What is the Dutch transition payment?
In the Netherlands, employees whose contract is ended or not renewed by the employer are entitled to a statutory severance payment called the transitievergoeding (transition payment). It is meant to ease the move to a new job, for example by paying for training or bridging a period without work. Since 1 January 2020 the right applies from the first day of employment, including temporary contracts and probation periods. It applies to anyone employed under a Dutch employment contract, whatever their nationality.
How the payment is calculated
The formula is set out in article 7:673 of the Dutch Civil Code:
transition payment = ⅓ × monthly salary × years of service
Part of a year counts pro rata. The calculator counts complete years, remaining months (1/12 of a year each) and remaining days.
What counts as monthly salary? Not only your base gross pay, but also:
- your holiday allowance (vakantiegeld, usually 8%);
- a fixed year-end bonus or 13th month (divided by 12);
- fixed allowances, such as shift pay or structural overtime;
- the average of variable pay (bonus, commission, overtime) over the past three years.
Employer pension contributions, a company car, expense allowances and the employer's social security costs do not count.
Example
You earn €4,000 gross a month plus 8% holiday allowance. You started on 1 March 2016 and your contract ends on 15 September 2026.
- monthly salary for the calculation: €4,000 × 1.08 = €4,320
- accrual per year: €4,320 ÷ 3 = €1,440
- length of employment: 10 years, 6 months and 14 days
- transition payment: €1,440 × (10 + 6/12 + 14/365) ≈ €15,175 gross
The cap in 2026
The transition payment is capped at €102,000 gross (2026), or one gross annual salary if you earn more than that. The cap is indexed every 1 January. For most people the payment stays well below it.
When is there no transition payment?
As a rule you are not entitled if:
- you resign yourself (unless your employer acted in a seriously culpable way);
- you are dismissed for seriously culpable conduct, such as theft;
- you are under 18 and worked 12 hours a week or less on average;
- the dismissal is linked to reaching Dutch state pension age (see the state pension age calculator);
- your employer is bankrupt or has been granted a suspension of payments;
- your collective labour agreement (cao) provides an equivalent arrangement, such as a social plan.
If your employer proposes a settlement agreement (vaststellingsovereenkomst), the transition payment is not automatically owed; the amount is negotiated. In practice the statutory payment is usually the starting point, and many employees ask a lawyer to review the agreement.
Tax and payment
The transition payment is wages. Your employer withholds wage tax at the rate for special payments, which is often higher than your normal rate; it is settled in your annual income tax return. The employer must pay within one month after employment ends. Under strict conditions, the costs of training or outplacement can be deducted, but only with your prior written consent. The Dutch income tax calculator shows how much tax you pay on your annual income.
Frequently asked questions
How much severance do I get per year in the Netherlands?
One third of your gross monthly salary, including holiday allowance and fixed extras, for each year of service. At €3,000 plus 8% holiday allowance that is €1,080 per year.
Do I get a transition payment if my fixed-term contract is not renewed?
Yes, if your employer decides not to renew. If your employer offers a new contract and you turn it down, you are not entitled.
Do I get severance after two years of sickness?
Yes. If you are dismissed after two years of illness, the transition payment is due. The employer can reclaim it from the UWV under a compensation scheme.
Is the transition payment gross or net?
Gross. Wage tax is withheld, usually at the special-payments rate. The net amount depends on your total annual income.
Does my probation period count?
Yes. The whole period of employment counts, including probation and earlier contracts with the same employer if the gap between them was no more than six months.
Is the result exact?
The calculator follows the statutory formula, but variable pay, a cao or a social plan can change the amount. Treat it as an estimate and get legal advice if the stakes are high.
Last reviewed: 2026-10-06. Results are estimates for information only.