What do you need to know about severance pay?
You are often entitled to other types of severance pay in addition to transition compensation. Many employees are not aware of these.
There is no set formula for calculating other severance payments, as in the case of transition compensation.
You have14-day cooling-off periodin which you can revoke the agreement without giving any reason.
In almost all cases of dismissal, you are entitled to severance pay, but there are some exceptions.
Last updated: 22/07/2025
What is severance pay?
Severance pay is financial compensation you receive when your employment contract is terminated by your employer. It is meant to help you during the transition to new work and to ease the loss of your job.
Note: Severance pay is broader than just the statutory transition allowance.
There are different types of severance payments you may be entitled to. These depend on your situation.
The difference between transition compensation and other severance payments
The transition allowance is the statutory minimum remuneration that your employer must pay in case of dismissal. But you can often get more than just this legal minimum. Think about:
- An above-statutory allowance (also known as a "golden handshake")
- Fair compensation for your employer's seriously culpable actions
- Additional compensation through negotiations
Want all the differences between severance pay and transition compensation to read? Then we have set it out for you.
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Types of severance payments in the Netherlands
In 2025, there are different types of severance payments you can claim. Here is the overview of all the different severance payments:
1. Transition compensation: the legal minimum
This is the basic compensation to which almost every employee is entitled upon dismissal. Since 2020, you are even entitled to this from your first working day (so even during your probationary period).
The amount is calculated based on your salary and years of service. You can easily calculate your severance pay with our severance pay calculator.
2. The excess severance pay (also known as: golden handshake)
This is an additional payment on top of the transitional compensation. Your employer is not obliged to pay it, but in practice it often does, especially in the case of resign By:
- Reorganisations
- Mutual consent
- Long-term employment
- In case you had a higher position in the company
3. Fair compensation
A judge may award this compensation if your employer has committed serious misconduct. Think, for example, of a dismissal in which the dismissal followed discrimination, bullying or other serious situations in the workplace. The fair compensation will then be on top of your transitional compensation.
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How to calculate severance pay?
The calculation for your severance pay is complex because many components for severance pay are based on your specific circumstances. For this, you can only make an estimate based on your situation.
We have developed a calculator to estimate your severance pay based on all other components. Here you can easily calculate your calculate severance pay.
Want to start calculating your severance pay yourself? Then find the formula to do so below.
Step 1: Calculate your severance pay
The basic formula is simple:
- Number of years of service × 1/3 of your gross monthly salary
Example: You work for 8 years and earn €3,000 gross per month.
- Calculation: 8 × (€3,000 ÷ 3) = €8,000 gross
For partial years, use this formula:
- (Days worked ÷ 365) × (1/3 monthly salary)
Step 2: check whether you are entitled to additional allowances
Watch:
- Your collective agreement (does it say anything about an above-standard allowance, for example)
- What is the reason for dismissal? Is there a difference of opinion?
- How has the dismissal procedure gone so far? Were any mistakes made in it?
- What is your negotiating position right now?
Tip: let our lawyers look into it with you free of charge and without obligation
Our dismissal lawyers see cases similar to yours come up daily. For this reason, we have a lot of expertise and can better assess what you are entitled to in the event of dismissal.
Tax on your severance pay
You pay income tax in box 1 on your severance pay (just like on a paid out transitievergoeding). You can find the current rates on the website of the Tax and Customs Administration.
Note: Your employer deducts this tax directly. You will therefore be paid a net amount.
Example tax calculation
Say your annual income is €56,817 and you get €40,000 gross severance pay.
- First €20,000 falls in rate of 37.48% = €7,496
- Second €20,000 falls into rate of 49.5% = €9,900
- Total load: €17.396
- Net severance pay: €22.604
Wondering what you will be left with in your case? Calculate your gross net amount from.
When are you entitled to severance pay?
There are a number of conditions you must meet to be entitled to severance pay.
You have well entitled to compensation if:
- Your employer fires you
- Your temporary contract is not renewed
- You resign yourself because of seriously culpable actions by your employer
- There is a settlement agreement
You have No right to compensation in the event of:
- Instant dismissal for own fault
- Voluntary dismissal without employer culpability
- Pension
- Death
Exceptions in which employers do not have to pay transition compensation
In certain cases, your employer does not have to pay severance pay:
- In case of bankruptcy
- If you are under 18 and work less than 12 hours a week
- For small employers with business closure due to retirement or death
Negotiating your severance pay
Many employees do not know that you can often negotiate for compensation higher than the legal minimum. Our legal practice shows that in 95% of cases a better arrangement is possible.
Tips for successful negotiations
- Know your rights - Calculate your minimum transitional compensation first
- Gather arguments - Think about:
- Length of service
- Labour market position
- Special circumstances
- Any lapses by your employer
- Consider legal help - A lawyer can often negotiate a much higher fee
When to ask for additional severance pay?
- At reorganisation
- If you are 'bullied away'
- In case of sudden dismissal
- If you are struggling to find new work
- At disrupted working relationship
Case examples from our legal practice
Example 1: Renske's successful negotiation
"There is from redundancy-lawyers.co.uk negotiated my settlement agreement. As a result, we ended up with a lot more than my employer's initial proposal. All this was free of charge and I am very happy with the result."
Renske was initially offered only the standard transitional compensation. After negotiation, she was paid almost double the amount.
Example 2: Brian's settlement agreement
Brian worked at his employer for years and had his settlement agreement checked. "I can't say other than: quick, reliable, top advice. Recommend it to everyone to have a check done here."
The check revealed that he was entitled to additional compensation due to unused holiday days and an understated calculation for his severance pay.
Example 3: Reorganisation with additional compensation
An employee in the tech sector was first offered the transitional allowance once upon reorganisation. After negotiation, this became:
- Severance pay: €32,000
- Extra-legal compensation: €48,000
- Total: €80,000 (i.e.: 2.5x the original offer)
Conclusion
Severance pay is often much more than just the standard transfer payment. Whether you are dealing with reorganisation, a disturbed working relationship or simply the end of your contract - there are several compensation payments you may be entitled to.
It definitely pays to know your rights well and negotiate a better settlement whenever possible.
Remember that the transitional compensation is only the legal minimum. In practice, employers are often willing to pay more, especially if you have the right arguments or engage professional help. Good preparation and knowledge of your rights can literally save thousands of euros.
In doubt about your rights or want help negotiating your severance pay? Our lawyers are ready to help you.
We offer a free initial check of your situation so you know exactly where you stand. Take contact on for personal advice.
"Definitely recommended. Started by filling in the calculation tool in which it quickly became clear what I am entitled to. Then low-threshold contact and result is there. Thanks!!!"
Nina had been working as a marketing specialist for three years when her employer asked her to talk about a so-called "amicable settlement." This was because the company was facing financial problems and wanted to save costs. Nina was presented with a vso, which included mutual agreement dismissal as the reason for dismissal. This did not include a severance payment and the reason for dismissal was unclearly worded.
After Nina shared her vso with us, we contacted her to further clarify the situation and go through all parts of the vso together. At ontslagrechtjuristen.nl, we discovered that her employer had made a proposal mainly for its own benefit, with compensation that was far too low. Nina indicated that we could contact her employer to discuss the settlement agreement. After several discussions with her employer, she received fair compensation, was entitled to unemployment benefits and could count on a work release.
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About the author: This article was written by Mickey Heimans, dismissal lawyer and writer at Ontslagrechtjuristen.nl. With over 5 years of experience in HR and dismissal law, has extensive experience in assisting employees with their dismissal cases. Specialisation: complex dismissal situations.