Fair compensation (billijke vergoeding) is the sum a Dutch court may award an employee on top of the statutory transition payment when the employer has acted in a seriously culpable way. Unlike the transition payment, it follows no formula: the court sets the amount by weighing the actual consequences of the employer’s conduct. Courts award it sparingly, but once that threshold is crossed the exposure can run to tens of thousands of euros.
This article sets out the statutory routes to fair compensation, the conduct that meets the threshold, the way courts calculate the amount, and what recent rulings show about the gap between what is claimed and what is actually awarded.
When can a court award fair compensation
Fair compensation is the exception, not the rule. An employee who is dismissed is in principle entitled to the transition payment; fair compensation comes on top of it and only where the employer is seriously culpable. The Dutch Civil Code opens four routes, and which one applies depends entirely on how the employment ended.
Under Article 7:681 DCC the employee can go to court when the employer terminated without the employee’s written consent and without permission from the UWV, or in breach of a prohibition on dismissal. The employee may then ask for the termination to be set aside or, in the alternative, for fair compensation. This is the route that applies after a summary dismissal that turns out not to hold.
Article 7:682 DCC covers the situation in which the employer did obtain permission from the UWV and then gave notice. The employee can ask the court to restore the employment contract or, instead, to award fair compensation where the termination is the result of seriously culpable conduct or omission by the employer. It is therefore about termination after the UWV dismissal procedure, not about dissolution by the subdistrict court.
Article 7:671b DCC governs dissolution at the employer’s request. If the subdistrict court dissolves the contract but the dissolution is the result of the employer’s seriously culpable conduct, it may award fair compensation alongside the transition payment. Article 7:671c DCC mirrors this for the employee who asks for dissolution because of circumstances attributable to the employer, which is the classic route where a working relationship has been made untenable from the employer’s side.
What counts as seriously culpable conduct
The law does not define seriously culpable conduct exhaustively; the concept is shaped by case law and by the standard of good employment practice in Article 7:611 DCC. The parliamentary history describes it as a narrow opening, and courts treat it that way. An employer that makes an ordinary mistake, builds a weak file or loses a dissolution case has not by that fact alone acted in a seriously culpable manner.
What does cross the line is conduct that touches the employee’s fundamental position. Recurring examples are taking a far-reaching decision such as suspension, transfer or dismissal without first hearing the employee; engineering a breakdown in the relationship in order to force an exit; ignoring the duty to explore redeployment or to cooperate in reintegration; making unfounded accusations of theft or fraud that follow the employee into the labour market; allowing discrimination or an unsafe working environment to persist; and structurally failing to pay wages or to allow the employee to do the agreed work.
The common thread is not the outcome but the process. Where the file shows that the employer knew what was required and chose otherwise, the threshold is far more easily met than where the employer tried and fell short.
How the court arrives at an amount
There is no formula. In the New Hairstyle ruling of 30 June 2017 (ECLI:NL:HR:2017:1187) the Supreme Court held that the amount of the fair compensation must be determined by reference to all the circumstances of the case, and that the consequences of the unlawful termination for the employee may be taken into account. The compensation is not punitive, but the seriousness of the employer’s conduct is part of what makes an amount fair.
In practice the court works from an estimate of how long the employment would probably have lasted if the employer had acted properly. That estimate drives everything else: the income the employee misses over that period, the pension accrual lost over the same period, and any non-material harm such as damage to reputation or health. Against that, the court sets off what the employee actually earns or receives. The employee carries the burden of substantiating each element, and a claim built on assertion rather than documents rarely survives.
What benefits and new income do to the calculation
A persistent misconception is that fair compensation is a bonus on top of everything else. It is not. Courts assess the loss actually suffered, so unemployment benefit received over the hypothetical remaining term is deducted from the missed salary, and so is income from a new job. Earnings from secondary employment or freelance work are set off as well, insofar as they can reasonably be attributed to the period after the dismissal.
The practical effect is that fair compensation bridges a gap rather than replacing a salary. An employee who finds comparable work quickly may end up with a modest award even where the employer’s conduct was plainly culpable, while an employee close to retirement with poor labour market prospects may end up with a substantial one on identical facts.
What recent rulings show
Three published decisions illustrate how differently the same threshold can play out.
Transfer and reintegration handled badly
In a decision of 31 July 2025 the District Court of Zeeland-West-Brabant (ECLI:NL:RBZWB:2025:5717) awarded 75,000 euro gross in fair compensation. The employer had moved a long-term sick employee to another role without properly discussing the alternatives, pressed for a meeting against medical advice, and skipped a constructive reintegration conversation before demanding that she resume work. The court also ordered payment of outstanding wages with the statutory increase and interest.
Serious culpability, modest award
On 23 April 2024 the Court of Appeal of The Hague (ECLI:NL:GHDHA:2024:655) found that an employer had failed extremely seriously in its core obligations: it had not paid the correct wages, had refused to let the employee work, and had disregarded court orders. Even so, the fair compensation came to only 3,800 euro gross, because the employee had contributed to the breakdown and the loss that could be attributed to the employer was limited. A finding of serious culpability is the gateway to fair compensation; it does not by itself produce a large sum.
A large claim cut down
In a decision of 8 December 2025 the District Court of Midden-Nederland (ECLI:NL:RBMNE:2025:6708) dissolved the contract of a senior employee who had been suspended and investigated without proper care. The employee claimed more than 600,000 euro. The court accepted the serious culpability but awarded 75,000 euro in fair compensation, alongside the transition payment and an outstanding bonus, because not all of the claimed loss could be traced to the employer’s conduct. It is a useful measure of how critically courts test the substantiation of damage.
How employers keep the risk down
Almost every award of fair compensation can be traced back to a process failure that was avoidable. The first safeguard is a file that exists before the decision rather than after it: appraisals, warnings and, where performance is the issue, a genuine improvement plan. Our article on building a dismissal file for underperformance sets out what a court expects to see.
The second is to hear the employee before taking any far-reaching step and to record what was said. The third is to investigate redeployment seriously and to document that investigation, including the vacancies that were considered and rejected. The fourth is to take advice while the situation is still reversible; once a suspension has been announced or an accusation has been made in writing, the room to correct course narrows quickly. Where the relationship is beyond repair, a negotiated exit is usually cheaper and more predictable than litigation, and the choice between a settlement agreement and a UWV procedure is worth making deliberately rather than by default.
Frequently asked questions about fair compensation
What impact does violating the right to be heard have on compensation?
Significant. Courts often consider this seriously culpable conduct and are more inclined to award higher compensation, especially if a proper process could have led to a less damaging outcome.
How exactly does the court calculate the amount?
There is no formula. Courts estimate the hypothetical duration of employment, calculate net income loss (accounting for benefits and new income), assess pension loss, and may include non-material damage.
Can reputational damage increase compensation?
Yes, provided it is substantiated with concrete evidence such as reduced job opportunities, rejected applications, or negative references.
How do unemployment benefits affect the calculation?
They are deducted as income. Fair compensation bridges the gap between hypothetical salary and actual income, plus other attributable damage.
Does the employee’s conduct matter?
Yes. If the employee substantially contributed to the situation (e.g. serious misconduct or refusal to cooperate with reintegration), compensation may be reduced or even denied.
How does the court estimate the expected duration of employment?
Based on all circumstances, including age, performance, reorganisation plans, contract type, and the likelihood of lawful termination.
Can secondary or freelance income be offset?
Yes, insofar as it can reasonably be attributed to the unemployment period following dismissal.
May employers request privacy-sensitive information?
Only if relevant to damage assessment and subject to safeguards such as limited disclosure and confidentiality.
How do the transition payment and fair compensation relate?
The transition payment is fixed and compensates for transition to new employment; fair compensation is variable and addresses seriously culpable conduct. They may be awarded cumulatively.
Is settlement advisable?
Often yes. A settlement agreement with clear terms (neutral reference, outplacement, confidentiality) can limit reputational damage and reduce litigation risks for both parties.
What this means for your dismissal file
Fair compensation is a real financial risk for employers who handle a dismissal carelessly, and a real remedy for employees whose employer crossed a line. In both positions the outcome is decided by the file: what was said, what was recorded, what was offered and what the loss actually is. The employment lawyers at Law & More assess dismissal files for employers and employees, advise on the prospects of a fair compensation claim or defence, and conduct the proceedings where a settlement is not available. Please contact us if you would like your situation reviewed.
