Severance pay/redundancy compensation
Are you an international, highly skilled migrant or expat currently working in The Netherlands? If so, it’s important to know your rights and entitlements when it comes to severance pay in the event of a dismissal.
Dismissal can have a significant impact on your life, both personally and financially. That’s why it’s important to understand the statutory and potential entitlements you may have to ensure you receive the best possible outcome.
In The Netherlands, if your employer initiates the termination of your employment contract, you are generally entitled to a statutory severance payment, also known as a transition payment. The amount of this payment is calculated based on a formula that takes into account your length of service and gross monthly salary. For example, you are entitled to one-third of a month’s salary for each year of service. This payment is capped at €89,000 gross or an annual income if this is higher than €89,000 gross, as of 2023.
In some circumstances, you may be entitled to a higher severance payment. For example, if the dismissal is based on a combination of certain grounds for dismissal that do not separately form a reason for dismissal, but together do, the transition payment can be multiplied by a (maximum) factor of 1.5. Additionally, in special circumstances, an employee may be entitled to a higher compensation referred to as “fair compensation”. This may include situations where the employer deliberately disrupts the employment relationship.
It’s important to note that wage tax will be withheld on a severance payment, and the 30% ruling does not apply to a severance amount. In the context of a settlement agreement, it’s essential to look carefully at which payment elements the 30% scheme can be applied to in order to maximize your tax benefit.
At our partnered law firm, we understand the complexities and nuances of Dutch employment law, especially for expats and highly skilled migrants. Experienced employment lawyers specialize in providing legal advice and support to internationals facing dismissal and are here to help you navigate the process.
If you need advice on all elements relevant to a settlement agreement, including severance pay, we are here to help. Contact us today to learn more about our services and how we can assist you in securing the best possible outcome in your dismissal case.
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