Changes in employment law with effect from 1 January 2020: transition payment

 From 1 January 2020 employees will have the right to a transition payment from the first day of employment. At this time the right only arises after employment of at least 2 years.


In addition, the current schemes will lapse on the basis of which an increased accrual of the transition payment applies (i) from the 10th year of service (ii) and for employees of 50 years of age and older. This means that from 1 January 2020 the transition payment will be the same for all employees. The transition payment will be equal to 1/3rd monthly salary per year of service worked. The calculation will also no longer be rounded off (downwards) to half years of service, but the calculation will take place pro rata. 

The current system and the changes from 1 January 2020 are once again represented diagrammatically below:

  The current system The system from 1 January 2020
First 10 years of service 1/6th monthly salary per half year 1/3rd monthly salary per year
After the 10th year of service 1/4th monthly salary per half year 1/3rd monthly salary per year
Employees ≥ 50 years 1/2nd monthly salary per half year 1/3rd monthly salary per year


Transitional law

The new scheme will have immediate effect from 1 January 2020. This will also apply for employment contracts that already commenced before that date. The amount of the transition payment will be determined at the time that it is owed.

Exceptions:  (i) if dismissal proceedings are started by the Employment Insurance Agency or the court prior to 1 January 2020, (ii) if the employment contract has (before 1 January 2020) already been terminated and the employee has agreed to the termination.


Transition payment and probationary period

If an employee is dismissed during the probationary period on the initiative of the employer, the transition payment will also be owed.


Transition payment and a temporary employment contract

A transition payment will be owed even if the temporary employment contract terminates by operation of law due to reliance on the agency clause (in Dutch: “uitzendbeding”). It must be considered that this relates to an employment contract terminated by operation of law and is not continued on the initiative of the employer. If the employment agency chooses to enter into a new consecutive employment contract and to make the temporary employee available to another hirer, the employment contract will in that case be continued after the termination by operation of law and the employment agency will not owe a transition payment.


Transition payment and seasonal workers

There is a deviant regulation with regard to seasonal workers. The employer, who has entered, consecutively and prior to the end of the employment contract, into a new employment contract (which is terminable in the interim), that commences with an interval not exceeding half a year, will not owe any transition payment. It must be considered that the employee is in that case offered the security of a new employment contract that will commence within six months.

If an employer decides at any time to no longer offer an employment contract, the various employment contracts will be added up for the determination of the amount of the transition payment.


Transitional arrangement for the small employer with a bad financial situation will lapse with effect from 1 January 2020

At this time the transitional arrangement for small employers (

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