Find Out if You are Eligible for Transition Pay
If you have been dismissed from employment in the Netherlands or if your temporary employment contract has not been extended, you may be eligible for transition pay, a form of severance pay meant to be used during a dismissed employee’s “transition” period between jobs. Since it was first introduced in 2015, the transition pay law in the Netherlands has undergone some important changes that may affect your eligibility for transition pay and how much compensation you are entitled to upon dismissal from employment. To learn more about transition pay eligibility in the Netherlands, or for help claiming the transition payment you believe you are entitled to, contact our experienced claims attorneys today. You may be entitled to compensation from your employer and we can help you with your claim.
What is Transition Pay?
The concept of transition pay, known as transitievergoeding in Dutch, was introduced in the Netherlands in July 2015, with the enactment of the Dutch Work and Security Act, or Wet Werk en Zekerheid, which effectively overhauled the laws governing flexible employment, unemployment benefits and dismissal in the Netherlands. Under the Work and Security Act, Dutch employees were eligible for transition pay upon dismissal from employment or upon non-renewal of their fixed-term employment contract only if they had been in service for a minimum of two years at the time of their dismissal. Unfortunately, this law left employees who were dismissed prior to the two-year mark without any sort of severance payment. All that changed in 2020, when a new law entered in force, known as the Labor Market in Balance Act, or Wet arbeidsmarkt in balans (WAB).
Understanding Transition Pay Requirements Under the WAB
As a successor to the Dutch Work and Security Act, the Labor Market in Balance Act sought to solve many of the problems posed by the old employment and dismissal law, one such problem being that it became common practice for employees to receive 23-month contracts so employers could avoid paying a transition payment when the employment contract was not extended. One of the most significant changes implemented under the WAB made it so that Dutch employees were entitled to transition pay from their first day of employment, rather than after having worked for at least two years.
Who is Eligible for Transition Pay?
Both employees with indefinite-term contracts (permanent contracts with no set end date) and fixed-term contracts (temporary contracts set to end on a specific date) are legally entitled to transition pay if their contract is terminated or not renewed upon the initiative of their employer, so long as the employment relationship was not ended as a result of the employee’s conduct or for certain other specific reasons. Employees eligible for transition pay include those who were fired due to a long-term illness, employees who were laid off due to economic reasons or because their job position was eliminated by the company, and also employees who resigned because of their employer’s seriously culpable behavior or neglect.
Calculating Your Transition Payment
The level of compensation owed to employees who are dismissed from employment in the Netherlands is based on the employee’s monthly salary and the total number of years the employee worked for the employer. If your employment contract is terminated or not renewed on the initiative of your employer, you are entitled to a transition payment equal to one-third of your gross monthly salary for every year you worked. This is true whether you worked for your employer for one year or 20 years. The Dutch Work and Security Act offered different levels of compensation for employees dismissed during their first 10 years of service and those dismissed after 10 years, as well as employees over the age of 50. However, the Labor Market in Balance Act eliminated these differentiations, leveling the playing field for all employees in terms of transition payments, and making the calculation of transition pay even easier. As of 2020, the maximum amount of transition pay you can recover upon dismissal in the Netherlands is €83,000, or one year’s salary, whichever amount is greater.
When is Transition Pay Not Required?
Changes made to Dutch employment laws in recent years have established important new protections for employees, including their legal right to a transition payment. Still, receiving transition pay upon dismissal is not always a certainty. There are certain specific situations in which Dutch employers are not required to pay a severance payment. For instance, if you are dismissed because your employer is bankrupt or because of seriously culpable acts or omissions on your part, you may not be eligible for a transition payment. The same is true if you resign from your position on your own initiative, if you are under the age of 18 and worked for up to 12 hours per week on average, if your employer offers to renew your temporary contract before your current contract has ended, if you and your employer agree to end the employment contract via mutual consent, or if your dismissal came after you reached retirement age. There are other circumstances that can play a role in your eligibility for transition pay, which is why we always recommend consulting an expert in transition payments.
Contact Our Skilled Claims Attorneys for Transition Pay Help
We have laid out some of the most important aspects of transition pay in the Netherlands for you. However, it is not always as simple as calculating how much you are owed and collecting the payment from your employer. There are other important factors that come into play in determining transition pay eligibility and calculating the appropriate amount of transition pay, not to mention ensuring that you actually receive the transition payment you are legally entitled to. Correctly interpreting the laws governing transitievergoeding in the Netherlands can be complicated and confusing, so don’t hesitate to get the help of an expert with experience handling transition pay claims. Our claims attorneys know how important receiving proper transition pay is to employees who are out of work and we can help by reviewing your case and giving you reliable advice tailored to your specific situation.