NederlandsWith the Balanced Labor Market Act (WAB), the government wants to bring more balance between flexible work and a permanent contract. Een of the changes is that every employee is entitled to a transition payment from the first working day.
Every employee is entitled to transition payment
Are you considering terminating, dissolving or not extending your employee's employment contract? From January 2020 you are obliged to pay a transition payment, regardless of how long the employee has been employed by you. Even if the agreement is terminated during the probationary period. This also applies to temporary workers.
Currently, as an employer, you are only obliged to pay a transition payment if the employment has lasted at least two years. Once the WAB comes into effect, this will change.
How do you calculate the new transition payment?
The calculation of the transition payment is simplified. The amount of the transition payment depends on the duration that the employee has been employed: a third monthly salary per full year of service. The increased transition payment for employees who have been employed for more than ten years will lapse.
Multiply the whole years of service by a third monthly salary. For the remaining duration of the employment contract and for employment contracts lasting less than one year, the transition payment is calculated pro rata. Use the following formula for this: (gross salary/gross monthly salary) x (1/3 gross monthly salary/12).
Compensation transition fee
SMEs (less than 25 employees) can request compensation for the transition payment if they terminate their company due to retirement, illness or death.
Even if you want to dismiss an employee who has been ill for two years or longer, you can request compensation from the UWV from 1 April 2020. The compensation scheme applies retroactively to all agreements that have ended from 1 July 2015.
Questions about the transition payment?
Do you have any questions about the transition payment or other changes to the WAB? Contact one of our branches in your area.