Expiry of Transition Payments?

Published by: Sebastian van den Brink posted on 14 November 2019 reading time

An employee is entitled to a transition payment upon dismissal, if he has been employed for more than two years and the employer terminates the employment contract or does not continue it [1]. Usually, the transitional compensation is paid to the employee together with the final payment. If this does not happen, the employee should take action quickly and go to the subdistrict court. This is because there is an expiry period of three months for claiming transitional compensation, counting from the moment that the employment contract was terminated.

Some employers do not make payments of their own accord, but wait until an employee makes a legal claim. These employers hope in this way to be able to invoke the expiry period and thus not have to pay the transitional allowance. The employer in the judgment below had even made this his policy, but the court of appeal blew the whistle on him

Court of The Hague

In the case ECLI:NL:GHDHA:2019:2618 the situation was as follows. An employee has been unfit for work for a long time. The employer writes to the employee that a dismissal permit will be requested from the UWV. Furthermore, the employer writes that if the permit is obtained, the employment will be terminated and the employee will receive a final payment and a transitional allowance.

The permit is obtained and the employee is dismissed. However, the transitional allowance is not paid. The employee does request payment, but only receives a written response after the expiry of the period and then writes to the employee that he should have requested the transitional allowance with his application.

The Court of Appeal did not follow suit and considered that a reliance on the expiry period would, under the given circumstances, be unacceptable and contrary to reasonableness and fairness. Furthermore, the fact that the employee considered the communication in the employer's letter as a promise and that the employer only came back to this promise after the expiry of the term of forfeiture played a role.

In short, the employer must still pay the transition allowance.

As of 2020

If, after 1 January 2020, the transitional compensation is due from the start of the employment, it may happen more often that an employer does not proceed to pay on his own accord. It remains to be seen whether more courts will follow the judgment of the Court of Appeal of The Hague. We advise to seek timely advice and take action in such situations.

Would you like advice on dismissal or other questions in the field of labour law? Then contact one of our labour law specialists.


[1] After 1 January 2020, as a result of the Labour Market in Balance Act (WAB), every employee is entitled to transitional compensation in the event of dismissal from day one (subject to exceptions).