No. There are situations in which you will not receive a transition allowance, for example if the dismissal is due to fault or if you have already agreed on another form of compensation. In most cases, however, you can count on a transitional allowance. It is therefore important to know your rights and obligations as an employee well, so that you know where you stand in the event of dismissal.

The transitional allowance is a statutory severance payment. The regulation transitional allowance is included in Article 7:673 of the Civil Code. The purpose of the transitional allowance is to financially facilitate the employee's transition (transition) to other work. The transitional allowance is also a compensation for dismissal. The employee can use the compensation for the cost of training or support to other work.

The difference between these compensations is that the transitional allowance is regulated by law. Severance payment is not regulated by law. The transitional allowance is a right to which the employee is automatically entitled in certain situations. Namely, when the employer terminates or does not renew the employment contract. The severance payment may be based on the outcome of the legal transitional allowance but it does not have to be. The severance payment agreed upon by the parties can be higher or even lower than the legal transitional allowance.

First, you need to determine the monthly salary, which consists of the basic salary + fixed and variable salary components. Then you need to determine the working hours (start date and expected end date). Based on this information you can calculate the transitional allowance. When determining the working hours, the period that you performed work for the employer through a temporary employment agency should also be included.

An employee may also be entitled to a transitional allowance in the event of partial termination of the employment contract, with or without a settlement agreement. In the event that working hours are structurally reduced by at least 20%, then the employee may be proportionally entitled to partial transition payment. We provide more information on this in the blog partial termination transitional allowance

The statutory transitional allowance is composed of three calculations.

• 1/3 monthly salary for all full years of service
• 1/36 monthly salary for the remaining full months of service
• 1/1095 monthly salary for the remaining days.

After 2 years of illness, the employer may terminate the employment contract after receiving permission through the UWV or may choose to enter into a settlement agreement. In both cases, the employee can claim the statutory transitional allowance. In our blog sick leave and transitional allowance, you can read all about what rights an employee has when he leaves employment sick.

In the situation where the employer may terminate the employment contract with the permission of the UWV or the subdistrict court, you cannot negotiate about the transition payment. Then the right to the transitional allowance, which is calculated according to a fixed formula, arises automatically. However, you can negotiate the severance pay and other conditions in case the employer offers a settlement agreement. The settlement agreement may include a higher or lower transitional allowance.

The employer does not have to pay a transition fee if the employee gives notice himself. Not even in the situation where the employee is summarily dismissed due to serious culpable actions. If the collective bargaining agreement includes a substitute provision that replaces the statutory transitional allowance, the employer does not have to pay any transitional allowance either. You can read more about the substitute provision as an exception to the transitional allowance in our blog on this topic.

If the employee leaves employment sick then the employer can apply for compensation for the transitional allowance. Also if the employer of a small company quits because he himself retires or dies, he can ask for a compensation of transitional allowance. With the compensation transitional allowance scheme, the employer can get the transitional allowance back from the government. Also, some costs incurred by an employer are deductible from the transitional allowance.