When am I entitled to a statutory transition payment?
In brief: entitlement to a statutory transition payment will usually arise when the employer terminates the employment or does not renew a fixed-term contract. In principle, the entitlement accrues from the first day of employment.
Under a settlement agreement, the employer and employee terminate the employment by mutual consent. This does not automatically create a statutory payment obligation. In practice, however, the statutory transition payment is usually the minimum starting point for negotiations.
First assess what would happen if the employer followed a formal dismissal procedure. If the employer has weak grounds for dismissal or an incomplete file, there may be scope for a higher payment and better additional terms.
Received a settlement agreement?
Do not sign until the calculation, termination date, notice period and wording concerning Dutch unemployment benefits (WW) have been checked. A correct payment does not compensate for an unsafe or incomplete agreement.
At a minimum, check:
The employer terminates the employment
In principle, the employer owes a statutory transition payment if it gives notice, the court dissolves the employment contract or a fixed-term contract is not renewed.
The employee terminates because of serious culpable conduct
In exceptional circumstances, an entitlement may also arise where the employee resigns or applies for dissolution because the employer has acted in a seriously culpable manner.
Calculation
The main rule is one third of the gross monthly salary for each full year of service, plus a proportionate amount for the remaining period. Relevant fixed pay components are included in the calculation.
Main exceptions
There may be no statutory entitlement where dismissal takes place at or around the Dutch state pension age (AOW) or another agreed retirement age, where the employee has acted in a seriously culpable manner, and in certain situations involving young employees who work only a small number of hours.
Special rules also apply in the event of bankruptcy, suspension of payments or statutory debt restructuring. Collective labour agreement provisions may also affect entitlement in a redundancy situation.
No fixed maximum stated on this page
The statutory maximum is adjusted annually. Always check the current amount so that an outdated year does not determine the assessment.
Template settlement agreement
See which arrangements concerning payment, termination date and other terms are normally recorded in writing.
Sample letter: responding to the proposal
Respond carefully to the initial offer without immediately accepting the payment or other terms.
Mr. Edwin van Jaarsveld
Edwin van Jaarsveld has over 20 years of experience with dismissal cases and regularly publishes about them.
Edwin’s expertise can also be found on:
