Transitional compensation in the event of long-term illness

Employers that have already paid the transition payment to employees with a so called ‘dormant employment agreement’ (slapend dienstverband) when the agreement was terminated, can strengthen their liquidity position by applying for this compensation and receive a repayment of the transition payment that was paid to the employee. We have set out below the highlights of the Transition Compensation Scheme.

Conditions

The compensation may be requested for employment agreements that are terminated on or after 1 July 2015. Under the following conditions, employers may receive compensation of the transitional allowance paid:

• the employment agreement has been (partially) terminated after expiry of the waiting period (104 weeks of illness or longer if the employer is penalized for not meeting its reintegration obligations) for the reason that the employee is no longer able to perform his/her employment as a consequence of illness;
• the employee was still ill when the employment agreement was terminated;
• the employee was entitled to a transition allowance under Dutch law; and
• the employer has paid a transition allowance to the employee.

Employers have to show that they meet the conditions by providing (for example) the following documents:

• the dismissal permit of the UWV or the judgement of the Cantonal Court on the basis of which the employment agreement is terminated;
• if the employment agreement is terminated by mutual consent, the settlement agreement that shows that the employment agreement is terminated as a consequence of long-term illness;
• the details that are used to calculate the transition payment (e.g. documents that evidence the monthly salary and the length of service);
• details that the transition payment has been paid tot he employee (banknotes).

Amount of allowance?

The compensation is limited to the amount of transition payment to which the employee would have been entitled upon termination of the employment agreement when the employer's obligation to continue to pay wages ends. The accrued transition payment during the period of the so-called ‘dormant employment’ is not compensated.

When?

The compensation can be applied for up to six months after payment of the transition payment. For transition payments that have been paid prior to 1 April 2020, an application must be submitted no later than 30 September 2020.

Should you have any further questions, please do not hesitate to contact us.