Transition allowance: interim arrangement

When an employee is dismissed on his or her employer’s initiative, he or she gains entitlement to a transition allowance the level of which depends on the length of service. No transition allowance at all is due and payable to those who have not been in service for at least two years. Small-scale employers have the option (provided they meet certain conditions) of applying for the transition allowance interim arrangement, allowing them to pay a limited fee rather than the entire transition allowance. One of the conditions for admission to the interim regime used to be that the business of the employer in question having been loss-making for each of the three financial years leading up to the year in which the dismissal in question took place. This has been different since the first of July 2016, in that the term of reference has since comprised the years leading up to the (financial) year in which the application for the dismissal permit is filed. Application of the interim regime is strictly contingent upon UWV, the Netherlands Employee Insurance Agency, having issued a certificate to the relevant effect. This certificate does not have ruling status and is not open to (objection or) appeal. 

In 2015 an employer, quoting commercial reasons, filed an application for dismissal permits for several members of staff as well as requesting to be admitted to the transition allowance interim arrangement for small-scale employers. Although UWV granted permission to terminate the employment contracts, it declined issuing the requisite interim regime admission certificate, arguing that the employer had failed to meet requirements: the term of reference based on dismissal in 2015 covered the years from 2012 (for which year the employer’s business had returned a profit) to 2015 inclusive (the business having been loss-making since 2013).

The employer by terminating one of the members of staff’s employment contract subject to a term of notice over and above the statutory minimum had pushed back the termination date to 2016 rather than 2015, in an attempt to curtail the term of reference to 2013-2015 so as to qualify for the interim arrangement. Although the Court of Appeal agreed that this had indeed caused the term of reference to be altered, it nevertheless denied the employer the right to apply the interim regime, stating that it had been unreasonable for the employer to extend the term of notice for no reason other than that of gaining admission to the interim arrangement given that the reason for termination of the employee had been the employer’s poor commercial performance. The employee was confirmed as being entitled to the entire transition allowance.

Don’t forget to read: Interim scheme for smaller-scale employers having to pay out transition allowance

Dutch version: Overbruggingsregeling transitievergoeding