--- title: Entitlement to a Transition Payment | Dutch Employment Law description: Learn when Dutch law provides entitlement to a statutory transition payment and how a settlement agreement affects that entitlement and the negotiations. author: Edwin van Jaarsveld url: https://vaststellingsovereenkomst.org/en/entitlement-transition-payment-settlement-agreement --- ![Entitlement to a statutory transition payment under a settlement agreement](https://vaststellingsovereenkomst.org/templates/yootheme/cache/17/shutterstock_499576012-1-gespiegeld-177f0f5e.jpeg) ## 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. [Have your proposal reviewed for free](https://vaststellingsovereenkomst.org/index.php?Itemid=2418) ![Reviewing a settlement agreement for entitlement to a transition payment](https://vaststellingsovereenkomst.org/templates/yootheme/cache/bb/vaststellingsovereenkomst_2020-bb35c750.jpeg) **At a minimum, check:** - who initiated the termination - whether any statutory exceptions apply - the correct length of service - the full gross monthly salary and fixed pay components - the agreed termination date and notice period - whether other entitlements are settled separately ## A settlement agreement changes the legal route You should therefore expressly record which payment will be made and how it has been calculated. [Request a free review](https://vaststellingsovereenkomst.org/index.php?Itemid=2418) ## When does the statutory entitlement arise? ### 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. ![Conditions for entitlement to a transition payment](https://vaststellingsovereenkomst.org/templates/yootheme/cache/56/photo-1597824707484-9c3a77c8c195-567d1db6.jpeg) ### 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. [Transition payment and settlement agreement](https://vaststellingsovereenkomst.org/index.php?Itemid=2433) ## Why is a settlement agreement different? Under a settlement agreement, the parties agree together that the employment will end. The employer does not formally give notice and the court does not dissolve the employment contract. The payment must therefore be expressly negotiated and included in the agreement. This does not mean that an employee must accept no payment at all. Compare the proposal with the statutory transition payment and with the employer’s prospects in formal proceedings. A higher payment may be appropriate if dismissal without consent would be uncertain, costly or time-consuming. ### A transition payment is not the same as fair compensation A court may award fair compensation where there has been serious culpable conduct. The same conduct may influence the negotiated severance payment, but these are legally distinct concepts. More than 20 years of experience in dismissal cases Our clients rate us 9  + gemiddeld More than 15000  + dismissal cases successfully completed ![Template settlement agreement](https://vaststellingsovereenkomst.org/templates/yootheme/cache/a8/vaststellingsovereenkomst_controleren-a89edd16.jpeg) ### Template settlement agreement See which arrangements concerning payment, termination date and other terms are normally recorded in writing. --- € 24,50 --- ![Sample response to a settlement agreement](https://vaststellingsovereenkomst.org/templates/yootheme/cache/54/vaststellingsovereenkomst_weigeren_te_ondertekenen-540d485e.jpeg) ### Sample letter: responding to the proposal Respond carefully to the initial offer without immediately accepting the payment or other terms. --- € 19,50 --- ![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/df/edwinportret-gigapixel-low_res-scale-4_00x-df0dd30f.jpeg) About the author ### 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:** [![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/c9/linkedin-logo-c9bd4b88.png)](https://www.linkedin.com/in/edwin-van-jaarsveld-4746691b/?originalSubdomain=nl) [![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/85/paroo2l-85019151.png)](https://vaststellingsovereenkomst.org/images/bekend_van/artikelen/Stel_bij_ontslag_alles_ter_discussie__Het_Parool1.pdf) [![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/2e/ad-2eae40c9.jpeg)](https://vaststellingsovereenkomst.org/images/bekend_van/artikelen/Drugs_op_zak_maar_niet_gebruikt_Ontslag_op_staande_voet_is_wellicht_te_zwaar.pdf) [![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/75/brisk1-75fa8d97.jpeg)](https://vaststellingsovereenkomst.org/images/bekend_van/artikelen/BC_-_Tien_tips_voor_werkgevers_bij_ontslag_wegens_disfunctioneren.pdf) [![](https://vaststellingsovereenkomst.org/templates/yootheme/cache/47/mtsprout-4785aa81.png)](https://vaststellingsovereenkomst.org/images/bekend_van/artikelen/Persbericht__Ontslag_op_staande_voet_een_weg_vol_risicos__MT_Sprout.pdf) ## Is your payment legally and financially correct? Have the entire settlement agreement reviewed before signing. The initial advice is free. [Contact us](https://vaststellingsovereenkomst.org/index.php?Itemid=2445) ## More about severance payments Choose the subject that matches your situation. [Severance pay overview](https://vaststellingsovereenkomst.org/index.php?Itemid=2432) [Transition payment in a settlement agreement](https://vaststellingsovereenkomst.org/index.php?Itemid=2433) [Settlement agreement and severance pay](https://vaststellingsovereenkomst.org/index.php?Itemid=2793) [Transition payment at state pension age](https://vaststellingsovereenkomst.org/index.php?Itemid=2768) [Transition payment shortly before state pension age](https://vaststellingsovereenkomst.org/index.php?Itemid=2771)