During a termination, the notice period and severance pay plays a critical role. However, in practice, this often goes wrong. Employers adopt the wrong notice period or forget that an employee is entitled to a severance pay. The Labour law lawyers from Arslan Advocaten provide an explanation about the rules, what can go wrong, and how you can avoid legal problems.

What is the notice period?

The notice period is the timeframe between the moment of resignation and the end of the employment contract. The duration of the notice period depends on the duration of the employment and who is giving the notice (employer or employee). The rules are determined according to article 7:672 BW.

Notice period for employees

An employee usually has a one-month notice period. The employment contract or collective agreement could state a longer period, but it should never exceed six months. The employer must implement a proportionately longer notice period if a longer period is mentioned.

Notice period for employers

The employer must consider the duration of the employment:

• 1 month for employment less than 5 years
• 2 months for 5–10 years
• 3 months for 10–15 years
• 4 months for 15 years or longer

If the notice period is wrongly applied, the termination could be void, or the employee could claim additional wages for the short period.

What is severance pay?

The severance pay (transitievergoeding) is a legal compensation that the employee receives during dismissal, also when a temporary contract is not extended. This compensation mitigates job loss and aids transition to another job.

According to article 7:673 BW, every employee has the right to severance pay starting from the first working day. The pay equals 1/3 monthly salary for each working year. In case of a fraction of a year, this will be proportionately calculated

Example Calculation

An employee with a gross monthly income of €3.000 and 6 years of service will receive:

6 × (1/3 × €3.000) = €6.000 gross severance pay.

Common Mistakes in Notice Period and Severance Pay

1. Incorrect calculation of the notice period

Many employers miscalculate the notice period. Note that the month starts on the first day of the month following the resignation. A termination letter of March 15 implies that the employment contract terminates on April 30 in the case of a one-month notice period.

2. Non-payment of severance pay

Some employers presume there is no compensation due during a temporary contract or probationary period. This is not correct. Severance pay is required during all terminations, unless the employee is culpable.

3. Ignoring the termination prohibitions

During dismissal while sick or pregnancy, there is a termination prohibition. If a termination still occurs, the employee can seek cancellation of the termination and demand wage recovery.

4. No notice period during a settlement agreement

During termination via a settlement agreement, there’s no legal notice period. However, it is advisable to consider the unemployment insurance (WW) periods: UWV requires that the notice period is adhered to; otherwise, the benefit can be temporarily denied.

5. Incorrect calculation with part-time or variable wage

The severance pay is calculated based on the average income including fixed allowances and holiday pay. For variable work or fluctuating hours, an average over the last 12 months is required.

Employees’ rights

Employees can submit a petition to the cantonal judge within three months after the end of employment contract if the severance pay is not paid or wrongly calculated. The judge can compel the employer to pay, possibly with interest and costs.

Employers’ rights and risks

Employers should ensure that the notice period and compensation are legally verified beforehand. A wrong calculation can lead to double costs: continued payment of wages én compensation. The labour law specialists of Arslan Advocaten help employers avoid mistakes and act legally correct.

Frequently Asked Questions about Notice Period and Severance Pay

Do I always need to adhere to the notice period?

Yes, except during immediate dismissal or during the probationary period. Otherwise, the termination is void, and wages are still due.

Do I receive severance pay during mutual termination?

Yes unless otherwise agreed in the settlement agreement. Always get this checked by a labour law lawyer.

When should the severance pay be made?

At the latest one month after the end of the employment. In the case of late payment, the employee can demand statutory interest and increase.

Do I get compensation during termination while ill?

Yes, after two years of illness, you still have the right to severance pay. See our article about dismissal during illness.

Arslan Advocaten Helps with Notice Periods and Severance Pay

The labour law specialists from Arslan Advocaten provide advice to employees and employers about notice periods, severance pay, and termination procedures. Do you want to avoid overpaying or receiving less? Contact us for instant legal advice.