Am I entitled to severance pay if I'm dismissed under Dutch law? And what's the difference between the transition payment and the severance payment? We'll explain when you're entitled to compensation and inform you about how much it can be.
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Since the introduction of the Wab in 2020, every employee who is involuntarily dismissed is entitled to severance pay. By 'involuntary' we mean the condition that the initiative to terminate or not renew your employment lies with your employer. A severance payment is a financial compensation that your employer pays to you. It does not matter whether you have (had) a contract for a fixed or indefinite period. Your severance package is made up of the statutory transition payment supplemented with other emoluments.
You are entitled to severance pay if your employer terminates your employment contract or does not extend your temporary contract. In other words: your employer initiates your dismissal. You are also entitled to severance pay if you resign or do not wish to extend your temporary employment contract due to seriously culpable actions or omissions by your employer. In the cases above you are entitled to the statutory transition compensation, possibly supplemented with other compensations.
The transition payment is a statutory compensation that must be paid by your employer in the event of involuntary dismissal. A severance payment may be higher as it includes all emoluments that you will ultimately receive upon dismissal.
The amount of your transition payment is calculated based on your monthly salary and the duration of your employment. The transition payment will be a maximum of € 102.000 in 2026, unless your annual salary is higher. Use the calculator below to calculate your transition compensation in 15 seconds.
Your severance payment often exceeds the height of your transition payment, because many employees are entitled to payment of unused vacation days or bonuses. In case your employer has behaved in a seriously culpable manner or your dismissal file is incomplete, a lawyer is often able to increase your severance payment. Your severance package can't be calculated with a calculator. Just have one of our lawyers check your dismissal proposal (settlement agreement).
The Dutch Tax Administration sees your severance pay as wages from work and therefore you are obliged to pay tax on it. However, there are options to reduce the taxed amount and even have your severance payment paid out tax-free.
Work from (former) employment is taxed in the Netherlands in Box 1. When paying out your gross severance payment, your employer will have to withhold wage tax and national insurance contributions in accordance with the normal rules. You will receive a net severance payment on your account. Because your severance payment is added to your income, you may even have to pay more tax than usual. Ouch!
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There are ways you can reduce the tax burden on your severance pay. If you don't apply them, the rules of our progressive tax system apply. The amount of your salary and your severance payment are summed up to determine which tax bracket you fall into. You can calculate the tax burden on your severance payment based on current tax rules and amounts from 2026. There is also a calculation example available.
Options to reduce the tax burden on your severance payment or use it tax-free (net):
Here you'll find more info about these tax options.
Have you just received a settlement agreement or are you willing to resign based on mutual consent? Have our labour lawyers perform a basic check to find out what's missing or should be improved. That doesn't cost you anything.
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The basic rule for qualifying for a transition payment (a statutory severance payment) is that you cannot be blameworthy. If your empoyer initiates the dismissal, you are probably entitled to a transition payment.
You are entitled to a transition payment if your fixed-term contract isn't extended, if you are dismissed via the UWV or the subdistrict court on valid grounds or if you resign following serious culpable conduct or negligence on part of your employer. You may even be eligible for fair compensation.
If you resign yourself, if you agree to dismissal by mutual consent or if you are to blame for your dismissal (due to culpable conduct or negligence), you are not entitled to a transition payment. With our help and a proper settlement agreement you could still succeed in obtaining a fair severance payment.
Most employees that are confronted with dismissal have the following questions about their transition or severance payment.
We are happy to inform you about all you need to know about your severance pay. You can call us free of charge. If you fill out the form below, we will call you back at an appropriate time.