Transition Pay and the COVID-19 Health Crisis
The ongoing coronavirus health crisis has left people all over the world without work, many of whom may be entitled to transition pay, a type of severance payment meant to cover the cost of retraining, additional education and other costs that may come up during the period of unemployment between jobs. A new law in the Netherlands makes it easier for employees to accrue the right to transition pay and considering the impact of the ongoing coronavirus pandemic on the global job market, the timing could not have been better. If you lost your job in the Netherlands as a result of COVID-19, or if your employer terminated or did not extend your employment contract at his or her initiative, you may be eligible to claim a transition payment from your employer based on your monthly salary and years of service. For more information about transition compensation during COVID-19, or for help calculating your transition payment or claiming your payment upon dismissal, contact a knowledgeable transition pay claim attorney today. With an experienced transition pay lawyer on your side, you can ensure that you receive the transition compensation you deserve after losing your job.
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Who is Entitled to Transition Pay?
Transition pay is an important unemployment benefit available to employees in the Netherlands who find themselves involuntarily unemployed through no fault of their own. The payment is meant to compensate unemployed workers for expected costs to help them find new employment. Dutch dismissal law requires employers to pay transition pay to employees whose employment contracts are terminated or not renewed at the employer’s initiative, so long as the dismissal is not for serious cause. The transition compensation obligation has been around in the Netherlands since the introduction of the Dutch Work and Security Act in July 2015. However, prior to 2020, employees in the Netherlands were only entitled to transition pay if they were dismissed after having worked for the same employer for a minimum of two years. That restriction was lifted with the introduction of the Labor Market in Balance Act, a new Dutch dismissal law that entered into force on January 1, 2020.
Known as Wet arbeidsmarkt in balans (WAB) in Dutch, this new law gives employees in the Netherlands the right to claim transition pay upon dismissal from employment beginning on their first working day, including any period of probation. That means, if you were dismissed from your job for any of the following reasons, regardless of how long you worked for your employer, you may be legally entitled to transition pay:
- Your indefinite-term (permanent) contract was terminated at your employer’s initiative,
- Your fixed-term (temporary) contract expired and was not renewed at your employer’s initiative,
- You resigned from your position as a result of serious culpable behavior or negligence on your employer’s part,
- Your position within the company was eliminated,
- You were laid off due to economic reasons, or
- Your employment contract was terminated after a period of long-term illness or disability.
When is Transition Compensation Not Required?
Employment and dismissal laws in the Netherlands are extremely protective of Dutch employees, and if you have been fired or laid off from your job for reasons other than your own seriously culpable conduct, it is likely that you are eligible for transition pay. That being said, there are some specific circumstances in which your employer may not be required to pay you transition compensation. For example:
- If your employment contract is terminated by mutual consent,
- If the company is bankrupt or involved in a debt restructuring arrangement,
- If you have already reached retirement age,
- If you are dismissed due to your own seriously culpable conduct,
- If you are under the age of 18 and worked a maximum of 12 hours on average per week,
- If the dismissal is for economic reasons and a different arrangement is laid out in your collective labor agreement,
- If your employer offers to renew your fixed-term contract before it ends, regardless of whether you accept or not, or
- If you and your employer agree to a new fixed-term contract before the current contract expires.
Understanding the complexities of Dutch dismissal law and determining how much transition compensation you are entitled to upon dismissal, if any, can be complicated, which is why it is a good idea to consult a transition pay expert who can give you advice tailored to your specific situation.
Job Loss and Unemployment During COVID-19 Pandemic
Being fired or laid off from your job is never easy, especially when the dismissal is not your fault, and dealing with the uncertainty and insecurity that comes with job loss can be a significant challenge, especially during the COVID-19 pandemic, when global unemployment rates are soaring. The impact of the ongoing coronavirus crisis on jobs worldwide has been far worse than initially expected and many workers and families facing income loss and limited job prospects are finding themselves in a difficult financial position. For many employees who are unexpectedly out of work, transition compensation is a critical lifeline, one that can be used for retraining, additional education or outplacement. Unfortunately, not all employers pay dismissed employees the transition pay they are owed, which is where an experienced transition pay claim attorney comes in.
How Much Transition Pay Am I Entitled To?
With the Labor Market in Balance Act came some important changes affecting flexible employment in the Netherlands, dismissal law and transition compensation, among other aspects of employment and unemployment. Regarding transition compensation, the law states that transition pay must be paid to permanent employees whose employment contracts are terminated and temporary employees whose employment contracts expire and are not renewed for reasons other than the employee’s behavior or performance. If your employment contract has been terminated and you believe you may be entitled to transition pay, you will want to know how much transition allowance you can expect to receive.
Under the previous Dutch Work and Security Act, the mandatory transition payment was equal to one-sixth of the employee’s gross monthly salary for every six-month period the employee worked during the first 10 years of service (with a minimum of two years of service), and then one-quarter of the employee’s gross monthly salary for every six-month period the employee worked after 10 years. Additionally, employees aged 50 and older were entitled to a higher transition payment. With the introduction of the WAB this year, however, dismissed employees are now immediately entitled to a transition allowance (rather than after two years of employment), and the payment due is equal to one-third of the employee’s gross monthly salary per year of employment. The new law did away with the different levels of compensation based on duration of service, the higher allowance for employees 50 and older, and the two-year working requirement. Visit www.transitionpay.com to find out how much of a transition payment your are entitled to.
Considering the current state of the global economy and rising unemployment rates stemming from the coronavirus pandemic, it is a good idea to be prepared with up-to-date information about the Labor Market in Balance Act and to know what the new law means for your transition payment should you be dismissed from your job in the coming weeks or months, as the world prepares for a possible second pandemic wave. According to data from the International Labour Organization, global working hours fell 14% during the second quarter of 2020, a dramatic decline equivalent to the loss of 400 million full-time jobs. This is a sharp increase from the ILO’s previous estimate in May, which indicated a 10.7% drop in working hours from April to June, equivalent to the loss of 305 million full-time jobs. Unfortunately, the outlook for the global job situation in the coming months remains grim. The ILO’s most optimistic estimate predicts a 1.2% drop in global working hours (equivalent to 34 million jobs) during the second half of 2020, and its most pessimistic estimate predicts a 11.9% decline in working hours (equivalent to 340 million jobs).
Claiming the Transition Payment You are Owed
The right to collect fair transition pay is guaranteed by the Labor Market in Balance Act for employees in the Netherlands who are dismissed from their jobs at their employer’s initiative. If you are a Dutch employee and you have lost your job, you should begin the process of claiming your transition payment as quickly as possible. As of 2020, the maximum amount of transition pay you can receive upon dismissal is €83,000, unless your salary is greater than €83,000, in which case, you are entitled to a transition payment that is equal to your annual salary. This transition allowance can help you and your loved ones get through what may prove to be a difficult period of transition between jobs, especially now during the COVID-19 crisis, so don’t hesitate to seek qualified legal counsel. A lawyer with experience handling transition pay claims will be knowledgeable in all matters pertaining to dismissal, transition pay and employment contracts in the Netherlands, and can ensure that you have a clear understanding of the full amount of transition compensation you are entitled to.