Ontslagvergoeding

The severance payment, also known as the transition payment since the introduction of the Work and Security Act, is a statutory entitlement owed by the employer to the employee upon dismissal. This payment compensates for the loss of income and the costs incurred by the employee in finding new employment.

The payment is significant in that it strengthens the employee's position and encourages employers to give careful consideration to dismissal. Its amount is calculated on the basis of the monthly salary and the length of service, subject to a statutory maximum.

In practice, the severance payment is frequently recorded in a settlement agreement, under which the parties may depart from the statutory provisions and agree on a higher or lower amount.