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Possible changes to transition payment

A number of changes are announced in the coalition agreement with regard to the transition payment. Below we consider the possible changes to the transition payment.

Immediate entitlement to the transition payment

The new cabinet proposes that the employee is entitled to a transition payment from the start of the employment contract. Now that is only after two years. For employees who have been employed for less than two years, the intention therefore means that they will be immediately entitled to a transition payment.

The purpose of this change is to prevent the employment contract from being terminated after 23 months (as we now often see in practice) solely to avoid payment of the transitional payment.

Possible changes to the structure of the transition payment

At the moment, the structure of the transition payment is as follows:

  • over the first ten years of the employment contract: 1/6e of the wages per month for each six-month period that the employment contract has lasted;
  • for each subsequent six-month period: 1/4e of the wages per month.

The coalition agreement includes the following changes to the structure of the transition payment:

  • for each six-month period of the employment contract: 1/6e of the wages per month.

The new cabinet therefore no longer wants to reward long-term employment with a higher transition payment. On the other hand, the coalition agreement states that the existing transitional arrangement for people over 50 will be maintained:

  • employees - who work for an employer with 25 or more employees - who are 50 years or older at the end of the employment contract and whose employment contract has lasted at least 10 years: 1/2e of the wages per month for each six-month period that the employee has been employed by the employer after reaching the age of 50.

This transitional arrangement currently has a term until January 1, 2020.

Training costs

Under certain conditions, training costs can be deducted from the transition payment. The new cabinet wants to expand this possibility. When the employer incurs training costs for an employee aimed at a other function within his company, these costs can, under certain conditions, be deducted from the transition payment.

Two parked bills are put through

The coalition partners want to continue the bill “compensation of the transition compensation after dismissal due to long-term disability”, which has been parked since the spring. If this bill is passed, employers - who have paid transition compensation since 1 July 2015 in the event of dismissal due to long-term disability of an employee - can receive compensation from the General Unemployment Fund (Awf). The uniform Awf premium will increase. Employers therefore jointly contribute to this. The advantage is that this will probably make the problem of 'dormant employment' a thing of the past.

The coalition partners also want to continue with the bill “no transitional compensation with a replacement collective labor agreement in the event of economic dismissal”. This bill creates the possibility to determine by collective labor agreement that employers do not have to pay transition compensation in the event of dismissal for business reasons. A requirement for this is that employees are entitled, on the basis of the collective labor agreement, to provisions consisting of measures to prevent and / or limit unemployment and / or reasonable financial compensation.

Other

The new cabinet wants to broaden the criteria for eligibility for the transitional payment bridging scheme for small employers. The current conditions of the transition payment bridging scheme are very strict. It is still unclear how these criteria will be broadened.

In addition, the new cabinet wants to create an opportunity to compensate employers - under certain conditions - for the transition payment if the employer in question terminates his company due to retirement or illness. The cabinet has come up with a proposal.