Redundancy Pay in Eindhoven: What's the Difference with the Transition Payment?

The difference between a severance payment and a transition payment

If you are facing dismissal and wondering whether you are entitled to a severance payment, a transition payment, or both — these terms are used interchangeably in practice, but they do not mean the same thing. Once you understand the difference, you will know exactly what you can expect as an employee in Eindhoven and when there may be more on offer than your employer is proposing.

A severance payment and a transition payment are not the same thing

The transition payment is a statutory payment that your employer must make upon dismissal. The basis is set out in Article 7:673 of the Dutch Civil Code and the amount is fixed by law: for each full year of service you accrue one third of a monthly salary. The severance payment is a broader concept. It is the total amount you receive upon dismissal — the transition payment may form part of this, but it can also include additional elements.

In short: every transition payment is a severance payment, but not every severance payment consists solely of a transition payment. That distinction matters when you want to know whether your employer is making you a fair offer.

What the transition payment means in 2026

The calculation of the transition payment is straightforward: you receive one third of a gross monthly salary for each full year worked. If you have worked for five years, that amounts to just over one and a half months' salary. The statutory maximum in 2026 is €102,000 gross. If your annual salary exceeds that amount, your gross annual salary serves as the cap.

Important to note: you accrue the transition payment from your very first working day. Whether you have a temporary contract, a permanent contract, or a zero-hours contract — upon dismissal at the employer's initiative you are in principle entitled to this payment. The right lapses only in cases of serious culpable conduct on your part as an employee.

When a severance payment is higher than the transition payment

The transition payment is a statutory minimum. Your actual severance payment may be higher in various situations:

• Settlement agreement: in the case of dismissal by mutual consent you negotiate freely. There is no statutory right to the transition payment in this situation, but in practice an employer will still offer this amount — and sometimes there is scope for more.
• Billijke vergoeding: if the subdistrict court rules that your employer acted in a seriously culpable manner, it may award a fair compensation payment on top of the transition payment. There is no statutory maximum on this additional amount.
• Unused holiday days and emoluments: payment of accrued holiday days, outstanding bonuses or other employment benefits count towards your total severance payment.
• Sociaal plan: in the event of a reorganisation, a social plan may apply with different arrangements regarding the level of the payment.
• Cao-afspraken: some collective labour agreements contain supplementary arrangements, although in the case of dismissal on business-economic grounds these have partly been replaced by other provisions.

What does this mean in practice for you as an employee in Eindhoven

In the Eindhoven and Brabant labour market — from manufacturing to tech and healthcare — employees are regularly offered a settlement agreement. This almost always includes a payment, but it is far from always well substantiated or complete. Nevertheless, many people sign quickly, while in reality there is scope for a higher severance payment.

This is particularly true if your employer has an incomplete dismissal file, if you have a long period of service, or if the reason for dismissal is not entirely clear. An employment lawyer can then quickly assess whether the offer is realistic or whether more can be obtained.

Practical points to consider with a severance payment:

• Always check whether the calculated transition payment is correct based on your full period of service and monthly salary.
• Check whether all fixed allowances and holiday pay have been included in the gross monthly salary.
• Find out whether a social plan applies in the case of collective dismissal or a reorganisation.
• Be alert to an excessively short cooling-off period: after signing a settlement agreement you have fourteen days in which to reverse your decision.
• Do not be caught off guard by the tax implications; the severance payment is taxed as income from employment, which may push you into a higher tax bracket.

When should you engage an employment lawyer

Not every dismissal situation is the same. With a straightforward and correct offer it is sometimes sufficient to check the calculation yourself. However, as soon as you have doubts about the level of the payment, the reason for dismissal does not add up, or your employer is putting pressure on you to sign quickly, it is wise to seek expert advice. An employment lawyer looks not only at the transition payment, but at the total severance payment and at the scope for negotiation in your specific situation. Read more about your rights on the page about transition payment.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven we know the local labour market and understand how employers in the region handle dismissal and payments. Together with you, we look at what your employer is offering, whether the calculation is correct and whether there is room for a better arrangement. Contact us without obligation — we will help you quickly and personally.

Frequently asked questions

What is the difference between a severance payment and a transition payment?

The transition payment is the statutory payment you receive upon dismissal at your employer's initiative: one third of a gross monthly salary for each full year of service. The severance payment is a broader concept: the total amount you receive upon dismissal, including the transition payment and any additional elements such as paid-out holiday days, bonuses, or a fair compensation award. The transition payment is therefore one component of the severance payment.

What is the maximum transition payment in 2026?

In 2026, the statutory maximum transition payment is €102,000 gross. If your annual salary exceeds €102,000, your gross annual salary serves as the maximum. This amount is indexed annually on the basis of contractual wage developments.

Can my total severance payment be higher than the transition payment?

Yes. A settlement agreement leaves room to negotiate a higher payment. In addition, the subdistrict court can award a fair compensation if your employer has acted in a seriously culpable manner. Unused holiday days and outstanding bonuses can also increase your total severance payment.

Am I entitled to the transition payment under a settlement agreement?

In the case of dismissal by mutual consent via a settlement agreement, you have no formal statutory right to the transition payment. In practice, however, the employer almost always offers this amount, because your cooperation is required. Moreover, a settlement agreement often provides room to negotiate a higher payment than the statutory transition payment.

When is it sensible to engage an employment lawyer regarding a severance payment?

It is worth consulting an employment lawyer if you are unsure whether the calculation is correct, if your employer is putting pressure on you to sign quickly, or if the reason for dismissal is not entirely clear. An employment lawyer will assess not only the amount of the transition payment, but also the total severance payment and the possibilities for negotiating a better arrangement.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.