Fair compensation (billijke vergoeding) is a court award available under specific Dutch dismissal rules, in addition to any transition compensation that is due. The legal test depends on how employment ends. Seriously culpable employer conduct is required for some routes; it is not a separate test in every case.
Legal content updated: 20 October 2026. This guide concerns Dutch employment law.
Fair compensation and transition compensation are different
Transition compensation (transitievergoeding) is the statutory payment normally due when the employer terminates or does not renew employment, subject to exceptions. It is calculated at one third of the relevant gross monthly pay per year of service, with a proportionate calculation for the remaining period. The qualifying pay components and statutory ceiling must be checked for the year employment ends.
Since 1 January 2020 there has been no minimum service requirement of 24 months. The calculation starts on the first working day where entitlement exists. However, voluntary resignation, a settlement agreement and statutory exclusions require separate assessment. A settlement agreement does not automatically create a statutory right to transition compensation.
A fair compensation claim has a different basis. An unhappy outcome, a weak dismissal file or financial loss alone does not establish entitlement. Start with the legal route, then assess the evidence and amount.
Which legal route applies?
- Unlawful termination — Article 7:681 BW: in the situations specified by this article, such as an invalid summary dismissal, the employee may seek annulment of the termination or fair compensation instead. Serious culpability is inherent in the statutory breach and need not be proved as a separate additional requirement.
- Dissolution at the employer’s request — Article 7:671b BW: the relevant fair-compensation provision requires the dissolution to result from the employer’s seriously culpable acts or omissions.
- Dissolution at the employee’s request — Article 7:671c BW: seriously culpable employer conduct can also support a claim in this route. Asking for dissolution does not itself establish entitlement.
- Non-renewal of a fixed-term contract — Article 7:673(9) BW: a claim may arise where seriously culpable employer conduct caused the non-renewal. This claim has a different expiry period from Article 7:681.
- Following UWV permission — Article 7:682 BW: the precise variant matters. For an economic dismissal without a reasonable ground, reinstatement is the starting point; the alternative under paragraph 1(b) also requires reinstatement to be unreasonable because of seriously culpable employer conduct. Other situations have their own statutory conditions.
- Appeal — Article 7:683(3) BW: if an employer’s dissolution request was wrongly granted, the appeal court can order restoration of employment or award fair compensation. There is no separate general requirement of seriously culpable employer conduct for that route.
A statutory director with an employment contract has a distinct position. Article 7:682(3) includes termination without a reasonable ground or without compliance with the redeployment requirement, and seriously culpable employer conduct. The applicable ground and legal status must be established; merely considering the dismissal unfair is insufficient.
Three fictional situations
These examples explain the rules. They are not actual cases handled by the firm or predictions of compensation.
- An inadequate performance file: the employer seeks dissolution without a genuine opportunity to improve. The court may reject the request. An inadequate file does not automatically produce a fair-compensation award.
- Serious reintegration failures: employer failures lead to the end of employment. The required serious culpability and connection with termination must be established for the relevant route.
- An invalid summary dismissal: the employee can consider timely annulment or fair compensation instead. The likely continuation of employment without the unlawful termination may matter when assessing the amount.
How is the amount assessed?
There is no fixed formula, standard number of salary months or universal ceiling equivalent to the transition-compensation cap. The court must assess the facts. Relevant factors may include the likely duration of employment without the unlawful act, whether and when a lawful termination could have occurred, lost income, new earnings, reasonably expected future earnings and other compensation.
The award has no specifically punitive purpose. It is not calculated simply by asking how much would punish the employer. The Supreme Court’s New Hairstyle decision of 30 June 2017 explains the assessment, especially paragraphs 3.4.2–3.4.5.
Do not count the same loss twice. Transition compensation, compensation for an irregular notice period and fair compensation have separate legal bases but may interact in the overall assessment. The additional payment for dissolution on the cumulative ground, up to half the transition compensation, is also a different payment.
Deadlines: do not wait for negotiations
- For claims under Article 7:681(1)(a)–(c) and Article 7:682(1)–(3), the usual expiry period is two months after the day employment ended.
- For transition compensation and a fair-compensation claim under Article 7:673(9), the period is three months after the day employment ended.
- A fair-compensation request in dissolution proceedings must be made in those proceedings in time.
- An appeal against a dissolution decision generally has a three-month period from the decision; obtain advice on the specific procedural position.
This is not an exhaustive list. Special rules apply, for example, to breaches of a re-employment condition. The deadlines in Article 7:686a BW are expiry periods. A complaint letter or ongoing settlement talks do not automatically preserve the claim. Have the final date for receipt of the petition checked promptly.
Settlement agreement: assess the complete offer
In a settlement agreement, the parties negotiate a termination payment. The prospects of a court award can influence the agreement, but neither a higher amount nor benefit eligibility is guaranteed. Consider the termination date, salary until that date, holiday balance, pension, restrictive clauses and final discharge together.
Do not sign solely because the employer labels a payment “transition compensation”. Check what rights you are settling and whether you wish to challenge the termination or accept its end and claim compensation instead.
Evidence checklist
- Keep the employment contract, dismissal letter, UWV documents or court decision and a record of receipt dates.
- Prepare a factual chronology supported by emails, documents and possible witnesses.
- Explain why the relevant legal ground is met and how the employer’s conduct relates to termination.
- Collect payslips, pension information, new-income records and evidence about job applications and employment prospects.
- Consider how long employment would probably have continued and any realistic possibility of lawful termination.
- Have all possible claims and their deadlines assessed, even while negotiating.
Employee conduct and exceptions
Seriously culpable employee conduct may exclude transition compensation. This is not identical to the test for a valid summary dismissal. Even where serious culpability exists, Article 7:673(8) allows a full or partial payment in exceptional circumstances if withholding it would be unacceptable under standards of reasonableness and fairness. Other statutory exclusions must also be checked.
Frequently asked questions
Do I always receive fair compensation after dismissal?
No. Entitlement depends on the statutory route. Certain dissolution cases require seriously culpable conduct by the employer. For a termination covered by Article 7:681 of the Dutch Civil Code, this does not have to be established separately: it is inherent in the statutory breach. An appeal may involve a different basis.
Must I have worked for two years?
No. There is no general two-year service requirement for fair compensation. Since 1 January 2020, transition compensation is calculated from the first working day where the statutory conditions are met. Short service does not automatically entitle you to both payments.
How much fair compensation will I receive?
There is no standard formula or fixed number of months of salary. The court considers the circumstances, the likely course of employment without the unlawful termination, income loss and other income. The award is not a punishment.
Can a settlement agreement include fair compensation?
A court awards statutory fair compensation. A settlement agreement contains a negotiated termination payment. Possible court claims can influence negotiations, but transition compensation is not automatically payable by law when employment ends by mutual agreement.
Is a lawyer compulsory?
A lawyer is not compulsory before the subdistrict court: you may act yourself or appoint a representative. A lawyer is compulsory on appeal. Professional advice can help identify the correct claim, evidence and expiry date.
What deadline applies?
It depends on the legal basis. Claims under Article 7:681(1)(a)–(c) and Article 7:682(1)–(3) generally expire two months after employment ends. Article 7:673(9) has a three-month period. A claim in dissolution proceedings must be made in those proceedings in time. Negotiations do not stop an expiry period.
Can transition compensation be refused?
Yes, statutory exceptions apply. An employee’s seriously culpable conduct may exclude entitlement, but a valid summary dismissal does not automatically establish such conduct. Article 7:673(8) allows an exceptional full or partial award if withholding it would be unacceptable according to standards of reasonableness and fairness.
Advice on your next step
For assistance with the legal basis, evidence or deadline, contact Arslan Advocaten. This guide does not predict the outcome of an individual dispute.
Primary legal sources: Dutch Civil Code, Book 7, dismissal rules and the Supreme Court decision linked above.
