Is your temporary contract not being renewed? Then you are probably entitled to a severance pay. This compensation is intended to make the transition to a new job easier. But how do you actually calculate what you are entitled to?
Severance Pay Formula
The severance pay amounts to:
1/3 monthly salary per year of service
For periods shorter than a year, this is calculated pro rata.
What counts as salary?
When calculating the severance pay, it’s about your gross monthly salary, including:
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holiday pay (8%)
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fixed bonuses
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shift allowance or structural overtime payments
Example calculations
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Example 1: An employee has worked 1 year with a salary of €2,400 per month.
→ Severance pay = 1/3 x €2.400 = €800. -
Example 2: An employee has worked 2 years with a salary of €3,000 per month.
→ Severance pay = 2 x 1/3 x €3.000 = €2.000. -
Example 3: A student had a contract of 8 months with a salary of €1.800 per month.
→ Severance pay = (8/12) x 1/3 x €1.800 = €400 (rounded).
Severance Pay Checklist
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📄 Check whether your contract has been terminated or not renewed by the employer.
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📅 Count the total number of months you were in service.
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💶 Take your gross monthly salary including allowances.
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📝 Calculate 1/3 monthly salary per year of service (pro rata for shorter duration).
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⚖️ Have the calculation checked by an employment lawyer if you have doubts.
Frequently Asked Questions
1. Do I get a severance pay even with a short contract?
Yes, even with a contract of only a few months, you are entitled to a payment.
2. When does my employer have to pay?
Within 1 month after the end of the contract.
3. What if my employer refuses?
Then you can start a procedure at the district court through a lawyer within 3 months after the end of the employment.
Legal Framework and Recent Developments in the Netherlands
In the Netherlands, severance pay is often referred to as transitievergoeding (transition compensation). Since 2015, Dutch law mandates that employers pay this compensation when an employment contract is terminated or not renewed, including temporary contracts that last at least 24 months. However, if your temporary contract is shorter than 24 months, you might not automatically qualify for transition compensation unless your contract is terminated prematurely or under specific circumstances.
It’s important to note that if your temporary contract is renewed consecutively for a long period, it may be considered as a permanent employment contract under Dutch law. This recognition can affect your rights, including eligibility for severance pay.
Exceptions and Special Cases
- Dismissal for urgent reasons: If the contract ends due to serious misconduct, severance pay may not be applicable.
- Small Employers: Companies with fewer than 25 employees may have a waiting period of one year before severance pay applies.
- Collective Labor Agreements (CAOs): Some sectors have specific rules that can influence severance pay calculations.
Practical Tips for Employees
When your temporary contract is not renewed, consider the following steps to ensure you receive the severance pay you are entitled to:
- Review Your Contract: Check the terms related to contract duration, renewal conditions, and any clauses about severance.
- Document Communications: Keep all emails and letters relating to the end of your contract, as this can be important for disputes.
- Calculate Your Entitlement: Use the formula discussed, making sure to include all components of your gross salary.
- Seek Legal Advice: If unsure, consult a legal expert to assess whether your severance pay is calculated correctly or if you qualify for additional compensation.
How Arslan & Arslan Advocaten Can Help
Calculating severance pay for temporary contracts can be complex, especially considering the nuances of Dutch employment law and recent legislative changes. At Arslan & Arslan Advocaten, we specialize in employment law and can provide tailored advice to ensure you receive the compensation you deserve.
Whether you need help understanding your contract, negotiating with your employer, or taking legal action if necessary, our experienced team is here to support you every step of the way.
Contact us today for a consultation and take the first step toward securing your rightful severance pay.
Frequently Asked Questions
Am I entitled to severance pay if my temporary contract is not renewed?
Yes, generally you are entitled to severance pay when your temporary contract ends or is not renewed, especially if it lasted at least 24 months or was terminated prematurely. The calculation depends on your length of service and gross monthly salary.
How is severance pay calculated for a temporary contract?
Severance pay is calculated as one-third of your gross monthly salary multiplied by the number of years of service, pro-rated for periods shorter than a year. Include allowances like holiday pay and bonuses in your gross salary calculation.
When should my employer pay the severance compensation?
Your employer is required to pay severance within one month after your contract ends or is not renewed. If they refuse, you can initiate legal proceedings within three months after employment termination.
What should I do if my employer refuses to pay my severance pay?
If your employer refuses to pay, you can start a legal procedure at the district court with the help of a lawyer within three months of the end of your employment contract. Consulting an employment lawyer can help protect your rights.