Have you been off sick for more than two years, are you no longer receiving a salary, yet your employment contract is simply continuing? If so, you are most likely dealing with a dormant employment. In that situation, you have the right to request termination. And to claim a transition payment. You can read here exactly how that works and what to pay particular attention to in 2026.
What is a dormant employment
A dormant employment arises when an employee is still formally employed after 104 weeks of illness but is no longer performing any work and is no longer receiving a salary. The employment contract continues to exist officially, but in practice there is no longer any active employment relationship. Employers previously chose this arrangement deliberately to avoid having to pay the transition payment. However, since an important ruling by the Supreme Court, this is no longer permitted.
The Xella standard, your legal basis
On 8 November 2019, the Supreme Court ruled in the so-called Xella case (ECLI:NL:HR:2019:1734) that an employer is obliged, on the grounds of good employment practice within the meaning of Article 7:611 of the Dutch Civil Code, to agree to a proposal from a long-term sick employee to terminate the employment contract, with the award of the statutory transition payment. This is also referred to as the Xella standard.
There is one important exception: if the employer has a justified interest in continuing the employment relationship, such as a genuine prospect of recovery in the short term, the employer may justify a refusal. The fact that the employee is approaching pensionable age is expressly Not included in this exception.
If your employer still refuses to co-operate, the court can be called upon to compel co-operation, potentially supplemented by an order for costs against the employer.
How much is the settlement payment for a dormant employment?
The payment amount is calculated over the entire period of employment, including periods of incapacity for work. The Supreme Court has ruled that the calculation looks back to the point at which the entitlement to continued salary payment ceased, which is the day after the expiry of 104 weeks of incapacity for work. Transition payment that subsequently accrued during continued latent employment therefore does not count in full towards compensation via the UWV.
The maximum transitional payment in 2026 is €102,000 gross. If you earn more than that on an annual basis, a gross annual salary applies as the maximum. The payment is calculated on the basis of one third of a gross monthly salary per year of service.
Holiday entitlement during a dormant employment, an additional risk
There is an additional risk in 2026 that should not be underestimated. On 12 August 2025, the sub-district court in Gelderland (ECLI:NL:RBGEL:2025:7054) ruled that Article 7:634(1) of the Dutch Civil Code, which links the accrual of holiday entitlement to the payment of salary, is contrary to European law. The court established that employees continue to accrue holiday entitlement even during a period of inactive employment. Upon termination, those days must be paid out.
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Plan a conversationThis ruling has not yet been confirmed by higher courts and there are also judgments reaching the opposite conclusion. A sub-district court in Rotterdam has meanwhile announced that it will refer preliminary questions to the Supreme Court in order to obtain a definitive answer. As long as this uncertainty exists, it is sensible to take this into account when terminating a dormant employment.
Compensation scheme for employers: what is changing
Employers are able, subject to conditions, to reclaim from the UWV any transition payment paid upon dismissal due to long-term illness. There is a bill that would limit this compensation scheme to small employers. At present, however, the new rules have not yet come into force: the UWV confirmed in April 2026 that the intended implementation date of 1 July 2026 will not be met and that the new rules will not take effect in the near future. The intended date has since shifted to 1 January 2027, although this has not yet been formally confirmed.
For you as an employee, nothing changes in any event: your right to a transition payment is entirely separate from the question of whether your employer receives compensation for it.
How to go about it step by step
Do you suspect that your employment is dormant and do you wish to bring it to an end? Here are the practical steps:
- Check whether your employment is indeed dormant: you are formally employed but have not received a salary for more than 104 weeks.
- I request that you co-operate in terminating my employment contract by mutual consent and in paying the transition payment.
- Have the amount of your transition payment calculated on the basis of your full years of service and gross monthly salary, including fixed salary components such as holiday pay and fixed allowances.
- In the settlement agreement, also draw attention to any outstanding holiday entitlement, in light of the recent case law on this point.
- If your employer claims not to have a reasonable interest in continuing the contract yet still refuses to co-operate, consider applying for an interim injunction or bringing proceedings by way of petition before the sub-district court.
- Keep an eye on the time limit: transition payment accrued after the expiry of the 104-week period does not count towards compensation via the UWV, which may be relevant to your employer’s position.
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Frequently asked questions
Can my employer refuse to co-operate in terminating a dormant employment?
In principle, no. Under the Xella ruling (Supreme Court, 8 November 2019, ECLI:NL:HR:2019:1734), an employer is obliged to co-operate in terminating the employment if you request it. Only if the employer has a justified interest in continuing the employment relationship – for example, a genuine prospect of recovery in the short term – can the employer justify a refusal. If the employer still refuses without a valid reason, the sub-district court can be called upon.
How is the transition payment calculated for a dormant employment?
The payment is calculated over the entire period of employment, including the period of illness, but the amount is determined as at the day on which the obligation to continue paying salary ended, that is, after 104 weeks of illness. The maximum in 2026 is €102,000 gross or one gross annual salary if that is higher. The payment amounts to one third of a gross monthly salary per year of service, with fixed salary components such as holiday pay and fixed bonuses included in the calculation.
Do I lose my right to a transition payment if my employer no longer receives compensation from the UWV?
No. Your entitlement to a transition payment is entirely separate from the compensation scheme for employers. Whether your employer is reimbursed for that payment via the UWV is the employer's responsibility and has no bearing on your entitlement.
You accrue holiday entitlement during a period of dormant employment.
Under Dutch law (Article 7:634 of the Dutch Civil Code), the accrual of holiday entitlement is linked to the right to salary, which is absent in the case of a dormant employment relationship. However, the sub-district court in Gelderland ruled in August 2025 that this provision is contrary to European law and declined to apply it. This line of reasoning has not yet been definitively confirmed by higher courts; proceedings are underway in which preliminary questions are being referred to the Supreme Court. It is prudent to take this into account during termination negotiations.
What if I wish to terminate the employment contract myself but my employer is imposing unfavourable conditions?
An employer may not attach additional unfavourable conditions to co-operating in the termination of a dormant employment, such as a far-reaching confidentiality clause or unreasonable waiver provisions that limit your rights. If your employer nevertheless wishes to include such conditions, you can submit the request to the sub-district court, which can assess whether those conditions are justified. Always have a settlement agreement reviewed before you sign it.
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