Fair compensation (billijke vergoeding) is an additional award a court can make on top of the transition payment where the dismissal is the result of seriously culpable conduct by the employer. Unlike the transition payment it is not calculated by formula, and there is no statutory cap.
Legal basis
The compensation appears in several places in the Dutch Civil Code. Article 7:681 covers dismissal given without the required permission or in breach of a prohibition. Article 7:682 covers cases where reinstatement is not ordered, and Article 7:683 applies on appeal. Under Article 7:671b and 7:671c a court dissolving the contract may award it where the employer has acted in a seriously culpable way, and an employee may ask the court to dissolve the contract on the same basis.
How the amount is set
The leading authority is the Supreme Court decision in New Hairstyle of 30 June 2017. The court held that the award should compensate the employee for the consequences of the culpable conduct, and that the consequences of the dismissal itself may be taken into account. Relevant factors include how long the employment would probably have continued, the income the employee will realistically miss, whether the employee has found other work, the extent of the employer’s culpability and the size of the transition payment already due.
Awards vary widely. Symbolic sums of a few thousand euro are common where the culpability is procedural, while awards running into six figures occur where the employer engineered the departure of a long-serving employee.
What counts as seriously culpable
The threshold is high and deliberately so. Examples accepted in practice include failing to comply with reintegration obligations during illness, discrimination, deliberately creating an untenable working relationship, and a false or fabricated dismissal ground. A dismissal that is merely badly handled, or a reorganisation that turns out to be unnecessary, does not reach the threshold.
Where it goes wrong
Employees frequently claim fair compensation as a matter of course in dissolution proceedings. Courts reject most of those claims, and an unfounded claim weakens the rest of the case. The argument works when the culpable conduct is documented: written instructions, an unanswered reintegration request, a paper trail showing the ground was constructed after the decision.
Related terms
See also transition payment (transitievergoeding) and summary dismissal.
Our employment lawyers in the Netherlands assess whether a case reaches the seriously culpable threshold before it is brought.
