What is a transition payment and what am I entitled to?

A transition payment is a severance payment that your employer must pay you if they dismiss you. You are entitled to this from the first day of your employment contract. The payment is intended to help you find a new job.

Last checked: March 2026. Legal information is subject to change — always check the current legislation at wetten.nl.

What does the law say?

The transition payment is laid down in Dutch law. New rules have been in force since 2020, introduced via the Balanced Labour Market Act (WAB). The most important rules can be found in Article 7:673 of the Dutch Civil Code (check this article on wetten.nl for the most up-to-date version).

What exactly does the law say? If your employer terminates the employment relationship, they are obliged to pay you compensation. This also applies if you have a temporary contract that is not being renewed. Previously, you had to have been employed for two years first. That rule no longer applies. You start accruing the compensation from day one.

You calculate the amount of the severance pay as follows. You receive one-third of your monthly salary for each year worked. Special calculation rules apply to part-time workers and people with variable incomes. The government has made an official calculation tool available via rijksoverheid.nl, so that you can work out for yourself what you are entitled to.

There is also a maximum amount. In 2024, this was a maximum of €94,000 gross. This amount is reviewed each year. Do you earn more than €94,000 per year? Then a different calculation applies to the portion above this amount. Always check the current maximum amount on rijksoverheid.nl or wetten.nl.

The employer must pay the transition allowance within one month of the employment contract ending. If they fail to do so on time, they may be liable for statutory interest on the amount paid late.

When does this apply to you?

You are entitled to a transition payment in most situations where you lose your job involuntarily. Below you can read when it does and does not apply.

You are entitled to the allowance if:

Your employer dismisses you via the UWV or the subdistrict court.
Your fixed-term contract is not renewed on the employer’s initiative.
Your employer asks you to agree to dismissal via a so-called settlement agreement — but please note, below you can read about a common mistake regarding this point.
You resign yourself because your employer has acted in a seriously culpable manner. Examples include persistent bullying, unpaid wages or seriously hazardous working conditions.

You are not entitled to compensation if:

You resign voluntarily without the employer having acted in a seriously culpable manner.
You are dismissed due to serious culpable conduct on your part. Examples include theft or repeated failure to fulfil your obligations.
You reach state pension age and therefore leave employment.
You are under 18 years of age and work an average of less than 12 hours per week.

A concrete example: Suppose you have been working as a cashier on a one-year contract for three years. Your employer decides not to renew your contract due to cost-cutting measures. You are then entitled to a transition payment. You calculate this based on three years’ service. With a gross monthly wage of €2,500, this amounts to three times one-third of €2,500, i.e. €2,500 gross in total.

Did you work part-time or did you have a variable income? In that case, your average earnings over the past twelve months are used as the basis for calculation. Always use the government’s official calculation tool to work this out correctly.

Step-by-step guide — what can you do now?

Check whether you are entitled to the allowance. Read the scenarios above carefully. Not sure? Ask your question on Claim.Cafe.
Calculate the amount. Use the official calculation tool on rijksoverheid.nl. Have your monthly wage and start date to hand.
Check the details of your dismissal. Have you received a settlement agreement? Never sign it straight away. You always have a cooling-off period — you can revoke the agreement at least fourteen days after signing.
Request the transition payment in writing. Send your employer a letter or email if they do not pay the compensation voluntarily. Always keep a copy.
Check the payment deadline. Your employer must pay within one month of the end of your contract. Are they paying late? Then remind them of their obligation in writing.
Seek help if payment is refused. Is your employer refusing to pay? Contact a solicitor, your trade union or the Legal Advice Centre. You can also take the matter to the small claims court.
Keep an eye on the deadlines. You have three months to claim a transition payment in court after your employment has ended. Don’t wait too long.

Common mistakes

Signing a settlement agreement straight away. Many employers offer a settlement agreement in the event of dismissal by mutual consent. These sometimes stipulate a lower payment than is required by law. Always have the agreement checked before you sign.
Thinking you are not entitled to compensation if you are on a temporary contract. Since 2020, you have been accruing transition compensation from day one, even on temporary contracts. This is a persistent misconception.
Taking action too late. You have only three months to seek redress through the courts. Many people wait too long and thus lose their entitlement.
Forgetting to check whether your employer acted in a seriously culpable manner. If you resign yourself due to poor employer conduct, you may still be entitled to compensation. Always have this assessed by a professional.
Assuming the compensation is tax-free. The transition payment is taxed as income. You receive a gross amount. Bear in mind the tax liability.

Frequently asked questions

How much is my transition payment?

You will receive one-third of your gross monthly salary for each year worked. Have you worked for part of a year? Then you will also receive a proportionate amount for that period. The maximum amount is adjusted annually. Use the calculation tool on rijksoverheid.nl for an exact calculation.

Am I entitled to a transition payment if I resign?

Normally, no. If you resign, you are in principle not entitled to a transition payment. There is one exception: if your employer has acted in a seriously culpable manner. Examples include non-payment of wages, serious bullying or hazardous working conditions. Always have this assessed by a lawyer.

What if my employer refuses to pay the transition allowance?

First, send your employer a written reminder. If they do not respond or refuse, you can take the matter to the small claims court. You have three months from the end of your contract to do this. Seek help from a lawyer or your trade union in good time.

Does a temporary contract count towards the transition allowance?

Yes, definitely. Since 2020, you have been accruing the transition allowance from the first day of your contract. It does not matter whether you have a permanent or temporary contract. Even if your temporary contract is not renewed, you are entitled to the allowance.

Can my employer offset the transition payment against something else?

This is only permitted in limited cases. Your employer may deduct certain costs from the transition allowance, such as costs for training aimed at a different role outside the company. However, they cannot do this without good reason. They must inform you of this in writing in advance. See the Civil Code for the exact provisions regarding which costs may be offset.

Relevant legal provisions

Article 7:673 of the Civil Code — transition payment (check this article on wetten.nl for the most up-to-date version)
Article 7:673a of the Civil Code — supplementary rules on transition payments (check this article on wetten.nl for the most up-to-date version)
Article 7:686a of the Civil Code — limitation period for claims in the event of dismissal (check this article on wetten.nl for the most up-to-date version)

Transition compensation: what is it and what am I entitled to? | Claim.Cafe