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Transition Compensation upon Termination of Employment in Amsterdam: Calculation and Conditions

Transition compensation (Art. 7:673 of the Dutch Civil Code) in Amsterdam after two years of service: 1/3 of a monthly salary per year. Conditions, exceptions, and tips for claiming upon dismissal, including local information for the District Court of Amsterdam and Legal Counter.

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Transition Compensation upon Termination of Employment in Amsterdam: Calculation and Conditions

Since 2013, employees in Amsterdam who are dismissed are entitled to transition compensation (Art. 7:673 of the Dutch Civil Code), a severance payment after two years of service. This applies in cases of termination, dissolution, or non-renewal of a fixed-term contract, except in cases of culpable conduct. In Amsterdam’s vibrant labor market, with sectors such as tech, finance, and the creative industry, this is crucial for employees working in companies located in the Zuidas or Amsterdam-Noord.

Calculation Method

  • 1/3 of a monthly salary per year of service.
  • Pro rata for partial years.
  • Includes holiday allowance and fixed allowances.
    Maximum of €89,000 (2024) or one annual salary. This cap is often relevant for Amsterdam residents with high salaries in startups or multinational companies.

Conditions for Entitlement

  • Minimum of two years of service.
  • Employer’s initiative (except in settlement agreements).
  • No entitlement in case of bankruptcy (unemployment benefits compensate), though this is rare in Amsterdam’s dynamic economy due to government support.

Exceptions and Appeals

For small employers (fewer than 25 employees), the subdistrict court regulation applies from 2020; in Amsterdam, you may turn to the District Court of Amsterdam. The employee may file a claim within six months of termination with the subdistrict court in Amsterdam-Centrum.

Practical Steps for Amsterdam

Calculate using the UWV tool or consult the free legal consultation hour at the Legal Counter Amsterdam (by appointment in Oost or West). Negotiate a higher fair compensation (Art. 7:681 of the Dutch Civil Code) in a settlement agreement, often successful with Amsterdam law firms. Register with the UWV Werkbedrijf Amsterdam for unemployment benefit supplements.

Employers in Amsterdam: budget accordingly due to high real estate and wage costs. Employees: file your claim in a timely manner via the local trade union FNV Amsterdam. Transition compensation does not accumulate with other compensations but can be combined with unemployment benefits. (248 words)

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