Transition fee and settlement agreement in The Netherlands



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Our Dutch law firm in Amsterdam provides legal advice on settlement agreements, dismissal and transition fee (allowance). A settlement agreement is regulated by law in Section 7:900 of the Dutch Civil Code. As a law firm in Amsterdam, we review your settlement agreement. Our lawyers employment law check your settlement agreement or termination agreement in case of dismissal (dismissal with consent), for example after 2 years of illness, in case of a conflict or business economic reasons (such as reorganisation and redundancy situations).

Call our employment lawyers: 0031 20 – 522 1999 

Only with a settlement agreement or dismissal letter by mutual consent (dismissal agreement) that meets the requirements of the UWV is there a right to (continued) WW benefit and the employee is not culpably unemployed.

Checking your settlement agreement in Amsterdam

As an Amsterdam law firm specialising in settlement agreements and transition fees, we legally check the agreement (vso) on all points. This is possible with all types of employment contracts, such as part-time, a fixed term contract or a 0-hour contract. Our Amsterdam employment law lawyers also negotiate on the conditions of dismissal:

  • termination date of employment
  • transition fee
  • exemption from work
  • post-contractual terms (such as relationship clause and non-competition clause)
  • reimbursement of the legal lawyer’s fees
  • reimbursement of outstanding vacation days and leave hours
  • bonus and thirteenth month
  • certificate
  • fictitious term of notice
  • relationship clause
  • privacy
  • final discharge
  • severance pay

Transition allowance in a separation agreement

An important part of the agreement is the transition allowance, a form of severance pay. This compensation in the event of dismissal by mutual consent is laid down by law, and is applicable if an employee has been employed. Although the transition allowance is not mandatory in a settlement agreement, this is often the starting point, and is often linked to the statutory regulation on dismissal.

Amount of Dutch transition allowance

As of 1 January 2020, you are entitled to a transition compensation in the event of dismissal as of the first day of your employment contract. The calculation of the transition allowance is as follows:

You will receive 1/3 monthly salary per whole year of service as from your first working day;
The transition allowance for the remaining part of the employment contract is calculated according to the formula: (gross salary received over the remaining part of the employment contract / gross monthly salary) x (1/3 gross monthly salary /12 )
This formula is also used to calculate the transition allowance if the employment contract has lasted less than one year.

Subdistrict court compensation (formula) in the termination agreement

In exceptional cases, the subdistrict court compensation is still used in the termination agreement, for example in a social plan in the event of reorganisation. Which compensation is agreed depends greatly on the circumstances, e.g. whether the employee is to blame.

The transitional allowance as compensation in the event of dismissal in a settlement agreement

The granting of a compensation is not mandatory when concluding a termination agreement. After all, a settlement agreement or termination agreement is a contract to which the freedom of contract applies. It concerns the termination of the employment contract by mutual consent by means of a termination agreement.

Termination agreement and severance pay

It is customary for a dismissal agreement to provide for compensation, because the employer who files a request to the UWV or the subdistrict court to have the employment contract terminated must, in most cases, also pay a severance payment. Because of the costs and duration of proceedings, a termination agreement is more advantageous. Moreover, other arrangements can be made together with the lawyer.

Settlement agreement and illness

A sick employee may not simply agree to a settlement or termination agreement during incapacity for work. If he voluntarily signs for dismissal, the Dutch ZW (and WW) benefit will be refused, unless the work disability lasts longer than two years, or is related to the employment relationship. This is possible after two years of illness (104 weeks), unless the UWV imposes a wage sanction on the employer.

Settlement agreement and temporary contract

Even in the case of a temporary contract without a notice clause, entering into a settlement agreement with the UWV may pose a problem for the WW benefit.

Checking the legal advice costs of the settlement agreement

The lawyer’s costs (legal aid costs) for checking a settlement agreement are almost always reimbursed by the employer.

Dutch law firm for settlement agreement and transition fee in Amsterdam attorney Netherlands

Contact a Dutch law firm for settlement agreement and transition fee in Amsterdam

As a law firm in Amsterdam, we specialise in providing legal advice on the settlement agreement or termination agreement, including the transition fee. For (free) legal advice on your settlement agreement or checking your termination agreement, please contact our experienced employment and dismissal lawyer in Amsterdam, P.Chr. Snijders: 020-5221999.



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