When Are You Entitled to Severance Pay in the Netherlands?

If your employment contract is terminated in the Netherlands, you may be entitled to severance pay (transitievergoeding). However, not every end of employment automatically gives you this right. In this article, you will find a comprehensive overview of when you are — and when you are not — entitled to severance pay under Dutch employment law. Understanding these rules is essential to protect your financial interests.

What is the transitievergoeding?

The transitievergoeding (statutory severance pay) is a compensation that your employer must pay when the employment contract is terminated at the employer's initiative or is not renewed. This compensation is regulated in Article 7:673 of the Dutch Civil Code (Burgerlijk Wetboek, BW) and was introduced on 1 July 2015 as part of the Work and Security Act (Wet werk en zekerheid).

The purpose of the transitievergoeding is twofold. First, it serves as compensation for the loss of your job. Second, it is intended to facilitate your transition to a new position — for example, by funding retraining, education or outplacement services. In practice, however, there is no obligation to actually spend the money on these purposes. You are free to use the compensation as you see fit.

Since 1 January 2020, the Balanced Labour Market Act (Wet arbeidsmarkt in balans, or WAB) changed the rules: you are entitled to severance pay from the very first day of employment, regardless of how long you have worked for your employer. Before 2020, you had to be employed for at least two years before any entitlement arose. This change significantly expanded the group of employees who qualify.

When you are entitled to severance pay

Under Article 7:673 BW, you are entitled to the transitievergoeding in the following situations:

1. Dismissal at the employer's initiative

If your employer terminates your employment contract, you are entitled to severance pay. This applies regardless of the route the employer uses:

• Dismissal via UWV: if your employer obtains a dismissal permit from the UWV (Employee Insurance Agency) due to economic reasons (bedrijfseconomische redenen) or long-term incapacity for work (langdurige arbeidsongeschiktheid), you are entitled to the transitievergoeding.
• Dismissal via the subdistrict court (kantonrechter): if the court dissolves your employment contract at the employer's request — for example, due to dysfunctioning, a disrupted working relationship, or frequent absence — you are entitled to severance pay. The court will determine the amount, which is at least the statutory transitievergoeding.
• Dismissal during the probationary period: this is an exception. If your employer terminates the employment contract during the probationary period (proeftijd), no severance pay is owed under Article 7:676 BW. The proeftijd termination falls outside the scope of Article 7:673 BW.

2. Non-renewal of a temporary contract

If you have a fixed-term contract (tijdelijk contract) and your employer decides not to renew it, you are entitled to severance pay. This applies to every non-renewal, regardless of how many contracts you have had or how long the total employment relationship has lasted. Even after a single contract of six months that is not renewed, your employer must pay the transitievergoeding.

Note that if you yourself choose not to renew the contract, the situation is different. In that case, the initiative does not lie with the employer and no entitlement arises — unless your decision not to renew is the result of seriously culpable conduct by your employer.

3. Court dissolution at your request due to employer fault

Under Article 7:671c BW, you can request the subdistrict court to dissolve your employment contract if your employer is at fault. If the court grants your request and finds that the employer has acted in a seriously culpable manner (ernstig verwijtbaar handelen), you are entitled to the transitievergoeding. In such cases, the court may even award additional compensation (the billijke vergoeding or fair compensation) on top of the statutory severance pay.

Examples of seriously culpable employer conduct include:

• Structural failure to provide a safe working environment
• Systematic discrimination or harassment that the employer fails to address
• Deliberately creating a situation to force you to resign
• Serious and prolonged failure to meet obligations under the employment contract
• Failure to comply with reintegration obligations during illness

4. Termination by mutual agreement due to employer conduct

If you resign because of seriously culpable conduct by your employer, you may still be entitled to severance pay. However, proving this is not straightforward. You would need to demonstrate that your resignation was directly caused by the employer's seriously culpable acts or omissions. In practice, it is usually better to request court dissolution (as described above) rather than resigning, because the burden of proof is then assessed by the court in a structured proceeding.

When you are not entitled to severance pay

There are several situations in which you have no right to the transitievergoeding:

1. Resignation on your own initiative

If you voluntarily resign, you are not entitled to severance pay. The reasoning is that the initiative to end the employment lies with you, not with the employer. The only exception is when your resignation is the result of seriously culpable conduct by your employer (as described above). In that case, you must be able to prove the causal connection between the employer's conduct and your decision to resign.

2. Summary dismissal for urgent cause (ontslag op staande voet)

If you are dismissed immediately for an urgent reason and the dismissal is valid, you are not entitled to the transitievergoeding. Urgent reasons for summary dismissal include theft, fraud, violence in the workplace, persistent refusal to perform duties, or other forms of seriously culpable conduct on your part. Under Article 7:673 paragraph 7 sub c BW, the right to severance pay lapses if the termination is the result of your own seriously culpable acts or omissions.

3. Employees under 18 working 12 hours per week or less

Under Article 7:673 paragraph 1 sub b BW, employees who are younger than 18 years old and who work an average of 12 hours or fewer per week are not entitled to the transitievergoeding. This exception is intended for typical side jobs held by minors, such as newspaper delivery or supermarket work. Once the employee turns 18 or exceeds the 12-hour threshold, normal eligibility rules apply.

4. Reaching the statutory retirement age (AOW-leeftijd)

If your employment contract ends because you reach the statutory retirement age (AOW-leeftijd), you are not entitled to severance pay under Article 7:673 paragraph 7 sub b BW. This applies when the employment contract contains a retirement clause (pensioenontslagbeding) or when the employer terminates the contract at or after the AOW age. The rationale is that you transition to your state pension and potentially occupational pension at this point.

5. Seriously culpable conduct on your part

If the termination of your employment is the result of your own seriously culpable conduct (ernstig verwijtbaar handelen of nalaten), the employer does not have to pay severance. This is a high threshold: regular dysfunction or a disagreement does not qualify. The employer must demonstrate that your actions or omissions are so serious that they amount to gross misconduct. Examples include structurally refusing to follow reasonable instructions despite repeated warnings, or intentionally causing damage to the employer's interests.

Note that the subdistrict court has discretion: even in cases of seriously culpable conduct by the employee, the court may award (partial) severance pay if not doing so would be unacceptable given the circumstances (Article 7:673 paragraph 8 BW).

6. Bankruptcy of the employer

If your employer is declared bankrupt, the curator (trustee in bankruptcy) will terminate your employment contract. Under Article 7:673c BW, no transitievergoeding is owed in this situation — this is a deliberate legislative choice to protect the bankruptcy estate. The claim can be filed as an unsecured claim in the bankruptcy proceedings, but in practice there is rarely sufficient estate to pay anything to unsecured creditors.

Special situations

Settlement agreement (vaststellingsovereenkomst)

When your employment ends through a settlement agreement, the transitievergoeding is not automatically owed. Instead, the parties negotiate a termination payment. In practice, the statutory severance pay amount is often used as a reference point, but the actual amount can be higher or lower. Many employers offer the statutory amount as a starting point, but this is not guaranteed — in situations where the employee's negotiating position is weak, the offer may be lower. Conversely, when the employer does not have strong legal grounds for dismissal, there may be significant room for negotiation.

Severance pay during illness

If you are dismissed after two years of illness via the UWV route, you are in principle entitled to the transitievergoeding. The general exceptions still apply — for example, if the employee has acted in a seriously culpable manner (such as structurally refusing reintegration without valid reason) or in case of the employer's bankruptcy. In the Xella ruling (2019), the Supreme Court held that an employer must in principle cooperate with terminating a sleeping employment contract, unless the employer has a legitimate interest in maintaining it — for example, a realistic prospect of the employee's recovery or concrete reintegration possibilities. Since 1 April 2020, employers can claim compensation for the severance pay from the UWV under the Compensation Scheme. Read more about severance pay during sick leave.

Partial dismissal and partial severance pay

If your working hours are permanently and substantially reduced, the Dutch Supreme Court (Hoge Raad) has ruled that you may be entitled to partial severance pay, proportional to the reduction in hours. In the Kolom ruling (HR 14 September 2018, ECLI:NL:HR:2018:1617), the Supreme Court used a guideline of at least 20% reduction, but this is not a hard statutory threshold — it is a criterion developed in case law that may be applied differently in exceptional circumstances. This can occur in situations such as partial disability or reorganisation.

Successive employment contracts

If you have had successive fixed-term contracts with the same employer, the total duration of employment is used to calculate the transitievergoeding. Interruptions of six months or less between contracts do not break the chain. This means that years of service under previous contracts count towards your severance pay, provided the gap between contracts was not more than six months.

Common misconceptions about severance pay eligibility

"I need to have worked for at least two years"

This is no longer true. Since 1 January 2020, you are entitled to severance pay from the very first day of employment. The old rule of a minimum of two years of service was abolished by the Balanced Labour Market Act (WAB). Many employees are still unaware of this change and do not claim severance pay when their short-term contract is not renewed.

"I am not entitled because I have a temporary contract"

This is incorrect. Employees on fixed-term contracts have the same right to severance pay as employees on permanent contracts, provided the non-renewal or termination is at the employer's initiative. If your temporary contract expires and is not renewed, you are entitled to the transitievergoeding.

"My employer offered me a settlement agreement, so I automatically get severance pay"

Not quite. In a settlement agreement, severance pay is a matter of negotiation. Your employer is not legally required to offer you at least the statutory amount, although in practice most employers use it as a reference point. Always have the proposed amount assessed by a lawyer to ensure you receive what you are entitled to.

"I was dismissed for underperformance, so I have no right to severance pay"

This is incorrect. Regular underperformance does not constitute seriously culpable conduct. If your employer dismisses you through the subdistrict court for dysfunctioning (disfunctioneren), you are still entitled to the full transitievergoeding. Only if the court concludes that the termination is entirely due to your own seriously culpable acts or omissions can the severance pay be denied — but this is a very high threshold.

"I have to spend the severance pay on retraining"

Although the transitievergoeding is intended to facilitate the transition to a new job, you are under no obligation to spend it on education or retraining. You are free to use the money however you wish.

How to claim your severance pay

In most cases, the employer pays the transitievergoeding automatically as part of the final settlement (eindafrekening). The payment is typically made together with your last salary, outstanding holiday pay, and accrued holiday allowance. However, this does not always happen without issues.

If your employer does not pay the severance pay, or pays less than the statutory amount, you must act within a strict time limit. Under Article 7:686a paragraph 4 sub b BW, you have three months from the end of the employment contract to submit a request to the subdistrict court for payment of the transitievergoeding. If you miss this deadline, your claim lapses permanently.

Before going to court, it is often advisable to first send a formal written demand to your employer, clearly stating the amount you are owed and the legal basis (Article 7:673 BW). In many cases, employers will comply after receiving a well-formulated demand letter, as they know the court will award the severance pay plus potentially the statutory interest and legal costs.

Frequently asked questions about severance pay eligibility

Am I entitled to severance pay if I am dismissed during my probationary period?

No. Dismissal during the probationary period (proeftijd) is an exception to the general rule. Under Article 7:676 BW, a probationary period termination does not give rise to a severance pay obligation. The right to severance pay from the first working day applies to regular dismissals, but the proeftijd is specifically excluded from the scope of Article 7:673 BW.

Do I receive severance pay if my temporary contract is not renewed?

Yes. If your employer decides not to renew your fixed-term contract, you are entitled to the transitievergoeding. This applies even if you have had only one temporary contract. The important factor is that the decision not to renew comes from the employer.

Am I entitled to severance pay if I resign because of my employer's behaviour?

Potentially, yes. If you resign due to seriously culpable conduct by your employer, you may be entitled to severance pay. However, the burden of proof is on you. It is generally advisable to request court dissolution rather than resigning, as this provides a more structured legal process.

What if my employer goes bankrupt?

Unfortunately, if your employer is declared bankrupt, you are not entitled to severance pay. The transitievergoeding is not a preferential claim in bankruptcy. You may be eligible for other forms of compensation through the UWV, such as payment of outstanding salary and holiday pay under the wages guarantee scheme (loongarantieregeling).

Can my employer avoid paying severance by claiming I was seriously at fault?

The threshold for denying severance pay on the grounds of seriously culpable conduct is very high. Ordinary underperformance, disagreements or even a single incident typically do not meet this standard. Your employer must demonstrate that your actions or omissions were so serious as to amount to gross misconduct. If you believe your employer is wrongly withholding severance pay on this basis, seek legal advice.

Am I entitled to severance pay after two years of illness?

Yes. If your employment is terminated after two years of illness via a UWV dismissal permit, you are fully entitled to the transitievergoeding. Your employer may be able to claim compensation for this payment from the UWV under the compensation scheme. Read more about severance pay during sick leave.