Understanding Severance Pay and Transition Payments in the Netherlands

Are you an employee facing the prospect of dismissal or termination? Understand your rights to severance and transition payments in the termination of your employment relationship. It’s crucial to understand your rights, particularly when it comes to severance pay and transition payments. This comprehensive guide will walk you through everything you need to know about these crucial compensation packages, ensuring you’re fully informed and prepared for the journey ahead.

What is Severance Pay?

Severance pay, also known as a severance package, is a lump-sum payment or series of payments provided by an employer to an employee upon termination of their employment contract. It is designed to compensate the employee for their years of service and to provide financial assistance during the transition period as they search for new employment, effectively serving as a transition compensation.

Statutory Transition Payment: Your Right as an Employee

In the Netherlands, employees who are dismissed or terminated are entitled to a statutory transition payment (transitievergoeding) from their employer, which highlights the principle that the employer must manage severance payments responsibly. This payment is based on the number of years the employee has worked for the company and is calculated according to a specific formula outlined in Dutch employment law.

Calculating Your Severance Pay and Transition Payment

The amount of severance pay and transition payment you receive depends on several factors, including your length of service, age, and gross monthly salary. The Dutch government provides an online calculator to help you estimate the amount you may be entitled to receive, including any severance pay or transition compensation.

Severance Packages: What to Expect

In addition to the statutory transition payment, some employers may offer a more comprehensive severance package. These packages can include additional compensation, extended benefits, outplacement services, and other incentives to facilitate the employee’s transition to new employment.

Understanding Settlement Agreements and Dismissal Compensation

In some cases, employers and employees may negotiate a settlement agreement (vaststellingsovereenkomst) as an alternative to dismissal. These agreements often include compensation for dismissal, which can be higher than the statutory transition payment. It’s essential to review these agreements carefully and seek legal advice if necessary to ensure you receive a severance payment if entitled.

When Are You Not Entitled to Severance Pay or Transition Payment?

There are certain circumstances where you may not be entitled to severance pay or a transition payment. These include dismissal due to seriously culpable conduct or negligence, dismissal by mutual consent, or if you are employed on a fixed-term contract that expires.

Severance Pay and Unemployment Benefits

If you receive severance pay or a transition payment, it may impact your eligibility for unemployment benefits (WW-uitkering) or the amount you receive. It’s essential to understand how severance payments and transition compensation interact and make informed decisions about your financial situation.

Taxation and Legal Considerations

Severance pay and transition payments are generally subject to taxation in the Netherlands. It’s crucial to consult with a tax professional or legal expert to ensure you understand the tax implications and comply with all relevant regulations.

Should You Get Legal Advice?

Given the complexities surrounding employment termination, severance pay, and transition payments, it’s highly recommended to seek legal advice from an experienced employment lawyer. They can help you understand your rights, negotiate on your behalf, and ensure that your interests are protected throughout the process.

Can I negotiate my severance pay or transition payment?

In some cases, it may be possible to negotiate a higher severance package or transition payment, especially if you have a strong bargaining position or valuable skills and experience.

Can I receive severance pay if I voluntarily resign?

Generally, you are not entitled to severance pay or a transition payment if you voluntarily resign from your position. However, there may be exceptions depending on the circumstances of your resignation which could affect your ability to receive a severance payment.


  • Severance pay and transition payments are crucial compensation packages for employees facing dismissal or termination in the Netherlands.
  • Employees are entitled to a statutory transition payment based on their years of service and gross monthly salary, which is a form of transition compensation.
  • Employers may offer additional severance packages, and settlement agreements can include compensation for dismissal.
  • Factors such as the reason for dismissal, your employment contract, and the employer’s financial situation can impact your entitlement to these payments.
  • Seek legal advice and consult with tax professionals to understand the implications and ensure your rights are protected.
  • Severance pay and transition payments can provide financial support during your transition to new employment, but it’s essential to understand how they may affect your eligibility for unemployment benefits.

Remember, navigating the complexities of severance pay and transition payments can be challenging, but being informed and seeking professional guidance can help you make the best decisions for your future.