The transition compensation will change as of 1 January 2020. The higher compensation for older employees will be cancelled, as will be the more favourable arrangement for small companies. Employees will always be entitled to 1/3 of the monthly salary per year of service, regardless of the duration of the employment contract.
The transition compensation will change as of 1 January 2020. The higher compensation for older employees will be cancelled, as will be the more favourable arrangement for small companies. In addition, the alternative provision in the collective labour agreement is limited to dismissal due to economic circumstances. Also, the requirement that this provision must be equivalent will lapse. The higher transition compensation for employment contracts of more than 10 years will also lapse.
The arrangement whereby employees aged 50 and over will receive a higher transition compensation will lapse. They will then be entitled, just like other employees, to 1/6 of the monthly salary per half year of employment regardless of their age and duration of employment.
Currently, employees aged 50 and over with an employment contract of more than 10 years are entitled to a higher transition compensation. This only applies to employees as from the age of 50. During this period, they are entitled to 1/2 of the monthly salary per half year of employment. This transitional arrangement gives them the opportunity to prepare for a lower compensation than before the introduction of the Work and Security Act (Wwz). This arrangement does not apply to small businesses.
The scheme whereby enterprises with less than 25 employees may pay a lower transition compensation will lapse. Now, they only have to pay transition compensation for the employment as from 1 May 2013. This transitional arrangement only applies to dismissal due to the poor financial situation of the company. The scheme for older employees does not apply either.
Small businesses that have to dismiss employees due to economic circumstances will therefore have to take this time limit into account in the case of long-term employees.
If the entrepreneur is bound by a collective agreement, it is possible to include a provision into the collective agreement instead of the transition compensation. The requirement that this provision must be equivalent will lapse as from 1 January 2020. This arrangement also only applies to dismissals for economic circumstances.
This arrangement can be used in collective agreements that take effect 1 January 2020 or afterwards. The requirement of equivalence continues to apply to current collective agreements.
As from 1 January 2020 the entitlement to the transition allowance will always be 1/3 of the monthly salary per year of service, regardless of the duration of the employment contract. The higher transition compensation as from the 10th year of service will lapse. Also, employees will be entitled to transition compensation from the first day of the employment, even in the event of dismissal during the probationary period.
In most cases it will not be possible to wait with a dismissal. Waiting to dismiss employees means that the issues are less urgent so that there is less reason for the dismissal of an employee.
As from 1 January 2020, there will also be the possibility for dismissing an employee due to a combination of reasons. However, it is not clear yet how this will work out in practice. It seems possible, for example, that more often than not a reasonable fee will have to be paid in addition to the transition compensation.
Whether it is possible to wait with a dismissal is a complex matter that will have to be assessed on a case-by-case basis. We will be happy to advise you on this.
Would you like to know what the changes in the transition compensation will mean for your business? Are you looking for advice on dismissal and severance pay? Or do you have any other questions concerning employment law? Please contact us:
On 28 May 2019, the Dutch Senate approved the bill on the Labour Market in Balance Act. This Act will be effective as of 1 January 2020. What are the six main changes?
The UBO register, the Labour Market in Balance Act, the obligation to report also non-cash transactions in the art world and many more regulations will change in 2020. Read on to be up to date of the most important changes for you and your company.
Statutory directors enjoy less protection against dismissal, but there must still be reasonable grounds for the dismissal. Otherwise, the employer must pay fair compensation. This can be substantial, as a recent ruling has shown. Why was the employer required to pay this compensation?
The European AI Act requires employers to ensure that employees have sufficient knowledge of AI systems. This can be achieved through training, but also through an AI policy tailored to the company. What should you include in such a policy? What role does the works council play in the implementation of the AI policy?
Reinier W.L. Russell, LL.M. has published an article on The benefits of a works council for entrepreneurs in the “Off the record” section of Primerus Weekly on March 3, 2026. Below you will find the text of this article.
Employees who are underperforming may be dismissed. However, they must first be given the opportunity to improve their performance through a performance improvement plan (PIP). What requirements must such a plan meet?
