In the event of dismissal, you are often entitled to a transition allowance. Sometimes an even higher severance payment can be agreed upon, for instance in a settlement agreement. The difference between these payments is substantial and the financial consequences for you as an employee can be considerable.
In this article, we explain how the transition allowance works, when you are entitled to a higher payment, and how to get the most out of your dismissal.
What is the transition allowance?
The transition allowance is the legal severance payment that an employer is obliged to pay in case of:
-
Dismissal via UWV or cantonal judge.
-
Dismissal via a settlement agreement.
-
Non-extension of a temporary contract.
The purpose of the payment is to facilitate the transition to another job.
How is the transition allowance calculated?
The transition allowance amounts to:
-
1/3 gross monthly salary per year of service.
-
For shorter periods, this is calculated pro-rata.
Example calculation:
-
Salary: € 3,000 gross per month.
-
Duration of employment: 6 years and 4 months.
-
Transition allowance = 6 × € 1,000 + (4/12 × € 1,000) = € 6,333 gross.
Note: more favourable arrangements are specified in some collective bargaining agreements.
When are you entitled to the transition allowance?
-
When your employer terminates the contract.
-
When your temporary contract is not extended.
-
When you sign a settlement agreement with your employer.
👉 You are NOT entitled to a transition allowance if you resign yourself, except in special cases (such as dismissal due to serious culpable behaviour of the employer).
Higher severance payment: how does it work?
The transition allowance is the minimum. In many cases, an employee can get more:
-
Through negotiations in a settlement agreement.
-
In the case of serious culpable behaviour by the employer (equitable compensation).
-
In a social plan in the event of reorganisation.
Practical examples
-
Example 1: An employee received the statutory transition allowance at dismissal due to reorganisation. After negotiations with his lawyer, he received 3 extra monthly salaries.
-
Example 2: An employee with a 1-year temporary contract received a transition allowance of € 800. He was initially unaware of this.
-
Example 3: An employee was dismissed due to serious culpable behaviour by the employer and received an equitable compensation of € 25,000 in addition to the transition allowance.
Checklist for transition allowance and severance payment
-
📄 Check if the transition allowance is calculated correctly.
-
📑 Check if a more favourable arrangement is outlined in the collective bargaining agreement.
-
💶 Negotiate for additional severance payment in a settlement agreement.
-
⚖️ Consider pursuing equitable compensation in case of serious culpable behaviour by the employer.
-
📝 Get your computation verified by a labour law attorney.
Common mistakes
-
Assuming that temporary contracts do not entitle you to a transition allowance.
-
Signing a settlement agreement without asking for an additional payment.
-
Not paying attention to the implications for your pension or unemployment benefits.
-
Relying on the employer’s computation without validation.
Frequently asked questions (FAQ)
1. Do I always have the right to a transition allowance?
In case of dismissal or non-renewal, usually yes, except when you resign yourself.
2. How high will my transition allowance be?
1/3 of the monthly salary for each year of service, pro-rata for shorter periods.
3. Can I get more than the transition allowance?
Yes, through negotiations or in the event of serious culpable behaviour by the employer.
4. Will my employer pay my attorney fees?
Yes, a compensation is often included in the settlement agreement.
5. Will I receive a transition allowance if my temporary contract expires?
Yes, this has been legally required since 2020.
Why choose Arslan Advocaten?
-
Specialized in dismissal and severance payments
-
Check the calculation of your transition allowance
-
Negotiate for higher payments via a settlement agreement
-
Regularly achieve additional compensation through legal procedures
Conclusion
The transition allowance is an important basic payment in case of dismissal, but often more can be achieved. With good negotiations or legal steps, the payment can be substantially higher. Therefore, always get your situation assessed before signing an agreement.
