If you dismiss an employee because they have been ill for more than two years, you usually pay a transition payment. For that payment you can, as an employer, apply for compensation from the UWV. You apply for the compensation within six months after you have paid the transition payment, and with a complete application the UWV decides within eight weeks. This article explains when you are entitled to compensation, which documents you need and how high the amount is.
Note: the compensation scheme is going to change. The government wants to abolish the scheme from 2027. What that means is explained in the article on the abolition of the transition payment compensation. Below we assume the rules as they apply at the time of writing, April 2026.
When are you entitled to compensation?
The compensation is intended for employers who part ways with an employee after a long period of illness and pay a transition payment for it. You qualify if these conditions are met:
- the employment contract has been ended because the employee has been ill for more than two years;
- the employee is still ill at the end of the contract;
- you have calculated the transition payment using the gross income and paid it out as a gross amount, with both the employee and the Tax Administration receiving their share.
The compensation also applies to a partial dismissal. In that case the contract hours must have decreased by at least 20% and that reduction must be expected to be permanent. Whether dismissal is allowed in your situation, and at what point, is explained in the article on dismissing a sick employee.
Within what deadline do you apply?
The deadline is tight, so put it in your diary right away. After you have paid the transition payment, you have to apply for the compensation within six months. If your application is complete, the UWV makes a decision within eight weeks. If the UWV needs extra information, it can take longer; you receive notice about that through the employer portal.
You can include the documents with the application straight away, but also supply them later through the same form. Some documents are always needed, others only in certain situations. What exactly is needed you can see in the form.
Which documents do you need?
You always include these documents. Make sure they are correct and complete, because missing documents can lead to lower compensation:
| Document | Explanation |
|---|---|
| Employment contract or start date | Proof of the employment contract or the start date; if the employee joined directly after an agency period, also add the agency contract |
| Proof of the end of the contract | Showing that and when the employment ended |
| Payslip before 1 year of illness | The payslip for the period before the date on which the employee had been ill for one year |
| Payslip after the ban on notice | The payslip for the period in which the ban on notice during illness was over |
| Transition payment calculation | The calculation of the payment the employee was entitled to on the end date of the ban on notice during illness |
| Proof of payment | That the full transition payment was paid, and on what date |
How high is the compensation?
Usually you get back the amount the employee was legally entitled to. You never get back more than that amount. In a number of situations the UWV pays out less than the statutory transition payment:
- you had to continue paying wages for longer than two years, for example due to a wage sanction from the UWV because you did not help the sick employee enough with reintegration;
- not all documents have been received;
- the amount you paid the employee was lower than the statutory transition payment.
Employer contributions and statutory interest are not reimbursed. The compensation therefore covers the statutory transition payment itself, and not the costs you incurred around it as an employer. If you want a fuller picture of what an employee on long-term sick leave costs you, read what a sick employee costs an organisation.
How does this relate to the second track?
The compensation only comes into play once a return really is no longer possible and you part ways. In the two years before that, everything is about reintegration: first with the original employer, and if that does not work through the second track with another employer. The more carefully that process runs, the smaller the chance of a wage sanction that later lowers your compensation. The substantiation of that whole process ties in with the transition payment in second-track reintegration.
The official rules
Care4Careers summarises the main points, but the source is the UWV. The current conditions and the application form are on the UWV page about the transition payment compensation for long-term incapacity. The scheme is in flux, and amounts and deadlines can change, so check the current state at the source before you submit an application.
Frequently asked questions
Within what deadline do I have to apply for the compensation? Within six months after you have paid the transition payment. With a complete application the UWV decides within eight weeks.
Can I also get compensation for partial dismissal? Yes, if the contract hours have decreased by at least 20% and that reduction is expected to be permanent.
Do I always get the full transition payment back? No. You get back the amount the employee was legally entitled to, and never more. With a wage sanction, missing documents or a lower amount paid, the compensation comes out lower. Contributions and interest are not reimbursed.
Is the scheme changing soon? Yes. The government wants to abolish the compensation from 2027. Read about it in the article on the abolition of the compensation scheme.
Help with the process and the conclusion?
A well-substantiated file prevents your compensation from being reduced later. Care4Careers guides employers through the entire second track and makes sure the file-building is right, from the first day of illness to the dismissal. See what second-track reintegration for employers can mean for your organisation, or discover the approach of a second-track reintegration programme.