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Transition payment (dismissal compensation)

This information is provided by:Netherlands Enterprise Agency, RVONetherlands Enterprise Agency, RVONederlandse versie

Do you want to dismiss an employee or not extend their contract? By law, you are obliged to pay them compensation for dismissal. This is called a transition payment (transitievergoeding). You do not have to pay the transition payment if your employee agrees with the dismissal (dismissal by mutual consent).

Your employee is entitled to a transition payment from the first day of the employment contract. This applies to permanent contracts as well as fixed-term contracts. It also applies to on-call contracts.

When do you have to pay a transition payment?

You have to pay your employee a transition payment if:

  • you have a valid ground to dismiss an employee
  • you do not extend the permanent or fixed-term contract of an employee
  • an employee resigns following seriously culpable conduct or negligence on your part (discrimination, for example)

In some cases you do not need to pay a transition payment (in Dutch). And you may be eligible for compensation from the to the Employee Insurance Agency (UWV, in Dutch). Read more about the transition payment.

What is the amount of a transition payment?

The transition payment depends on the employee's monthly salary and number of years of employment. Read more about how to calculate a transition payment (in Dutch).

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