Transition payment (transitievergoeding)

The transition payment (transitievergoeding) is the statutory severance an employee is entitled to when the employer terminates the employment or does not renew a fixed-term contract. It is due from the first day of employment, including during a probationary period, and it does not depend on the employee having found other work.

Legal basis

Article 7:673 of the Dutch Civil Code sets out both the entitlement and the calculation. The employee receives one third of a gross monthly salary for each full year of service, with the remaining part of a year calculated proportionally. As of 1 January 2026 the payment is capped at 102,000 euro gross, or at one gross annual salary where that is higher.

Gross monthly salary for this purpose is more than base pay: holiday allowance, a fixed thirteenth month, shift allowances and structural bonuses count towards it. Periods of illness or leave do not reduce the amount, because the calculation is based on what the employee would have earned.

When it is not owed

There is no entitlement where the employee has acted in a seriously culpable way, where the employee resigns without the employer being seriously culpable, where the employee has not yet reached the age of eighteen and worked no more than twelve hours a week, or where the employer has been declared bankrupt. An employee who reaches state pension age loses the entitlement for the period after that date.

Where it goes wrong

Two mistakes recur. The first is treating the transition payment as the ceiling in a negotiated exit. It is a statutory floor for a dismissal imposed by the employer; in a settlement agreement the parties are free to agree more, and a factor above one is common where the employer wants certainty. The second is the calculation base: employers often compute the payment on base salary alone, which understates it by roughly ten per cent once holiday allowance is included.

Costs the employer has incurred for outplacement or retraining can be deducted, but only with the employee’s written consent given in advance.