As an employer, in many cases, you are required to pay a transition payment upon dismissal. What many employers do not realise is that, under strict conditions, you may deduct certain costs from that amount. Read below how to calculate the payment correctly and when a deduction is permitted.
How to calculate the transition payment as an employer
Before considering any deductions, you need to know what you owe. The statutory formula is straightforward: an employee is entitled to one third of a gross monthly salary for each full year of service. Months and days worked beyond a complete year are counted on a pro-rata basis. Every single day counts.
In 2026, the statutory cap will be €102,000 gross. If an employee earns more than €102,000 per year, the cap is one gross annual salary. This maximum is indexed annually in line with contractual wage developments.
When calculating the gross monthly salary, more than just the basic salary is taken into account. Consider also:
- Holiday pay (8%)
- A fixed end-of-year bonus or thirteenth month (converted to a monthly amount)
- Structural supplements such as allowances for irregular hours or fixed overtime pay
- An average variable bonus, provided it is structural in nature
Don't get caught out: an incorrectly calculated monthly salary can easily lead to underpayment, which may have legal consequences. If you're unsure of the correct basis, it's advisable to seek advice. For more background on how the payment is structured and what rights apply, visit our page Transition Payment.
Two types of costs you can claim
The law recognises two categories of costs that an employer may, provided all conditions are met, deduct from the transition payment. This is governed by the Regulation on the Conditions for Deducting Costs from the Transition Payment (based on Article 7:673(6) of the Dutch Civil Code).
Transition costs are costs incurred to prevent or shorten the employee’s period of unemployment. Examples include outplacement support or a job-to-job programme funded by you, the employer.
Employability costs are training costs incurred to enhance the employee’s employability. Two further requirements apply here: the costs must be aimed at enhancing employability outside your organisation (or in a different role within your own company), and the costs must have been incurred within the five years preceding the date on which the transition payment becomes due.
Please note this important distinction: costs for training that is mandatory under law or a collective agreement are not eligible for the deduction. You are already legally obliged to provide such training free of charge. Only non-mandatory training aimed at improving broader employability or preparing for a different role is eligible.
The conditions for deduction are strict
You cannot simply deduct costs from the transition payment without meeting the requirements. Several cumulative conditions apply, including:
- The employee must give prior written consent to the deduction; ideally, include this in the employment contract or terms and conditions of employment.
- The employee must be given insight into the costs incurred.
- The costs must not exceed the transition payment itself.
- The costs must be verifiable and properly documented.
- For employability costs: the training must not have been directed at the employee’s current role.
- Where agreements have been made with trade unions or a works council under a CLA, the requirement for individual written consent no longer applies.
In practice, things regularly go wrong here: costs have not been specified in advance, have not been recorded in writing in a timely manner, or relate to training that benefits the employee solely in their current role. Such costs are simply not deductible.
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Plan a conversationPayment in instalments when the payment places too great a burden
If paying the transition payment in full would have unacceptable consequences for the running of the business, the law provides a way out: under certain conditions, you may pay the amount in instalments, spread over a maximum of six months. This affords some financial breathing space in certain situations, but does not relieve you of the obligation to pay.
Compensation scheme for long-term illness to be abolished in 2027
As an employer, you currently have another way to recoup costs: the compensation scheme via the UWV (Employee Insurance Agency). If you dismiss an employee who has been off sick long-term after two years, you can still claim back the transition payment you have paid from the UWV. This scheme has been in place since 1 April 2020 and was designed to put an end to so-called dormant employment contracts.
However, this is set to change. The government has submitted a legislative proposal to abolish the compensation scheme entirely for all employers with effect from 1 January 2027. The current scheme remains in force until that date, but the proposal still needs to pass through both Houses of Parliament. As an employer, it is wise to map out the files of long-term sick employees in good time and, where necessary, take action before the possible reference date.
Practical points to consider during the transition:
- Identify now which employees are approaching the 104-week threshold.
- Calculate the potential transition payment per employee and factor this into your financial planning.
- Consult an employment lawyer on whether termination before 1 January 2027 is advisable in your specific situation.
- Keep track of the parliamentary progress of the legislative proposal; the definitive date of entry into force has not yet been confirmed.
Why Labour Lawyer Eindhoven
As an employer in Eindhoven or the Brabant region, you cannot afford to make costly mistakes when calculating or deducting costs from the transition payment upon dismissal. At Arbeidsjurist Eindhoven, we offer practical guidance: from accurate calculations to the correct recording of training costs and a clear strategy regarding the compensation scheme. Get in touch for a no-obligation consultation and we will look at your situation together.
Frequently asked questions
What costs may I as an employer deduct from the transition payment?
You can deduct two types of costs: ‘transition costs’ (such as outplacement or a job-to-job programme) and ‘employability costs’ (training aimed at broader deployability or a different role). Mandatory training under statute or a CLA is explicitly excluded. Strict conditions apply to any deduction, including the employee's prior written consent.
How do I calculate the transition payment as an employer in 2026?
The formula is: one third of a gross monthly salary for each full year of service, with remaining months and days counted on a pro-rata basis. The gross monthly salary also includes fixed components such as holiday allowance, a thirteenth month and structural supplements. In 2026, the maximum is €102,000 gross, or one gross annual salary if that is higher.
Can I, as an employer, pay the transition payment in instalments?
This is permitted under certain conditions. If paying the full transition payment in one go would have unacceptable consequences for the running of the business, you may spread the payment over a maximum of six months. This does not, however, release you from the obligation to pay.
As an employer, can I claim compensation from the UWV upon dismissal following long-term illness?
Until 1 January 2027 (subject to parliamentary approval), you can claim back the transition payment from the UWV where an employee is dismissed after two years of illness. The government intends to abolish this compensation scheme entirely for all employers from that date. If you have employees approaching the 104-week threshold, it is advisable to act in good time.
What happens if I, as an employer, pay the transition payment late?
If you are obliged to pay the transition payment but fail to do so within one month of the end of the employment, you will owe statutory interest on the outstanding amount. In addition, the employee may submit a petition to the subdistrict court within three months of the end of the employment to enforce payment.
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.
