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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.
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Maximum basic severance
The maximum transition allowance is EUR 81,000 (2019), 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.