Under the current law, the level of any severance pay still partly depends on the dismissal route: UWV or the court.

Under the new law, these separate dismissal routes (UWV or the court) have been prescribed as mandatory.

Under the new law, the severance pay (transitional compensation) is due when an employee will have been employed for at least 2 years. As a general rule, only in case of a termination at the initiative of the employer.

There is a right to compensation when the employment agreement is terminated by the court, in case of a termination after following the UWV procedure, or when an employee agrees to a termination. This is also the case when a flexible employee is not offered an equivalent new contract.

The compensation is not payable in case of serious imputable acts by the employee.

The level of the transitional compensation will depend on the duration of the employment. The maximum compensation is €75,000, or one annual salary, if this is higher.

In case of an employment that has lasted for at least two years, the first ten years, a transitional compensation accrues of 1/6th monthly salary per half year of service. Subsequently, 1/4th monthly salary per half year of service will accrue.

For employees who are older than 50 years of age, a transitional regime will apply until 2020; this differs in a positive sense from the scheme. Also for employers with less than 25 employees, a transitional arrangement is in place.

For further information on the impact of these legislative changes, please feel free to contact me.