Upon dismissal, you are in many cases entitled to a transition payment. Sometimes, on top of that, a higher severance payment can be agreed upon, for example 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 payment works, when you are entitled to a higher payment, and how to get the most out of your termination.

What is the transition payment?

The transition payment is the statutory severance payment that an employer is required to pay upon:

• Dismissal via the UWV or subdistrict court.

• Termination via a settlement agreement.

• Non-renewal of a temporary contract.

The compensation is intended to facilitate the transition to another job.

How is the transition payment calculated?

The transition payment amounts to:

• 1/3 gross monthly salary per year worked.

• For shorter periods, this is calculated pro rata.

Example calculation:

• Salary: € 3.000 gross per month.

• Length of employment: 6 years and 4 months.

• Transition payment = 6 × € 1.000 + (4/12 × € 1.000) = € 6.333 gross.

Note: in some collective labor agreements, more favorable arrangements have been agreed.

When are you entitled to the transition payment?

• When your employer terminates the contract.

• If your temporary contract is not extended.

• If you and your employer enter into a VSO.

👉 You are not entitled to a transition payment if you resign, except in special cases (for example, dismissal due to seriously culpable conduct by the employer).

Higher severance pay: how does that work?

The transition payment is the minimum. In many cases an employee can get more:

• Through negotiations in a settlement agreement.

• In the event of seriously culpable conduct by the employer (fair compensation).

• Under a social plan during a reorganization.

Examples from practice

• Example 1: An employee received, upon dismissal due to reorganization, the statutory transition payment. After negotiations through his lawyer, he received 3 additional monthly salaries.

• Example 2: An employee with a 1-year temporary contract still received a transition allowance of € 800. He did not know this at first.

• Example 3: An employee received, in addition to the transition allowance, a fair compensation of € 25.000 upon dismissal due to seriously culpable conduct by the employer.

Checklist transition allowance and severance pay

• 📄 Check whether the transition allowance has been calculated correctly.

• 📑 See whether the collective labor agreement (CAO) contains a more favorable provision.

• 💶 Negotiate for additional severance pay in a settlement agreement (VSO).

• ⚖️ Consider proceedings for a fair compensation in the event of seriously culpable conduct by the employer.

• 📝 Have the calculation checked by an employment law attorney.

Common mistakes

• Thinking that fixed-term contracts do not entitle you to a transition payment.

• Signing a VSO without asking for extra compensation.

• Ignoring the consequences for pension or unemployment benefits (WW).

• Relying on the employer’s calculation without checking.

Frequently Asked Questions (FAQ)

1. Am I always entitled to a transition payment?
Upon dismissal or non-renewal, usually yes, except when you resign yourself.

2. How much is my transition payment?
1/3 of a monthly salary per year worked, pro rata for shorter periods.

3. Can I get more than the transition payment?
Yes, through negotiations or in the event of seriously culpable conduct by the employer.

4. Will my employer pay my attorney’s fees?
Yes, a reimbursement is often included in the VSO.

5. Will I also receive transition compensation when my temporary contract ends?
Yes, that has been legally required since 2020.

Why Arslan Advocaten?

• Specialized in dismissal and severance payments

• Check the calculation of your transition compensation

• Negotiating for higher compensation via a settlement agreement

• Regularly achieve additional compensation in legal proceedings

Conclusion

Severance pay is an important basic compensation upon dismissal, but there is often more to be gained. With good negotiations or legal action, the compensation can turn out much higher. Therefore, always have your situation assessed before you sign an agreement.