What is the transition payment and when are you entitled to it?

A transition payment is the statutory compensation that an employer pays when terminating or not continuing employment at the employer’s initiative. The allowance helps employees make the switch to new work and is calculated on the basis of (part of) the monthly salary per year worked.

When are you entitled to a transition payment?

You are entitled to a transition payment if:

• The employer cancels with permission from the UWV
• The subdistrict court terminates the employment relationship
• A temporary contract is not renewed by the employer
• You terminate or request termination yourself due to serious culpable actions on the part of the employer

You are not entitled to a transition payment if:

• The dismissal is your fault (serious culpable action)
• You have reached the state pension age
• You were under 18 and worked an average of less than 12 hours per week
• The employer is bankrupt or has a suspension of payments (with a few exceptions)

Not sure about your situation? See the detailed explanation of when you are entitled to a transition payment.

How is the transition payment calculated?

The amount of compensation depends on the length of employment and the monthly salary. You will find more calculation examples and factors in the article on the amount of the transition payment.

Formula: 1/3 gross monthly salary per full year of service, plus a proportional share for remaining months.

The monthly salary includes:

• The fixed gross monthly salary
• Vacation pay
• Fixed thirteenth month or year-end bonus
• Structural surcharges
• Average structural variable remuneration (such as overtime or bonus)

Not included: expenses, company car and the employer’s share of the pension contribution.

The maximum transition payment in 2026 is €102,000 gross (or, whichever is higher, one gross annual salary).

Example calculation

An employee with a gross monthly salary of €3,200 and an employment contract of 3 years and 6 months receives:

• 3 years × (1/3 × 3,200) = €3,200
• 6 months × (1/3 × 3,200 × 0.5) = €533

Total indication: €3,733 gross (depending on rounding and wage components).

What length of service counts?

• Successive temporary contracts add up (interruption ≤ 6 months)
• Length of service in case of subsequent employment or transfer of business often counts
• Periods before the age of 18 when less than 12 hours a week were worked do not count

Read more about subsequent employership and what it means for how your length of service is built up.

Can costs be deducted from the transition payment?

Yes, but only under strict conditions and with the written consent of the employee.

Examples of costs that can be deducted:

• Employability costs: training courses that increase employee employability
• Transition costs: costs that prevent or reduce unemployment, such as an outplacement process

You can read more about the legal rules surrounding this settlement in transition payment and tax.

Deadlines: take timely action

• Does the employer not pay the compensation (in full)? Within 3 months of the end of the employment, file a request with the subdistrict court.
• Do you want to challenge the dismissal yourself (for example, in case of summary dismissal)? The term is usually 2 months.

Don’t wait: get timely legal advice and monitor the due dates.

Use your transition payment smartly

Many employees use (part of) their transition payment for guidance towards other work.
With professional support, you can accelerate your reorientation, make better choices and reduce the period without appropriate work.

Therefore, consider:

• Outplacement: assistance with dismissal and finding new work
• Outplacement process: structured guidance from orientation to a new job

In case of dismissal after long-term illness, the second-track programme plays a role alongside the transition payment.

Want to know where you stand? You can calculate the amount of your transition payment with us.