An employee is often compensated in case of dismissal. In defining the basic compensation (‘transition allowance’) a standard formula is used.
Employees with an employment contract for more than two years, gain a legal entitlement to severance compensation. This compensation, the ‘transitievergoeding’, is owed when the employer has taken the initiative to terminate the contract (and also when a temporary contract is not extended by the employer).
Calculation transition payment
The transition allowance is (roughly) a third month’s salary per year worked. If the term of employment is over ten years, the employee is entitled to a half month’s salary per year worked for each year the employment has lasted for more than 10 years.
Maximum basic severance
The maximum transition allowance is EUR 76,000, or, if higher, a year’s salary.
- A transitional arrangement applies to workers aged over 50, until 2020. Under certain conditions, they receive a higher transition allowance.
- If a small company ( less than 25 employees) needs to restructure as a result of a bad financial situation, under certain conditions a lower transition allowance may apply.
There can be circumstances in which a cantonal judge may award an extra compensation, on top of the transition allowance. Please feel free to contact our employment lawyers for further details.
Always entitled to a transition allowance?
You will normally not be entitled to a transition allowance, when you resign of when a summary dismissal took place.