The transition payment is a major change compared to the old dismissal law. Since 1 July 2015, every employee whose employment contract is terminated after an employment of at least two years is entitled to a transition payment. The compensation serves as compensation for the dismissal. The transition of the employee to another job is also facilitated. The amount of the transition payment is determined on the basis of a fixed legal standard, in which the monthly salary and the duration of the employment contract are important.

When is no transition payment due?

In certain situations, the right to a transition payment may lapse. You can think of the following situations, among others:

• The employment contract is terminated by mutual consent and a severance payment has been agreed;
• The employee was fired because he acted seriously culpably;
• The employee has reached retirement age;
• The employer has been declared bankrupt;
• The collective labor agreement includes a so-called ‘equivalent provision’. The value of this compensation must be equivalent to the transition compensation to which the employee is entitled.

Amount of the transition payment

The amount of the transition payment depends on the employee’s monthly salary and the duration of the employment contract. The compensation is only calculated over whole periods of 6 months of the employment contract.

Over the first 10 years of the employment contract, the employee receives 1/6 monthly salary for every half year of service. For every half year of service that the employee has been employed for more than 10 years, 1/4 monthly salary is calculated per half year. This concerns the gross monthly salary including holiday allowance. Other surcharges and/or allowances can also be included in the calculation.

Under certain circumstances, the employer can deduct costs, the so-called transition costs and employability costs, from the transition payment. However, the employee must be informed in writing about the costs to be incurred. In addition, other conditions also apply to the deduction of costs from the transition payment.

From 1 January 2019, the maximum transition payment is €81,000, unless an employee earns more than €81,000 per year. In that case, the compensation is equal to the annual salary.

Do you have any questions about the transition payment, its amount or another question? Our experienced employment lawyers can assist both employer and employee in such matters.