From 1 April 2020, employers may claim compensation for the compensation paid upon termination of employment with an employee who has been sick or incapacitated for work for more than two years. The scheme applies retroactively to transition compensation paid from 1 July 2015. A request for compensation can be submitted to the UWV.
From 1 April 2020, employers may claim compensation for the compensation paid upon termination of employment with an employee who has been sick or incapacitated for work for more than two years. The scheme applies retroactively to transition compensation paid from 1 July 2015. A request for compensation can be submitted to the UWV. This scheme is intended to put an end to the dormant employment of sick of incapacitated employees.
The Compensation Scheme only applies if:
If the employee had been ill for two years before 1 July 2015, he/she is not entitled to transition compensation and the employer is not entitled to compensation.
The following types of compensation are covered by the scheme:
If the compensation is paid in instalments, compensation may be claimed only after the last instalment has been paid. The Scheme also applies if the employee is working at least 20% less due to incapacity for work.
Because of the Compensation Act, the employer is obliged, upon request of the sick employee, to terminate the contract after two years and pay the transition compensation. If the employer fails to do so, the employee is entitled to damages. The amount of damages is equal to the amount of the transition compensation the employer would have had to pay in the event of termination on the day after the two-year waiting period in the event of sickness has elapsed.
The compensation does not exceed the transition compensation that would have to be paid in the event of termination on the day after the two-year waiting period in the event of sickness has elapsed. The compensation does never exceed the amount actually paid by the employer. The employer may have paid a lower transition compensation because he was allowed to deduct costs he made. These costs are also covered by the Compensation Scheme.
Since 1 January 2020, the calculation method for transition compensation has changed. As a result, employees employed for 10 years or longer and employees aged 50 and over are no longer entitled to a higher transition compensation. When the waiting period of two years lapsed before 1 January 2020, and the termination procedure started before that day, the employer will qualify for compensation according to the old calculation method. In all other cases, the new calculation method applies to the calculation of the compensation, even if the old calculation method was used for the calculation of the transition compensation.
The Act says that if the total amount of wages paid to the employee during the two years of sickness does not exceed the transition compensation, the maximum amount of the wages paid will be compensated. This scheme does not apply yet. It was overlooked that this can also be the case if the employer makes use of a subsidy scheme for hiring or employing disabled people.
Please note: The compensation must be applied for in time. Have you paid a compensation to a long-term sick employee before 1 April 2020? In that case, you will have to submit your application for compensation to the UWV up to and including 30 September 2020 at the latest. If you pay the transition compensation on 1 April or later, you have to submit the application for compensation within 6 months after the payment of the total transition compensation. If you pay the transition compensation in instalments, the application period starts to run on the day you paid the last instalment.
In new cases, the UWV has eight weeks to take a decision. In old cases they have six months. Old cases include the situation in which notice could have been given before 1 April 2020, but the transition compensation was not paid until 1 April or later. If the UWV has decided that you are entitled to the compensation, the money will be paid into your account within five working days.
You can lodge an objection against the decision of the UWV. If you do not agree with the decision on your objection, you can lodge an appeal with the Administrative Court and then with the Central Appeals Tribunal.
Do you have any question about the Compensation Scheme? Would you like to know, for example, how this will turn out in your employee’s situation? We will be happy to help you. We are also happy to assist you in matters relating to the reintegration of sick employees or the termination of an employment contract. Please contact us:
Employers are no longer allowed to keep the employment contract with employees dormant after two years of illness to avoid the payment of transition compensation. That’s what the Supreme Court decided recently. What does this mean for employers?
Many companies do not have a works council, even though they should. When is it mandatory to establish one? What are the advantages of a works council? What are the consequences if your company does not have a works council?
Discrimination in the recruitment and hiring of new staff is not permitted. When do you, as an employer, discriminate during the application process, even unintentionally? And how can you prevent this, also if you use AI?
The government wants to improve the legal position of flex workers with a new law. What will it mean for employers and flex workers if the legislative proposal is adopted? What new rules will you need to take into account?
The statutory minimum hourly wage changes every six months. What are the new amounts as of 1 July 2025?
If a contract has ended, there may still be obligations you want your contract partner to fulfil, such as warranties or confidentiality. You can regulate this through survival clauses. What should you look out for when including such clauses?
