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.
The 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 €98,000 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 aanzegging en transitievergoeding), it includes:
- The fixed gross monthly salary (base salary).
- The holiday allowance (8%), expressed as a monthly equivalent (8/108 × monthly salary).
- Fixed bonus components paid at least once per year - for example, a fixed annual bonus or a fixed year-end payment.
- Fixed shift allowances or other regular fixed emoluments.
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 fixed bonuses; (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).
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).