Severance payment

Dismissal has a huge impact. Not only on a personal level, but also because of the drastic financial consequences. We work with you to get the best out of an unpleasant situation. Learn more about severance payments in The Netherlands.

Severance pay Netherlands

If your employer takes the initiative to terminate your employment contract, you are normally in any event entitled to a statutory severance payment as applicable in The Netherlands. This is the so-called transition payment. Depending on the exact situation, you may be entitled to a higher severance payment.

Transition payment

With a few exceptions, you are almost always entitled to the transition payment in the event of dismissal. Even if a temporary employment contract ends by operation of law and is not continued, the transition payment must be paid.

Severance pay calculator

The transition allowance amounts to roughly a third month’s salary per year of service. The transition payment is capped at an amount of € 89,000 gross or an annual income if this is higher than € 94,000 gross (2024).

Higher severance payment

When are you entitled to a higher severance pay? If the dismissal takes place on the basis of a combination of certain grounds for dismissal that do not separately form a reason for dismissal, but together do, the transition payment can be multiplied by a (maximum) factor 1.5.

When there are special circumstances an employee can also be entitled to a higher severance payment. This higher compensation is referred to in law by the term “fair compensation”. This may include, for example, the situation in which an employer deliberately disrupts the employment relationship. On the other hand, special circumstances can also be present that deprive you from entitlement to any severance pay. An example of this is an employee who has rightfully been dismissed on the spot because he/she has committed fraud.

Is severance pay taxable in The Netherlands

Wage tax will be withheld on a severance payment. Furthermore, please note that the 30% ruling does not apply to a severance amount.

In the context of a settlement it is always important to look carefully to which payment elements the 30% scheme can be applied in order to maximize your tax benefit.

Expert advice

As employment lawyers we are happy to provide you with advice on all elements that are relevant in the context of a settlement agreement, including the severance payment. We work mainly for expats and are here at your disposal.

Feel free to give us a call so that we can tell you more about our services.