Right to Transition Compensation in Amsterdam
The right to transition compensation is a fundamental aspect of Dutch employment law, providing protection for employees in Amsterdam upon dismissal. This compensation covers lost income and supports the transition to new employment, which is particularly valuable in a dynamic city like Amsterdam with its diverse job market. Employers are legally obligated to provide this under specific conditions. This article explores the legal framework, calculation methods, and applications, with attention to local resources such as the Amsterdam Legal Helpdesk (Juridisch Loket Amsterdam).
Legal Basis of the Right to Transition Compensation
The transition compensation is governed by the Dutch Civil Code (BW), specifically in Article 7:673 BW, under Book 7, Title 10, Section 10.2, which covers dismissal procedures. Introduced through the Wet Werk en Zekerheid (Employment and Security Act, WWZ) on January 1, 2012, and fully effective since July 1, 2015 for ongoing contracts, it replaced the old severance pay. The law aims to facilitate a smooth transition to alternative employment, relevant for Amsterdammers in sectors such as tech, finance, and creative industries.
The law guarantees employees with at least two years of continuous service a compensation upon dismissal, unless the dismissal is attributable to the employee (e.g., due to serious misconduct or voluntary resignation). This minimum can be expanded by collective labor agreements (CAOs) but never reduced. For advice on your situation in Amsterdam, contact the Amsterdam Legal Helpdesk.
Conditions for the Right to Transition Compensation
Automatic entitlement to transition compensation does not always apply. Key criteria include:
- Length of service: At least two consecutive years with one employer in Amsterdam or elsewhere. Shorter periods do not qualify unless through successive contracts.
- Reason for dismissal: Not solely the employee’s fault, such as in cases of misconduct without prior attempts at reintegration or voluntary resignation.
- Contract type and age: Applies to indefinite and fixed-term contracts; for expiring flexible contracts without notice periods, only if the employer violated chain rules.
- No offsetting: The compensation cannot be deducted from other obligations, such as non-compete clauses, without explicit agreement.
Note: In cases of bankruptcy or suspension of payments, the UWV (Dutch Employee Insurance Agency) pays the transition compensation (Article 7:673, paragraph 7 BW), which may occur in Amsterdam’s vibrant economy with its startup scene.
Calculating Transition Compensation
The compensation is based on the daily wage, multiplied by a factor per year of service. The steps are:
- Daily wage: Average daily income over the last three months, including vacation pay and variable components, but excluding overtime.
- Under 50 years: One-third of the monthly salary per year worked.
- 50 years or older: Half of the monthly salary per year worked.
- Cap: €89,000 in 2023, or the annual salary if lower.
Use the UWV calculator for precise results. This article builds on our overview Transition Compensation Upon Dismissal – Calculation and Rights, with practical tips for Amsterdammers.
| Years of Service | Compensation per Year (Under 50) | Compensation per Year (50+) |
|---|---|---|
| 1–2 years | 1/3 monthly salary | 1/3 monthly salary |
| 3–10 years | 1/3 per year | 1/3 until 50, then 1/2 |
| More than 10 years | 1/3 per year | 1/2 per year after 50 |
Rights and Obligations Regarding Transition Compensation
Employees in Amsterdam are entitled to receive the compensation within one month after dismissal, or in agreed installments. It can be exchanged for outplacement services or a settlement agreement, but only with mutual consent. Employers must clearly explain the calculation; employees contribute to transition plans, such as in cases of long-term illness.
In case of disputes, you can file a claim with the Amsterdam District Court—the statute of limitations is two months. The compensation does not affect unemployment benefits (WW) and can be combined with them. For free legal advice, visit the Amsterdam Legal Helpdesk.
Practical Examples of Transition Compensation Rights
Consider Anna, who worked five years at an Amsterdam marketing agency earning €3,000 gross per month. Her daily wage is €111 (based on 27 days). Upon economic dismissal, she receives 5 × (1/3 × €3,000) = €5,000, ideal for job applications in Amsterdam’s thriving job market.
Bert, 52, with 15 years of service at a Zuidas finance company earning €4,000 monthly: First 10 years: 10 × 1/3 × €4,000 = €13,333. Last 5 years: 5 × 1/2 × €4,000 = €10,000. Total: €23,333. No entitlement in case of voluntary resignation. For flexible workers in Amsterdam, chain contracts count after two years.
Frequently Asked Questions About Transition Compensation
Am I entitled to transition compensation if I resign voluntarily?
No, unless there is a compelling reason, such as unpaid wages. Exception: If the employer fails to meet obligations—consult the Amsterdam Legal Helpdesk.
What if my employer goes bankrupt?
The UWV will pay the compensation. In Amsterdam, with many SMEs, this is relevant; submit a claim via uwv.nl for quick processing.