What is a severance payment?

A severance payment, also known as transition payment (in Dutch: transitievergoeding), is a compensation paid by the employer to the employee for ending the employment contract. It is owed if:

• The employer terminates the employment agreement;
• The employer does not extend an employment agreement of definite time;
• The employee terminates the employment agreement or does not agree to an extension of his definite term employment agreement due to gross misconduct of the employer;

No severance payment is owed in the case of a settlement agreement or summary dismissal. The severance payment is also not owed if the employer terminates or does not extend the employment agreement due to gross culpability of the employee. 

What amount of severance payment is owed?

The amount of severance payment depends on the duration of the employment contract. Every year of employment equal a third of a month’s salary. Every month or day the employment has lasted for less than a total year will yield a proportional severance payment.

Issues for foreign employers and expats
It may be difficult to navigate whether a severance payment is owed or not and how much of it is owed. If you have any questions concerning the severance payment, please do not hesitate to contact us.