Since 1 July 2015, it has been legally stipulated that, in the event of dismissal on the initiative of the employer, employees are usually eligible for a transitional payment (severance pay).
However, many collective labour agreements still include a deferred payment scheme and the legislator did not consider it desirable for the employee to receive both deferred payment and a transitional payment upon dismissal. The Transitional Transitional Compensation Decree of 23 April 2015 regulates that employees who are still entitled to a waiting allowance on the basis of a CAO are not eligible for a transitional compensation. However, this is a temporary arrangement until 1 July 2016 at the latest. The idea here is to give the parties to the CAO sufficient time to adjust the CAO (deferred payment scheme) to the new legislation.
Meanwhile, there are still about four months to go until 1 July 2016 and in many collective agreements with a waiting allowance regulation, no adjustment has yet taken place. This could lead to employees receiving both waiting money and a transition allowance in the event of dismissal after 1 July 2016.
For employers, it may therefore be important to submit the request for dismissal to the UWV or the request for dissolution to the subdistrict court before 1 May 2016, because in that case, this Transitional Transitional Remuneration Decree will continue to apply. This way, an employer can avoid paying twice.
If you would like to know more about the concurrence of severance pay and transition pay, please do not hesitate to contact us.