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Transition compensation lower from 1 January 2020. Is your employer postponing dismissal to reduce costs?

The new labor law, the Balanced Labor Market Act (WAB), will come into effect on 1 January 2020. With this package of measures, the government wants to reduce the gap between flexible and permanent work. One of the components: an adjustment of the severance payment, also known as the transition payment. In many cases it will be lower than it is now. This makes it attractive for employers to postpone dismissal until 2020. What do we see happening? And can you do something about it? 

What exactly is the transition payment?

If you are fired, you are entitled to a transition payment. You now receive this statutory severance payment in most cases after two years of employment. The amount of the compensation? It depends on the gross monthly salary during your last contract, the length of your employment and your age:

  • 0 to 10 years of service: 1/6 gross monthly salary per six months
  • 10+ years of service: 1/4 gross monthly salary per six months
  • 10+ years of service and over 50: 1/2 gross monthly salary per six months

What will change on January 1?

From 1 January, you are entitled to a transition payment in the event of dismissal from your first working day. However, you always receive the same part of your gross monthly salary: 1/3 per full year of service, regardless of your age and the duration of your employment. As a result, the transition payment is in many cases lower.

Transitional arrangement

Have you been employed for more than 10 years or older than 50? Then it will cost your employer less to fire you from 2020. And the closer we get to January 1, the more attractive it becomes to postpone a dismissal. Because why fire someone now if it will only cost half in two months? There is a transitional arrangement to prevent all employers from waiting until 2020. In a few cases, the old calculation of the transition payment also applies to dismissals after 1 January:

  1. Your employer submitted the request for termination to the court before 1 January 2020.
  2. Your employer terminated your employment contract before 1 January 2020.
  3. Your employer will terminate your employment contract after 1 January 2020, but you already agreed to this in writing in 2019.
  4. Your employer submitted the application for dismissal to the UWV before 1 January 2020.

What do we see happening?

Our legal specialists have already noticed that employers assume the reduced transition payment when they negotiate a settlement agreement of an employment contract that ends after January 1, 2020. We obviously do not agree with this. Employers also sometimes seem to be pushing for a reorganization to fall under the 2020 social plan. Then we would like to check with you whether your employer is on the right track. Is your employer officially initiating the dismissal process for 2020? Then the transitional arrangement applies and you will receive the transition compensation that currently applies. If your employer does not take official steps to dismiss it, it will be more difficult.

De Unie is ready for you

Do you suspect that your employer wants to fire you? Then contact our legal specialists. They take the time to figure out your situation, think about what you can do best and help you start a conversation with your employer. If necessary, we can mediate or even litigate for you. Call or email our Service Center: 0345 851 963 or

Want to read more about the WAB? Then ask our whitepaper to!