As a temporary worker, just like regular employees, you may be eligible for severance pay. This is a form of dismissal compensation you receive from your employer when your contract is terminated. The severance pay is intended to help you to transition from one job to another, for example through retraining. In this article, we discuss extensively how the severance pay works for temporary workers, when you are entitled to it, and how it is calculated.

What is a severance payment?

A severance payment, also known as dismissal compensation, is an amount you receive from your employer when your contract ends. This compensation is intended to facilitate the transition to a new job. For example, you can use the money for retraining or re-education. The amount of the severance pay is legally set and amounts to one-third of the gross monthly salary per year worked. The compensation applies not only to permanent employees but also to temporary workers.

When are you entitled to severance pay as a temporary worker?

As a temporary worker, you are entitled to severance pay when your contract is terminated by your employer, or if your contract is not renewed. This has been the case since the implementation of the Balanced Labor Market Act (WAB) on January 1, 2020. Before this date, the situation was different, but since then, every temporary worker has been entitled to severance pay from day one. This means that even short-term employment contracts are entitled to compensation.

The most important conditions to be eligible for severance pay as a temporary worker are:

• Your contract is terminated by the employer.
• You are 18 years or older (unless you are underaged and have worked more than 12 hours per week).
• You have not yet reached retirement age.

How is the severance pay for temporary workers calculated?

The calculation of the severance pay for temporary workers is almost the same as for regular employees. The amount of the severance pay depends on several factors, such as the duration of the employment and the gross salary. For the calculation, one third (1/3) of the gross monthly salary per year worked is taken into account.

Below are the factors that determine the calculation of the severance pay:

• Duration of the employment: The number of years, months, and days you have worked for the employer are included in the calculation.
• Gross monthly salary: This includes vacation pay and any supplements such as a thirteenth-month payment or bonuses.
• Average salary calculation: As a temporary worker, you sometimes work without a fixed monthly salary. In that case, an average salary is calculated based on the periods during which you have worked.

The maximum severance payment in 2024 is € 94,000, unless your annual salary is higher. In that case, your gross annual salary is the maximum. This maximum amount is re-indexed annually.

What happens if a temporary worker is employed by the hirer?

It often happens that temporary workers become direct employees of the hirer over time. In such a case, the temporary worker is not entitled to severance pay from the temp agency, since the employment there is terminated. However, the years of service built up at the temp agency do count towards the severance pay if the employee is later dismissed by the hirer. This means that the employment history at the temp agency is included in the calculation of the severance pay at the new employer.

Example calculation of severance pay for temporary worker

Suppose, you have worked two years as a temporary worker for a gross monthly salary of € 2,500. Then you calculate the severance pay as follows:

• Step 1: The compensation per year worked is one third of the gross monthly salary. In this case, that is: 1/3 x € 2,500 = € 833.33.
• Step 2: Since you have worked two full years, you multiply this amount by two: € 833.33 x 2 = € 1,666.66.
• Step 3: The severance payment in this example amounts to € 1,666.66.

What should you watch out for as a temporary worker?

Although the law has significantly improved the rights of temporary workers, it’s important to keep a close eye on several things:

1. Calculation of number of service years: Ensure that all years where you have worked (even at other temp agencies or employers) are correctly included.
2. Fixed or flexible salary: If you don’t have a fixed monthly salary, an average has to be calculated. Check whether this is correctly calculated by your employer or temp agency.
3. Employment with the hirer: If you get a job with the hirer, don’t forget that your employment history at the temp agency counts towards your severance pay.

Conclusion

Also as a temporary worker, you have a right to severance pay when your contract ends. The calculation of this compensation is comparable to that of regular employees, and you build up rights from day one. It’s important to be well-informed about your rights, especially if you have worked for an employer as a temporary worker for a long period. If you have questions about your specific situation or want to know what you are entitled to, feel free to contact the employment lawyers of Arslan Advocaten for expert advice.

Questions about the severance payment?

For more information or a personal consultation, you can contact our office. We are ready to help you further with all your questions about labor law and severance payments.