How to calculate your transition payment in the Netherlands
The transition payment (transitievergoeding) is the statutory severance payment every employee in the Netherlands is entitled to when employment is terminated at the initiative of the employer or on the employer's seriously culpable conduct. The formula is established in Article 7:673 of the Dutch Civil Code and is straightforward in principle - but employers frequently make errors in the calculation that cost employees thousands of euros. Checking the calculation yourself, or having an employment lawyer verify it, is always worthwhile.
Free toolTransition payment calculatorThe statutory severance on dismissal or non-renewal, based on salary, holiday pay and bonus.Calculate the paymentThe formula is: 1/3 monthly salary × number of full years of employment + pro-rated amount for any remaining period. Since 1 January 2020, the accrual is uniform from day one of employment - the previous higher accrual rate for longer-serving employees was abolished. There is no maximum number of years and no cap on the total amount (though the transition payment is capped at €102,000 gross in 2026, or one annual salary if that is higher).
What counts as 'monthly salary'?
The monthly salary for the transition payment calculation is not just the base salary. Under the Transition Payment Decree (Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding), it includes:
- The fixed gross monthly salary (base salary).
- The holiday allowance (8%), expressed as a monthly amount (8% × monthly salary).
- A fixed year-end payment or 13th month, divided by 12.
- Overtime pay and shift allowances over the last 12 months, divided by 12.
Common employer errors in the Netherlands
The most common employer errors in calculating the transition payment are: (1) omitting the holiday allowance from the base; (2) failing to include bonuses averaged over three calendar years; (3) incorrectly calculating the number of completed months; and (4) applying the pre-2020 formula for part of the employment period. If you believe your employer has underpaid the transition payment, you have three months from the end of employment to institute proceedings before the kantonrechter. An employment lawyer can verify the calculation and recover the shortfall.
Under Article 7:673(4) of the Dutch Civil Code, consecutive employment contracts between the same parties interrupted by no more than six months are counted as one continuous period; contracts with different employers who are reasonably considered each other successors in respect of the work performed are also aggregated, regardless of whether the new employer had knowledge of the employee qualities. Training and outplacement costs incurred by the employer during the employment may, under conditions set by Royal Decree, be deducted from the transition payment (Article 7:673(6) of the Dutch Civil Code). The transition payment is not due if the employment ends as a result of the employee seriously culpable conduct (Article 7:673(7)(c) BW), though the court may nonetheless award a full or partial transition payment if withholding it would be unacceptable on grounds of reasonableness (Article 7:673(8) of the Dutch Civil Code).
Overview per wage component
What counts as "wage" is not set out in the Dutch Civil Code itself: Article 7:673(10) leaves this to the Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding (Decree on the wage concept for the notice compensation and the transition payment). The Regeling looncomponenten en arbeidsduur (Regulation on wage components and working hours) designates which fixed and variable wage components count.
| Wage component | Counts? | Calculation | Legal basis |
|---|---|---|---|
| Gross base salary with fixed working hours | Yes | Hourly wage times the agreed working hours per month | Art. 2(1) Besluit loonbegrip |
| Salary with no or varying working hours (on-call, zero-hours and min-max contract) | Yes | Hourly wage times the average number of hours worked per month in the twelve months before the end, or over the whole term if that was shorter; periods of leave, strike and illness do not count | Art. 2(1) Besluit loonbegrip; art. 2 Regeling |
| Commission and piece wages | Yes | What was owed in the twelve months before the end, divided by twelve (pro rata for a shorter term) | Art. 2(3) and (4) Besluit loonbegrip; art. 3 Regeling |
| Holiday allowance | Yes | The allowance to which there would be entitlement within twelve months if the employment continued, divided by twelve | Art. 3(1)(a) Besluit loonbegrip |
| Fixed year-end payment or 13th month | Yes, if the payment is fixed | As with the holiday allowance: divided by twelve | Art. 3(1)(a) Besluit loonbegrip |
| Overtime pay and shift allowance | Yes, to the extent agreed | What was owed in the twelve months before the end, divided by twelve | Art. 3(1)(b) Besluit loonbegrip; art. 4 Regeling |
| Bonuses, profit shares and a variable year-end payment | Yes, to the extent agreed | What was owed in the three calendar years before the year of the end, divided by 36; years without a payment count; pro rata for a shorter term | Art. 3(1)(c) and (2) Besluit loonbegrip; art. 5 Regeling |
| Other allowances, travel expenses, expense allowances, a lease car, the employer's pension contribution | No | Not designated as a wage component | Art. 4 and 5 Regeling (designation) |
The Regulation expressly designates the fixed wage components (overtime pay and shift allowances) and the variable wage components (bonuses, profit shares and year-end payments). An allowance that does not fall under those descriptions does not count. Whether a particular allowance, for example an allowance for irregular hours, qualifies as a shift allowance depends on the agreement and the nature of the work.
Fixed or variable: the year-end payment
The year-end payment appears twice in the rules, and the difference matters. A fixed year-end payment, such as a 13th month that the employee receives unconditionally every year, is treated like the holiday allowance: the payment to which the employee would be entitled within twelve months, divided by twelve (article 3(1)(a) Besluit loonbegrip). A year-end payment whose amount depends on the employee's performance or the results of the business is a variable wage component (article 1(c) Besluit loonbegrip and article 5 Regeling). It counts over the three calendar years before the year in which the employment ends, divided by 36.
The difference can be large. If an employee received no variable year-end payment in two of the three calendar years and did receive one in the third year, that one payment counts for one third. A fixed 13th month counts in full.
Varying hours, absence and commission
If no fixed working hours were agreed, or they vary, the average number of hours worked per month in the twelve months before the end counts. The Regulation disregards periods in which the employee was on leave, on strike or ill (article 2(1) Regeling looncomponenten en arbeidsduur). If a total of 30 days or more falls away, each period of 30 days is replaced by a calendar month without absence immediately preceding the reference period (paragraph 2), but not from before the start of the employment contract that ends (paragraph 3).
The same rules apply to commission and piece wages (article 3 Regeling). If a fixed salary is supplemented by commission, both count: the fixed part according to the agreed working hours, the commission as an average over twelve months.
In the transition payment calculator you enter varying hours, absence and commission per month through the extended calculation below the salary field. The calculator applies the rules on absence and, for a min-max contract, calculates with at least the agreed minimum.
Calculation examples
Both examples have been checked with the calculation engine of the calculator; it rounds each wage component to the cent and then works with the rounded monthly wage.
Example 1: salary with all types of wage components
An employee was employed from 1 March 2016 to 28 February 2026 inclusive: exactly ten years. The gross monthly salary is €3,500, the holiday allowance 8%, there is a fixed year-end payment of €1,750 per year, €2,400 in overtime and shift allowance was owed in the last twelve months, and the bonuses were €1,800 (2023), €0 (2024) and €3,600 (2025).
| Component | Calculation | Per month |
|---|---|---|
| Gross monthly salary | €3,500.00 | |
| Holiday allowance | 8% of €3,500 | €280.00 |
| Fixed year-end payment | €1,750 / 12 | €145.83 |
| Overtime and shift allowance | €2,400 / 12 | €200.00 |
| Bonuses | (€1,800 + €0 + €3,600) / 36 | €150.00 |
| Monthly wage | €4,275.83 |
Transition payment: 10 × €4,275.83 / 3 = €14,252.77. Without the wage components, with the base salary only, the result would be €11,666.67.
Example 2: on-call worker with one month of illness
An on-call worker was employed from 1 July 2020 to 30 June 2026 inclusive, with an hourly wage of €18. In the twelve months before the end, the employee worked 100 hours every month, except in December 2025: the employee was ill for that whole month (31 days). In June 2025, the month before the reference period, the employee worked 160 hours.
- December 2025 does not count, because the employee was ill (article 2(1) Regeling).
- The absence is 31 days, so 30 days or more: June 2025 takes its place (paragraph 2).
- Average: (11 × 100 + 160) / 12 = 105 hours per month; monthly wage 105 × €18 = €1,890.
- Transition payment: 6 × €1,890 / 3 = €3,780.
Had the employee been ill in February 2026 (28 days), the threshold of 30 days would not have been reached. February then still falls away, but no earlier month is added: the average is 1,100 / 11 = 100 hours, the monthly wage €1,800 and the transition payment €3,600. For short fixed-term contracts, see transition payment on fixed-term contracts; for illness, see transition payment and illness.
Key legal sources
- Article 7:673 of the Dutch Civil Code - sets the statutory formula for calculating the transition payment
- Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding (articles 1 to 4)
- Regeling looncomponenten en arbeidsduur (articles 2 to 5)