Have you received a settlement agreement and want to know what you can expect financially? The statutory redundancy payment is often the first figure you look at. However, the situation with a settlement agreement is slightly different from a formal dismissal procedure — and that actually works in your favour if you know how it works.
The legal basis for a statutory redundancy payment
The statutory redundancy payment is governed by Section 7:673 of the Dutch Civil Code. The calculation is straightforward: you receive one third of your gross monthly salary for each full year of service. Periods shorter than a full year are included on a pro-rata basis. Following the introduction of the Labour Market in Balance Act (WAB) in 2020, you accrue entitlement to a redundancy payment from your very first working day — even if you are dismissed during your probationary period.
The statutory maximum in 2026 is €102,000 gross. If your annual earnings exceed this amount, your gross annual salary serves as the cap. This maximum is indexed annually in line with contractual wage developments.
What exactly counts towards the monthly salary
Many employers calculate using only the basic salary, but this is too narrow. The basis for calculation is broader than you might think. The following components are generally included:
- Holiday pay — on a salary of €3,500, this quickly adds around €280 extra per month to the base, which makes a considerable difference over a longer period
- Fixed allowances — such as a structural shift allowance or an irregular hours supplement
- A fixed thirteenth month — if this is agreed contractually, it must also be included in the calculation
- Commission or bonus — provided it is structural in nature and not dependent on annual performance
Has your employer presented a figure lower than you expected? Always check whether all these components have been included. A forgotten item can easily cost you hundreds or even thousands of pounds.
Redundancy pay within a settlement agreement is not automatically mandated.
This is an important point: in the case of formal dismissal via the UWV (Dutch Employee Insurance Agency) or the subdistrict court, you have a statutory right to the redundancy payment. With a settlement agreement, the position is different. Strictly speaking, you have no automatic statutory right to a redundancy payment under a settlement agreement. You and your employer agree on a payment together, and it does not necessarily have to equal the statutory amount — it may also be higher.
In practical terms, this means two things: your employer can, in principle, propose a lower amount, but you have every opportunity to negotiate a higher severance payment. The Settlement agreement is in most cases a starting point for negotiation, not the final word.
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Plan a conversationWhen you can negotiate more than the statutory formula
The redundancy payment is the statutory minimum, but it certainly does not set the ceiling in a settlement agreement. There are situations in which a higher payment is realistic:
- You have a long service record and the dismissal comes suddenly or unexpectedly
- The grounds for dismissal are questionable or legally weak
- Your employer wants a quick resolution and has an interest in reaching an amicable settlement.
- There is a dispute in which the employer bears some responsibility
- The employer made procedural errors during the dismissal process.
In such cases, the statutory redundancy payment as an opening offer is actually on the low side. An employment law solicitor can assess how much room there is in your specific situation.
Common mistakes in the calculation
In practice, errors frequently occur in the calculation an employer provides with a settlement agreement. Watch out for these common sources of mistakes:
- Holiday pay has not been added to the calculation base
- Fixed allowances or supplements for irregular hours have been omitted.
- The start date of employment is incorrect, for example following a transfer of undertaking or successive employment.
- Part-time situations where the calculation is too low due to incorrect application of the part-time factor
- The amount is presented without any breakdown or explanation
Don't forget: once you sign the settlement agreement, the amount is final. Adjusting it afterwards is virtually impossible.
Gross is not what you receive
The redundancy payment is always calculated as a gross amount. Your employer deducts income tax before the payment reaches your account. Would you like to reduce the tax burden? There are options for handling this smartly, such as using the payment for outplacement services or training, or making use of your annual tax allowance. Choices of this kind require careful preparation – it is worth seeking advice on this well in advance.
Why Labour Lawyer Eindhoven
At Arbeidsjurist Eindhoven, we help employees in Eindhoven and the Brabant region to understand what their settlement agreement is truly worth. We check whether the redundancy payment has been calculated correctly, identify missing components and assess whether there is scope for a better arrangement. Are you uncertain about the amount your employer has mentioned, or do you simply want to be sure you are not leaving money on the table? Get in touch with us without obligation – we are happy to think things through with you.
Frequently asked questions
Am I automatically entitled to a redundancy payment in a settlement agreement?
No, in a settlement agreement you do not automatically have a statutory right to a redundancy payment. Unlike dismissal via the UWV or the subdistrict court, in a settlement agreement you agree on a payment together with your employer. That payment may equal the statutory redundancy payment, but it can also be higher or lower. It is advisable to seek advice before you sign.
The maximum statutory redundancy payment in 2026 is €540, but this is subject to periodic review.
In 2026, the statutory maximum redundancy payment is €102,000 gross. If you earn more than €102,000 per year, your gross annual salary serves as the cap. This amount is indexed annually in line with contractual wage developments.
Which salary components count towards the redundancy pay calculation?
In addition to your basic salary, holiday pay, fixed allowances (such as shift allowances or irregular hours supplements) and a contractually agreed thirteenth month all count towards the calculation base. Employers frequently omit these items in a settlement agreement, resulting in a figure that is too low. Always check the breakdown carefully.
Yes, you can negotiate more than the statutory redundancy payment in a settlement agreement.
Yes, absolutely. The redundancy payment is the statutory minimum, but there is no statutory maximum on the payment in a settlement agreement. In many cases there is room to negotiate, particularly if the grounds for dismissal are questionable, the period of service was long, or the employer has an interest in a swift and amicable settlement.
What should I check if my employer states an amount for the redundancy payment in the settlement agreement?
Always check that holiday pay and fixed allowances have been included, that the correct start date has been used (including in cases of successive employment), that all years of service have been counted in full, and that the amount is accompanied by a clear breakdown. If you sign without checking, the amount is final and virtually impossible to alter afterwards.
We're happy to help you brainstorm ideas. For advice tailored to your specific situation, we'd be happy to sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
