Vertrekpremie
severance payment
A severance payment is a financial compensation paid by an employer to an employee upon termination of the employment relationship, often as compensation for the loss of the position.
A severance payment, also known as a dismissal indemnity or golden handshake, is a lump-sum award made by the employer upon termination of the employment contract. It may arise under a settlement agreement, in connection with a reorganisation or pursuant to a court order, and is designed to mitigate the financial consequences of dismissal.
The payment is significant in that it strengthens the employee’s bargaining position and may help to avoid proceedings before the UWV or the cantonal court. Since the entry into force of the Work and Security Act in 2015, the statutory transition payment has constituted the baseline entitlement, although the parties remain free to agree a higher amount.
In practice, the quantum is determined by factors such as age, length of service, remuneration and the reason for termination. The severance payment is frequently structured on a tax-efficient basis through a stamrecht BV or a bank savings product.
“After prolonged negotiations, the employee agreed to the termination of his employment contract in exchange for a severance payment equivalent to four months' salary.”
Need legal advice?
Schedule a free consultation with one of our specialists