If you dismiss an employee who has worked for you for 2 years or more, you have to compensate them for expected costs with regard to their finding new employment, such as costs for scholing or outplacement. This is called a transition payment.
Calculation transition payment
The transition payment is calculated for each period of 6 months your employee has worked for you. The total amount depends on the number of years of their employment:
- They receive 1/6 of their gross monthly salary for each period of 6 months.
- If your employee has worked for you for more than 10 years, they will receive 1/4 of their gross monthly salary from the 10th year of employment.
- If your employee is 50 years of age or older and they have worked for you for more than 10 years, until 2020 they will receive 1/2 of their gross monthly salary for each 6 month period. This only applies if your company has more than 25 employees.
The transition payment is capped at €76,000, unless your employee's salary exceeds that amount. In that case, the transition payment is capped at this employee's yearly salary. The transition payment is calculated on the basis of your employee's gross monthly salary. For the actual payment you can conclude a payment scheme with your employee.
Changes to transition payments
In the Prinsjesdag 2018 (Budget Day) proposals, fixed and flexible contracts are to be brought in line with one another with regard to transition payments to make it more attractive for employers to offer a fixed contract rather than a flexible one. This is subject to this measure being passed in both Houses of Parliament.