A transition payment is a payment that the employer must pay to the employee when an employee is dismissed. On the one hand it is intended as compensation for dismissal, on the other hand the compensation is intended to facilitate the transition of employees to another job.

All employees are entitled to a transition payment in the event of dismissal. In addition to the situation of dismissal, the right to a transition payment also applies if a temporary contract is not extended. The employee is also entitled to a transition payment if he resigns himself, if he does so because his employer acted seriously culpably or was seriously culpably negligent.

The employer does not have to pay a transition payment in a number of cases:
▼ upon termination of the contract by mutual consent
▼ if the employee has been dismissed because he acted seriously culpably or was seriously culpably negligent, unless the subdistrict court decides otherwise
▼ if the employee who has been dismissed is not yet 18 years old and worked on average no more than 12 hours a week
▼ if the employee is dismissed because he has reached the state pension or other retirement age or after reaching this age
▼ if an 'equivalent provision' is included in a collective labor agreement to which the employer falls
▼ if the employee has entered into a subsequent temporary contract with the employer before the (legal) termination of a temporary contract. This is subject to the condition that the new contract takes effect after a maximum of 6 months after the previous contract has ended (and can be terminated in the interim).

If the contract is not extended at the initiative of the employer, there is a right to transition payment. If the employee himself renounces the extension, there is no right to the transition payment. The employee must then have received a reasonable offer for a new contract with conditions comparable to those in the current contract.

An employee receives 1/3 monthly salary per full year of service from the first working day. The transition payment for the remaining part of the employment contract is calculated according to the formula: (gross salary received on the remaining part of the employment contract / gross monthly salary) x (1/3 gross monthly salary /12). The latter formula is also used to calculate the transition payment if the employment contract has lasted less than one year. The reimbursement is a maximum of € 83,000 gross. Or, if the annual salary is higher than € 83,000, a maximum of 1 gross annual salary.

The transition payment is therefore based on two variables: the duration of the employment and the amount of the salary. For the amount of the salary, you may add other wages and the holiday allowance to the basic gross monthly salary. For other wages, think of: fixed year-end bonus, shift allowances, overtime allowances, bonuses, profit payments, variable year-end bonuses.

Costs of, for example, outplacement or training can be deducted from the transition payment. Also costs incurred by the employer, because a longer notice period is used and the employee is exempt from work during this period. Did the employer incur costs during the employment contract to promote employability outside the organisation? Then these costs can also be deducted. The condition is that this has been agreed in advance.

In principle, the employer must pay the transition payment in one lump sum within one month of termination of the employment. If this possibly harms the business operations, the employer can pay this in installments, spread over a maximum of 6 months. The employer will then owe statutory interest from 1 month after the end of the contract. The interest is calculated on that part of the transition payment that has not yet been paid.