Calculate severance pay
Your employer fires you or does not renew your contract. If so, you are entitled to a so-called transition compensation. With this compensation, you can, for example, start your own business or get retrained. You can calculate the transition compensation here.
What is a Transition Payment?
A transition allowance is a legal compensation that employees receive upon dismissal. This compensation helps with the transition to a new job or to financially bridge the time without work. In 2024, the transition compensation will be 1/3 monthly salary per year of service with a maximum of €94,000.
How does our Severance Pay Calculator work?
Our tool calculates your severance pay based on your gross monthly salary and the length of your employment. Follow the simple steps below:
- Enter the start and end date of your employment
- Enter your gross monthly salary
- Enter your holiday allowance %
- Enter any other amounts
- Click on 'Calculate' to instantly see your severance pay.
The maximum transitional compensation in 2024 has been increased to €94,000. Is your annual salary higher? Then this amount will be retained when you calculate the transitional compensation.
For example, when your annual salary is €120,000 gross and the calculation of the transition compensation comes out at €105,000 gross then the amount of statutory transition compensation is €105,000 gross. If the outcome is €130,000 gross then the compensation is capped at €120,000 gross (the gross annual salary).
Why choose our services?
- Free and No-obligation: Our tool is completely free to use.
- Fast and Accurate: Get an accurate calculation of your severance pay immediately.
- Legal Advice: Contact us for free legal advice and support on your dismissal
Contact us at WhatsApp, call 085 080 5482 or send a mail.
What is a Transition Payment?
Am I entitled to transitional compensation?
Who is entitled to transition compensation? You are entitled to this compensation if your request for dismissal is approved by the UWV or the subdistrict court. Even if your temporary contract is not extended with a subsequent temporary or permanent contract, you are entitled to a transition allowance. In principle, you are not entitled to compensation if you terminate your job yourself, unless you do so because your employer can be blamed for serious culpable actions or negligence.
You are entitled to a transitional payment in case of dismissal
You will receive the transition compensation within one month of the end of employment. Does your employer not pay the compensation within this period? Then he must also pay you the statutory interest of 2%. Does a conflict arise between you and the employer about the transitional compensation or its payment? Contact our employment lawyer. He will give you advice and can take steps so that the employer still makes payment. You have three months to turn to a subdistrict court in the event of a dispute. After these months, you no longer have any rights to claim the transitional allowance.
How to calculate severance pay?
The transition compensation is calculated according to a fixed formula laid down by law. The amount of this compensation is calculated based on the amount of the gross monthly salary and the length of employment. The gross monthly salary is multiplied by 1/3 per year of service, meaning that an employee receives 1 gross monthly salary for every 3 years of service when the employee is dismissed.
The transition allowance is calculated not only per full year of service but also per working day. When someone is employed for 4 years 3 months and 15 days at a gross monthly salary of 2,500 gross (including holiday allowance), you get the following calculation:
- 4 x 1/3 x €2,500 = €3,333.33
- 3 x 1/36 x 2,500 = €208.33
- 15 x 1/1095 x 2,500 = €34.25
When you add the above three amounts together, you arrive at a compensation of €3,575.91. When calculating a transfer compensation, note that often other variable remuneration should also be included in your gross monthly salary. Employers often make mistakes here.
Calculate severance pay/ Calculate subdistrict court formula
Higher than transitional compensation possible?
Your employer pays at a settlement agreement in most cases a higher severance payment than a transitional payment. This is because he avoids a long and costly process if he runs your dismissal through UWV or subdistrict court. Therefore, the compensation for dismissal by mutual agreement is more favourable for you.
Severance pay is often higher than transitional compensation: advantage of settlement agreement
How do I calculate my severance pay?
Severance pay is a different compensation from the transitional compensation. The amount of your transitional compensation calculation you can easily do at the top of this page. There is no generally applicable formula for severance pay. The amount of this compensation is calculated based on x number of months or the transitievergoeding times two. But this depends on all the facts and circumstances that apply in your specific situation.
Severance pay and transition pay are not the same thing
VSO compensation calculation
A lawyer can calculate the amount of severance pay based on your story and related facts at a settlement agreement (VSO). The level of severance pay is also an issue of negotiation. For example, your employer may propose a certain compensation, but you do not have to accept this immediately. If you or the lawyer think a higher compensation is more appropriate, that proposal can be submitted.
Severance pay is almost always higher than the transitional allowance
Cantonal court formula calculation
The subdistrict court formula is a formula formerly used to calculate severance pay. Dutch subdistrict courts developed it to calculate the amount of so-called fair compensation. With effect from 2015, subdistrict courts no longer use the subdistrict court formula in cases of dismissal, but the transitional compensation and any additional compensation on top of this transitional compensation. In case of individual dismissal by mutual agreement (settlement agreement) and collective dismissal, the subdistrict court formula can still be used to determine compensation.
This formula takes into account the number of years worked and your age. In almost all cases, the subdistrict court formula is much higher than the transitional compensation. Sometimes as much as three times higher.
The subdistrict court formula is also called the ABC formula
A x B x C is the amount of severance pay. Where A stands for number of weighted years of service, B for pay per month (gross monthly salary including holiday allowance, thirteenth month and other allowances) and C for correction factor (is usually around 1). The older you are, the higher the severance pay. In the settlement agreement, all agreements, including the amount of the severancecompensation in the event of a settlement agreement, recorded and signed by employer and employee.
The number of weighted years of service is calculated as follows:
- age up to 35 years: weighting factor 0.5
- age 35-45 years: weighting factor 1
- age 45-55 years: weighting factor 1.5
- age over 55 years: weighting factor 2
Tax and transitional/redundancy pay
Is a transitional allowance tax-free?
No, a severance pay is not tax-free. That tax has to be paid is one of life's certainties, so too about the transition or severance pay.
A severance payment upon dismissal is always calculated gross. The employer will pay tax from the gross severance payment and deposit the net amount into your account, as the tax authorities consider the compensation to be income. How much tax you have to pay on the compensation received depends entirely on your annual income. This means that the tax rate is based on your gross annual income plus the severance pay received. There is then a chance that you will therefore have to pay a high tax rate.
How heavily is the transitional allowance taxed?
| Annual income (including compensation) | Percentage |
| €0 to €73,031 | 36,93% |
| €73,031 and above | 49,50% |
What are the options to pay less tax on the allowance?
- Resources
Once you want to receive the transitional allowance in your bank account, there are no options to direct pay less tax on the transition allowance. However, if you received a much higher income in 1 year due to the transition allowance, you can resource your income with the tax authorities. With averaging, you actually spread your income over 3 years. As a result, you may receive on average less income per year and therefore fall into the lower tax rate.
- Training / outplacement
If you plan to take an outplacement or training course, you can use the gross amount for this purpose. This means you have a tax advantage because the costs are deducted from the gross amount. For example, if you receive a severance payment of €30,000 gross and the training you want to follow costs €10,000, you can deduct the costs, in consultation with the employer, from the gross compensation. The gross compensation to be paid will then be €20,000, this quickly gives a tax benefit of 49.5%.
Do you have questions about the calculation of your severance pay? Or would you like more information on the subdistrict court formula? Please contact us via WhatsApp, call 085 080 5482 or send a mail.; our employment lawyer will be happy to talk to you. And provide the answers to all your questions.
Frequently asked questions
The average "transition compensation" included in a settlement agreement (VSO) is 0.57 gross monthly salary per year worked. This is therefore 0.24 gross monthly salary higher than the legal calculation. The compensation is therefore higher on average when a lawyer negotiates a VSO.
In theory, there is no right to a transition fee in the case of a settlement agreement (VSO). The employer only owes a transition fee when a dismissal via the UWV or dissolution via the subdistrict court takes place. However, it is common for the VSO to include a severance payment that is as high or higher than the statutory transitional compensation.
You have no entitled to a transition allowance if you resign yourself (except if employer has acted seriously culpable), you are seriously culpable for the dismissal and if the employer has been declared bankrupt or has a suspension of payments. This also means that if you decide not to extend the fixed-term employment contract you will no entitled to a transitional payment.
You are entitled to a transition allowance when the employer takes the initiative to terminate the employment contract through the UWV or Cantonal Court. The conditions herein are that you do not serious culpable dismissal, such as in cases of theft or fraud, among others. This means that you are also entitled to a transition allowance if the employer decides not to extend your fixed-term employment contract.
Of course, tax has to be paid on the transitional compensation / severance pay you receive. How much tax you have to pay depends on your annual income. In 2023, there are two rates applied:
Annual income up to €73,031 you pay 36.93% tax
Annual income from €73,031 you pay 49.5% tax
That is certainly allowed. We even advise doing so. The settlement agreement was drawn up by the employer. Are all the agreements on paper correct as you have agreed? And do you get everything out of the agreement financially? VSO to be checked.
Our employment lawyer checks your offered VSO free of charge.
There is no generally applicable formula for severance pay. The amount of this compensation is calculated based on x number of months or the transitievergoeding times two. But this depends on all the facts and circumstances applicable in your specific situation.
The subdistrict court formula is a formula that the severance pay calculates. Dutch subdistrict courts developed this guideline to calculate the amount of the so-called dissolution compensation. With effect from 2015, subdistrict courts no longer use the subdistrict court formula for dismissal, but the severance pay and any additional compensation on top of this severance pay. In case of individual dismissal by mutual consent (settlement agreement) and collective dismissal, the subdistrict court formula can still be used to determine compensation.
Our employment lawyer will be happy to assist you. Thanks to years of experience and the right expertise, he has the answers to all your questions surrounding your dismissal. Contact us via the contact form.
You can very easily calculate the amount of your severance pay online. Enter your details in the form and you will see the amount of your transitional allowance. Of course, this does not fix the final amount.
The amount of your transition allowance is one-third of your monthly salary per year of service and with a maximum amount of €89,000