Severance pay

Calculate your statutory starting point and discover which other financial arrangements may be possible.

What payment is appropriate in your dismissal situation?

Severance pay is an umbrella term. In some cases there is a statutory entitlement to a transition payment. Under a settlement agreement, the employer and employee agree the payment themselves, often using the statutory transition payment as the starting point.

A higher payment is not automatic: the scope for negotiation depends on the employer’s dismissal file, the risks of formal proceedings and the consequences of leaving employment.

Have your proposal reviewed

Financial starting point

Check separately: the severance payment, salary arrears, holiday allowance, unused holiday, bonus, pension and legal costs. Not every amount forms part of the severance payment.

See what you can negotiate

1. Statutory transition payment

The statutory payment on dismissal at the employer’s initiative or where a fixed-term contract is not renewed. Under a settlement agreement, the parties will often agree an equivalent amount.

Accrued from the first day of employment
Based on salary and length of service
Subject to a statutory maximum

2. Negotiated severance payment

On termination by mutual consent, the parties determine the amount themselves. The transition payment is a starting point, not an automatic final figure.

Depends on the employer’s file and litigation risk
Scope to compensate for loss of income
Record the amount and payment date precisely

3. Additional payment awarded by a court

In specific proceedings, a court may award an additional payment alongside the transition payment, for example where the employer has acted in a seriously culpable manner.

Not a standard entitlement under every settlement agreement
Highly dependent on the circumstances
Requires a separate legal assessment

The statutory calculation

The main rule is one third of the gross monthly salary for each full year of service. The payment for the remaining part of the employment is calculated proportionately.

In 2026, the statutory maximum is €102,000 gross, or one gross annual salary if that is higher.

Gross monthly salary including fixed pay components
Full length of service
Remaining months and days calculated proportionately
Check successive employment contracts

Simple calculation example

With a gross monthly salary of €3,600 and nine full years of service, the basic calculation is:

9 × 1/3 × €3,600 = €10,800 gross

A remaining period of employment and fixed pay components may increase the final amount.

Monthly salary: €3,600 gross
Length of service: nine full years
Basic amount: €1,200 for each year of service
Total in this example: €10,800 gross

What determines the scope for negotiation?

1. Strength of the employer’s dismissal file

The greater the likelihood that formal dismissal proceedings would fail, the stronger your negotiating position.

Grounds for dismissal and evidence
Statutory bans on dismissal and redeployment

2. Expected loss of income

The time required to find other work, any salary difference and the risk of receiving no or lower Dutch unemployment benefits (WW) may all be relevant.

Time until new employment
Difference between salary and benefits

3. Financial entitlements

Outstanding pay components must be settled fully and transparently in addition to the severance payment.

Bonus, commission and unused holiday
Expense claims, pension and shares

4. Rights surrendered

A non-compete clause, full and final discharge or waiver of claims may have financial value.

Non-compete and non-solicitation clauses
Claims and full and final discharge

Gross is not the same as net

A severance payment is taxable income. The employer withholds payroll tax and social-insurance contributions using the special rate. The final tax due depends on your total annual income and personal circumstances.

Always agree a gross amount
Request a clear gross-to-net breakdown
Check the effect on means-tested allowances
Consider your assets on the next assessment date

Separate the severance payment from the final settlement

The severance payment must not inadvertently replace amounts to which you were already entitled. Include a separate final settlement listing all accrued pay components and a specific payment date.

Salary, holiday allowance and unused holiday
Bonus, commission and expenses
Pension and other employment benefits
Legal costs and payment deadlines

More detailed information about severance pay

Settlement agreement and transition payment

Read how the statutory payment is used as a starting point on termination by mutual consent.

Entitlement to a transition payment

See when the statutory entitlement arises and which exceptions may apply.

What is a normal severance payment?

Read which factors determine whether a proposal is reasonable, low or particularly favourable.

Settlement agreement and severance pay

Read how severance pay is recorded in a settlement agreement.

Transition payment at Dutch state pension age

See when there is an entitlement to a transition payment around Dutch state pension age (AOW).

Transition payment shortly before state pension age

Read which points require attention when the state pension date is near.

Omitted wage claim

See what may happen if a wage claim is not included in the final settlement.

Bonus and full and final discharge

Read why bonus arrangements must be clear before full and final discharge is granted.

Case law on severance payments

View judgments and practical examples concerning dismissal and severance payments.

Practical tips concerning severance pay

In addition to eligibility for Dutch unemployment benefits (WW), a termination package must or may address several other matters. The following points provide a useful overview.

Keep the severance payment and final settlement separate

Clearly state which amount is the severance payment and which amounts already arise from salary, holiday allowance, unused holiday or bonus entitlements.

Check the correct gross monthly salary

Fixed pay components may count alongside basic salary when calculating the transition payment. Check the complete salary basis.

Record the payment date

Include a specific payment date and determine what happens if the employer pays late.

Request a calculation as an appendix

A transparent calculation prevents disputes about length of service, pay components and rounding.

Negotiate one complete financial package

Assess the payment, salary, release from duties, unused holiday, bonus, pension and legal costs together.

Consider tax and means-tested allowances

The payment counts as taxable income and may affect means-tested allowances and possibly your assets on the next assessment date.

Have legal costs reimbursed separately

A budget for legal assistance should preferably not be deducted from your severance payment.

Check the full and final discharge

Do not agree a broad full and final discharge until all possible salary and damages claims have been identified.

Protect the payment

If there are doubts about the employer’s financial position, the payment deadline, security and any payment by instalments require particular attention.

Useful template documents

Template settlement agreement

Our specialists have prepared a template settlement agreement. You can adapt it to the specific arrangements made with your employee or employer.

Order the editable template settlement agreement below.

€ 24,50

Sample letter for an employee

Your employer wishes to terminate your employment and has offered you a settlement agreement. How should you respond? We have prepared a sample initial-response letter. The letter allows you to remain available for work and preserve your salary entitlement. It also requests time to consider the employer’s proposal and obtain advice.

Order the sample letter below.

€ 19,50

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:

Are you receiving a financially reasonable outcome?

Do not only have the transition payment recalculated. Review the complete financial proposal and establish where there is scope for negotiation.

Have your payment reviewed

Frequently asked questions

Am I automatically entitled to a transition payment under a settlement agreement?

Under a settlement agreement, the parties agree the payment themselves. It will often be based at least on the statutory transition payment that would be due if the employer terminated employment formally.

How is the transition payment calculated?

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 of employment.

Can I receive more than the transition payment?

Yes. A higher amount can be negotiated. The scope depends in part on the employer’s dismissal file, litigation risk, loss of income and the rights you surrender.

Do I pay tax on severance pay?

Yes. The payment is taxable income. The employer withholds payroll tax; the final tax due depends on your total annual income.

Is the final settlement part of the severance payment?

No. Outstanding salary, holiday allowance, unused holiday and other accrued entitlements must be settled separately.

Reviews

Professional advice

Rishico

Your dismissal specialists helped me very well with professional advice following a labor dispute I had with my employer. They clearly have experience with settlement agreements. I definitely needed their assistance to reach a good agreement with my employer. Thank you for the clear communication and all the help!

My thanks

Carla ten Bulte

My thanks to Mr. Geradts,

With great professionalism, decisiveness, speed, and effectiveness, I was able to conclude a good settlement agreement. If your first counteroffer hadn’t been so strong, I wouldn’t have been able to secure even half of it.
Not only because of the money, but certainly also to be able to close my employment history with dignity.
I wish every employee in such a situation could have such a skilled lawyer!

Good severance payment

Metternich

I want to sincerely thank you for the excellent help I received when my employer wanted to terminate my employment contract with a settlement agreement.
You advised me not to sign the agreement and, through negotiations, secured my unemployment benefits and severance payment.

Good advice

Louman

We are an employer in a cyclical industry. Sometimes there is plenty of work, other times too little.
Therefore, we regularly have to part ways with employees for “economic reasons.”
We use the services of vaststellingsovereenkomst.org for this. They know exactly how a dismissal request to the CWI or the subdistrict court should be prepared.

Even in cases where an employee underperforms or behaves inappropriately, we have had good experiences with the lawyers at vaststellingsovereenkomst.org.
They are always available to us with sound advice and have never disappointed us.

Difficult situation

Singh

A dismissal specialist helped me in a very difficult situation. I had been so foolish to sign a letter in an emotional state, resigning myself. Because of this, I lost my salary and wasn’t entitled to unemployment benefits. Vaststellingsovereenkomst.org managed to reverse this. They were able to prove that I signed under pressure and didn’t fully understand what I was doing.
In the end, I left with a good severance payment and now I have another job. Without the help of Vaststellingsovereenkomst.org, I would be in serious financial trouble right now.

Higher severance payment

Gast

I would like to sincerely thank you for the quick and professional assistance.
My employer unexpectedly presented a settlement agreement to terminate my employment contract, but thanks to your help, I received a higher severance payment and compensation for my vacation days.

Excellent assistance provided

Thijssen

Recently, you helped me with my dismissal case. I am very satisfied with the assistance provided. The lawyer was very involved and well-versed in dismissal law. He understood well that I didn’t want a long procedure but wanted the matter resolved quickly.
That solution came swiftly and to my full satisfaction. I didn’t even have to visit your office. Communication was handled by phone and email, so you were always accessible.
My rating: a solid 10.

Dismissed but still well helped

A. van den Berg

Because of a conflict at work that got seriously out of hand, I was dismissed immediately (summary dismissal). I had behaved badly during that conflict, so I could understand why my boss took such a harsh measure.
But I still had to fight the dismissal, because I had no job and no right to unemployment benefits. Fortunately, the dismissal specialist dared to take the risk and started a procedure against my employer on a No Cure No Pay basis. Without the possibility of No Cure No Pay, I wouldn’t have dared to do it myself.
In the end, after two procedures, the lawyer from vaststellingsovereenkomst.org succeeded in securing my right to unemployment benefits and even a severance payment.

Dismissal assistance

van Vliet-Houtman

I worked with great pleasure from the age of 18 at a flower exporter in Aalsmeer.
When I was 54, my employer applied for dismissal through the CWI for economic reasons. At that time, I engaged Mr. Edwin van Jaarsveld from Ontslagspecialist for dismissal assistance.
A dismissal permit could not be avoided because my employer was really in financial trouble. Since my employer offered only a very small severance payment, Mr. van Jaarsveld advised me to start proceedings at the subdistrict court.
That turned out to be successful. The court awarded a severance payment of €94,000.
Thanks to the dedication and excellent legal knowledge of vaststellingsovereenkomst.org, I achieved this great result. Kudos!

Very pleasant experience

Rachel Waki

We are an international company based in Amsterdam. We have engaged Vaststellingsovereenkomst.org as our regular legal counsel and legal assistance for business matters. They successfully concluded our first legal case immediately.
I have found the collaboration with the lawyers at Vaststellingsovereenkomst.org to be very pleasant. We complement each other well regarding key issues and evidence.
Rarely have I experienced such excellent legal service and attention. I would definitely recommend Vaststellingsovereenkomst.org in every respect; their rates are also very reasonable!

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