Dutch Severance Pay 2026: Transitievergoeding Formula and Cap

Severance pay in the Netherlands is called the transitievergoeding, and it is not a negotiated exit package. It is a statutory sum with a fixed formula in artikel 7:673 BW, owed from the first day of employment with no qualifying period.

The formula is one line: one third of a month's pay as the statute defines it (loon) for each year the employment contract (arbeidsovereenkomst) lasted, plus a proportionate part for a shorter final period. The figure is hard to pin down because of its two inputs, what counts as loon and how the years are counted.

Information last verified on 21 July 2026. This page provides general legal information about Netherlands law and does not constitute legal advice in an individual case.

Who is owed it, and who is not

Artikel 7:673 lid 1 BW ties the payment to who ended the employment rather than to the reason behind it. It is owed where the employer gives notice (opzegging), where the subdistrict court (kantonrechter) dissolves the contract at the employer's request (ontbinding), or where a fixed term contract ends by operation of law and is not continued on the employer's initiative.

The same lid covers the mirror image, where the employee ends the contract by one of those routes as a result of the employer's ernstig verwijtbaar handelen of nalaten. There is a second mirror case, and it is easy to miss.

Where a transfer of undertaking (overgang van onderneming) causes an aanmerkelijke wijziging van de arbeidsvoorwaarden ten nadele van de werknemer and the employee ends the contract for that reason, artikel 7:665 BW deems the ending to be on the employer's initiative. Resigning after an outsourcing worsened the terms is therefore not automatically fatal to the payment.

Artikel 7:673 lid 7 BW lists three situations in which nothing is owed:

• an ending before the day the employee turns eighteen, where the average working time was twelve hours a week or less
• an ending in connection with or after a statutory or agreed pension age, or, failing that, the AOW age of artikel 7 sub a AOW
• an ending resulting from the employee's own ernstig verwijtbaar handelen of nalaten

Under lid 8 the kantonrechter may still award the payment in that third case where withholding it would be unacceptable by standards of reasonableness and fairness. The first case has its own residual route: artikel 7:673 lid 9 sub b BW lets the kantonrechter award a billijke vergoeding where lid 7 sub a denies the transitievergoeding and a fixed term contract was not continued because of the employer's ernstig verwijtbaar handelen of nalaten.

Artikel 7:673c BW separately ends the obligation on the employer's bankruptcy, surseance van betaling or schuldsanering.

Whether the dismissal may happen at all is a separate question upstream of the payment. Artikel 7:669 lid 1 BW is cumulative: there must be a reasonable ground (redelijke grond), and redeployment into another suitable role, if necessary with retraining, must either be impossible or cannot reasonably be expected (niet in de rede ligt). The herplaatsingsplicht is an independent hurdle, and artikel 7:669 lid 2 BW disapplies it only where the employee holds a religious office (een geestelijk ambt).

A cao can switch the payment off

Lid 7 is not the whole list. Artikel 7:673b lid 1 BW allows a collective agreement (cao), or a regeling made by or on behalf of a competent bestuursorgaan, to provide that the transitievergoeding is niet verschuldigd.

Two conditions apply cumulatively: the ending must be on the bedrijfseconomische ground of artikel 7:669 lid 3 onderdeel a BW, and the cao or regeling must itself confer a right to a voorziening, a reasonable financial payment, or both.

Someone made redundant under a cao with a sociaal plan may therefore be owed nothing at all under artikel 7:673 BW, and the sociaal plan rather than the statutory formula then decides the sum.

The formula and the 2026 ceiling

Artikel 7:673 lid 2 BW puts it as one third of the loon per month for each year the contract lasted, and a proportionate part of that for a shorter period. The calculation is continuous rather than stepped, so a partial year is neither rounded down nor up.

The same lid caps the result at EUR 102,000, or at an amount equal to at most twelve months of loon where that loon is higher than that amount. The second limb is not an option to be chosen: it is a higher ceiling that applies automatically to higher earners.

That EUR 102,000 is the 2026 figure. Artikel 7:673 lid 3 BW has the Minister van Sociale Zaken en Werkgelegenheid revise it each 1 January in line with contract wage developments, rounded to the nearest EUR 1,000, and the new amount applies only where the contract ends on or after that date.

What counts as loon

Artikel 7:673 lid 2 BW leaves the calculation method to an algemene maatregel van bestuur and lid 10 does the same for the meaning of loon. Both are filled in by the Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding, with the components listed in the Regeling looncomponenten en arbeidsduur.

Artikel 2 lid 1 of the Besluit sets the base as the gross hourly wage times the agreed working time per month, or, where none or a varying one was agreed, the average hours actually worked. The reference period is the twelve months before the ending (sub a), or the contract's duration where that was shorter (sub b), with lid 4 adjusting the divisor pro rata. Artikel 3 then adds three groups:

• vakantiebijslag and the vaste eindejaarsuitkering claimable within twelve months had the contract continued, divided by twelve
• the fixed components owed in the twelve months before the ending, divided by twelve, which the Regeling designates as overwerkvergoedingen and ploegentoeslagen
• the variable components owed in the three calendar years before the year of the ending, divided by thirty six, which the Regeling designates as bonussen, winstuitkeringen and eindejaarsuitkeringen

Those lists are closed, so a benefit outside them does not enter the artikel 3 calculation. A variable bonus is smoothed over thirty six months rather than twelve, so one strong year moves the figure much less than expected.

Four worked calculations

Each example uses a gross monthly salary plus 8 percent vakantiebijslag and no other components, so the arithmetic stays visible. Overwerk, a shift allowance or a bonus would raise the monthly loon and every line below.

One, six full years. A salary of EUR 3,200 plus EUR 256 vakantiebijslag gives a monthly loon of EUR 3,456, one third of which is EUR 1,152 per year. Six years give 6 x EUR 1,152, or EUR 6,912 gross.

Two, four years and seven months. A salary of EUR 2,800 plus EUR 224 gives a monthly loon of EUR 3,024, so one third is EUR 1,008 per year. The four full years give EUR 4,032, and the evenredig deel for seven months is seven twelfths of EUR 1,008, or EUR 588, for a total of EUR 4,620 gross.

Three, a high earner whose ceiling is lifted. A salary of EUR 21,000 plus EUR 1,680 gives a monthly loon of EUR 22,680, one third of which is EUR 7,560 per year, so twenty years give EUR 151,200. Twelve months' loon here is EUR 272,160, above EUR 102,000, so the ceiling is EUR 272,160 and the EUR 151,200 stands in full. A flat EUR 102,000 reading would understate this by nearly EUR 50,000.

Four, where the ceiling bites. This one starts from a loon figure rather than a salary, because the ceiling turns on loon alone. A monthly loon of EUR 9,000 over forty years gives EUR 3,000 per year and EUR 120,000 in total. Twelve months' loon is EUR 108,000, still above EUR 102,000, so the maximum is EUR 108,000 and the calculation is cut by EUR 12,000.

All amounts are gross, and they indicate how the formula runs rather than what a contract produces.

The calculator below runs the same arithmetic. Enter the monthly loon, not the bare salary: the gross monthly pay plus vakantiebijslag and any designated fixed components. That is why Example One is entered as EUR 3,456 rather than EUR 3,200.

Counting the years, and when payment falls due

Artikel 7:673 lid 4 BW governs the duration used in lid 2. Months before the employee turned eighteen with twelve hours a week or less are left out, and successive contracts separated by gaps of at most six months are added together, including across employers that must reasonably be regarded as each other's successor for the work.

Lid 5 then deducts two things. Sub a deducts a transitievergoeding already paid on such an earlier contract, and sub b deducts the value of a voorziening already granted under artikel 7:673b lid 1 BW, so a sociaal plan payment on an earlier ending reduces the later calculation rather than sitting alongside it.

Artikel 7:686a lid 1 BW makes statutory interest (wettelijke rente) run from one month after the day the contract ended, which in practice sets the payment date.

Severance in a settlement agreement

An employer wanting to end a contract commonly uses a settlement agreement (vaststellingsovereenkomst) rather than a procedure before UWV or the kantonrechter. That ends the contract by mutual agreement, so it is not one of the endings in artikel 7:673 lid 1 BW and the statutory payment is not triggered automatically.

The statutory figure still anchors the negotiation, because the alternative is a procedure in which the employer faces the transitievergoeding anyway, plus its own costs and the risk of a billijke vergoeding. The agreed sum is therefore normally discussed against the calculated figure, with the ending date and the wording about the grounds negotiable alongside it.

Artikel 7:670b BW adds two protections. The agreement is valid only in writing (lid 1), and the employee may undo it in writing without giving reasons within fourteen days of the date it came about (lid 2). Where the employer fails to mention that right, lid 3 extends the period to three weeks.

That reflection period (bedenktijd) has two limits. Lid 4 disapplies it where the parties enter a new termination agreement within six months of an earlier ontbinding under lid 2 or a herroeping under artikel 7:671 lid 2 BW.

Lid 5 disapplies leden 2 to 4 altogether to a bestuurder van een rechtspersoon whose contract cannot be restored under Boek 2 BW, and to the director of a comparable foreign legal person. A statutory director who signs a termination agreement therefore has no fourteen day window in which to undo it.

How this interacts with the WW-uitkering

The employer pays the transitievergoeding, while UWV decides a WW-uitkering under the Werkloosheidswet, so the two run on different rules. Two WW articles decide whether the exit route costs the employee money.

Artikel 24 lid 1 sub a WW requires an employee to avoid becoming verwijtbaar werkloos, and lid 2 defines that in two limbs. Sub a covers unemployment underlain by a dringende reden in the sense of artikel 7:678 BW for which the employee can be blamed, and sub b covers an ending brought about by or at the request of the employee without such objections to continuing the employment that continuation could not reasonably be required of them.

Sub b is the limb a settlement agreement has to survive, which is why such an agreement is normally drafted as employer initiated and on a neutral ground.

Artikel 19 lid 3 WW is the separate rule, and it is the one that quietly costs weeks of income. Where the contract ended by opzegging or by written agreement, there is no right to a WW-uitkering for as long as the legally applicable notice period (the rechtens geldende opzegtermijn) has not expired. On an ending by mutual agreement it is the employer's notice period that counts, running from the date the ending was agreed in writing, which is why it is called the fictieve opzegtermijn.

It differs in kind from artikel 24 WW: not a culpability refusal that can be argued away on the facts, but an unpaid gap, since an end date inside the notice period leaves the weeks up to the end of the fictieve opzegtermijn with neither salary nor benefit.

Whether and how a lump sum affects a WW-uitkering is decided by UWV under separate income rules, which are outside the scope of this page.

If the employer refuses to pay

The forum is the kantonrechter, whatever the size of the claim. Artikel 93 sub c Rv gives it cases about an arbeidsovereenkomst telkens ongeacht het beloop of de waarde van de vordering, regardless of the amount at stake. The procedure is started by verzoekschrift rather than by a summons (artikel 7:686a lid 2 BW).

The deadline is the part that costs people their claim. Artikel 7:686a lid 4 sub b BW provides that the power to file a verzoekschrift concerning artikel 7:673, artikel 7:673b and artikel 7:673c BW lapses three months after the day the employment contract ended.

A vervaltermijn is not an ordinary limitation period: it expires by itself, a letter of demand does not reset it, and once it has passed that route is closed.

The billijke vergoeding is a different payment

The transitievergoeding is the standard payment with a statutory formula. The billijke vergoeding is an additional award tied to the employer's own ernstig verwijtbaar handelen of nalaten, with no formula and no statutory maximum, assessed on the facts.

Artikel 7:671b lid 9 sub c BW covers a dissolution resulting from the employer's ernstig verwijtbaar handelen of nalaten, and artikel 7:673 lid 9 BW covers a fixed term contract not continued for the same reason.

Artikel 7:682 BW covers several further situations, and only lid 1 concerns a dismissal given with prior permission (toestemming) under artikel 7:671a BW. Leden 2, 3 and 7 apply where no permission is needed at all, among them a domestic worker, a bestuurder van een rechtspersoon and an employee holding a geestelijk ambt.

Permission does not always come from UWV either: artikel 7:671a lid 2 BW routes a bedrijfseconomische request to an independent and impartial commissie where a cao or regeling has designated one.

The Dutch codes and courts referred to above are set out on the Netherlands law overview, and the wider dismissal framework on the Netherlands employment law section page.