**Calculating your severance payment**

May 7, 2020

**"How much is my severance pay?" is probably the most frequently asked question on this topic. The amount of this allowance depends on your salary and how long you have worked for your employer. In this article, we will explain the simple calculation behind the payment and the exceptions to the formula.**

**What is severance pay?**

You are entitled to a severance pay, often referred to as a “transition compensation”, if you are fired by your employer. The expiry of a temporary contract is also seen as dismissal. This rule only applies if you are eighteen or older. Are you under 18? Then you are eligible only if you have worked at least 12 hours a week - it doesn't matter how long you have been employed. You are even entitled to severance pay during your probationary period.

We often use the term severance pay instead of the official term transition payment. This is because people will understand it more easily that way. blog.

**Settlement Agreement**

When you are fired, a future date is usually set on which the dismissal takes effect. This can never be decided by your employer without discussion. However, it is possible to do so after permission from the Employee Insurance Agency (UWV), Subdistrict Court or by mutual consent. The employer must pay your salary until the mutually agreed upon date of dismissal laid down in the settlement agreement. The agreement also contains other details, such as the use of the office laptop, company car and telephone, for example. You will also find the notice period, payment of vacation days and holiday pay and the cancellation of the non-compete clause. The severance payment is also included in this agreement.

### Notice period

Are you dismissed as a permanent employee, or before the expiration of your contract? Then there must be a statutory notice period, which is often one or two months. During this period your employer must continue to pay you. Usually you have to continue working during the notice period, but it may also be the case that it is agreed in consultation that you immediately stop working.

**Amount of severance pay **

The amount of your severance payment depends on two factors: salary and years of service. It does not matter how long you have been employed, you are already entitled to the allowance even after one month of work. However the longer you have worked for the same employer, the higher your compensation will be. How much you will receive is also determined on the basis of your salary: the higher your salary, the higher your compensation.

### Change in severance pay 2020

The right to severance pay has changed from January 1, 2020. Before 2020, you were only entitled to severance pay if you had been working for your employer for at least 24 months. Now, everyone over the age of eighteen is entitled to severance pay, even if they only worked for one month. People under 18 who work more than 12 hours a week are also entitled to compensation.

**Calculate your severance payment **

From 2020, the severance payment amounts to one third of your monthly salary for every year you have worked at the office. There is a simple way to calculate the amount you are entitled to:

**(1/3 gross monthly salary *) x (number of months worked / 12)**

Daan had a gross monthly salary of € 2400 (including holiday pay) * and was dismissed from his work after 2 years of service. The sum goes like this: (2400/3 = 800) (800 x 24 months = 19.200)/12=€ 1.600

* If there are other fixed gross components as a bonus or 13th month, these must also be included.

Anna had a gross monthly salary of € 3600 and worked for the employer for 8 months. The sum goes like this: (3600/3 = 1200) (1200 x 8 months = 9.600)/12 = € 800

*Also possible: total gross wages during employment x 2.78% = allowance*

* Your gross salary is the salary before deduction of all taxes. This is the amount that is also in your contract. The amount that you actually receive in your account is the net salary.

### Calculate your severance payment for a zero-hours contract

Calculating the amount of your severance payment for a zero-hour contract works slightly differently than normal. Since you do not have a fixed amount as a monthly salary with this contract, we look at how many hours you have worked on average per month.

You multiply your average number of hours per month by your hourly wage and you take a third of this amount, just like with the 'normal' calculation. You also divide this by 12 months. The sum goes as follows:

**(average number of hours per month x hourly wages/3) x (number of months worked/12) **

You calculate the average number of hours per month by adding up all the hours worked and dividing that number by the amount of months you worked for your employer.

Example 1: Julia has been employed for six months and earned € 10 per hour. She worked a total of 480 hours in those 6 months. The calculation is as follows:

The average number of hours you calculate like this: 480/6 = 80 hours

(80 uur x 10 = 800/3 = 266,67) (266,67 x 6 = 1600)/12 = € 133,34,-

*Example 2: *Merten has been employed for 1 year and earned € 8.50 per hour. He worked a total of 950 hours throughout the year. The calculation is as follows:

The average amount of hours you calculate by: 950/12 = 79,17 hours

(79,17 x 8,50 = 672,95/3 = 224,31) (224,31 x 12 = 2931,72)/12 = € 244,31,-

But actually there is an easier sum: add all gross earnings including holiday pay and multiply 2.78% = gross payment.

### Tax on your severance pay

You must pay income tax on your severance payment (box 1). The employer is obliged to withhold this tax from your allowance and to pay it to the tax authorities directly. The amount that you ultimately receive in your account is the amount after tax deduction. The amount that you calculate with the above sum is the gross amount, not the amount that you will ultimately receive in your account. Exactly how much tax you have to pay depends on your total income in the year in which the compensation is paid. The compensation is calculated in accordance with the rate of the tax authorities.

**Negotiating your severance pay **** **

Soms is er ook een mogelijkheid om te onderhandelen over je ontslagvergoeding. De som rekent uit waar jij minimaal wettelijk recht op hebt. Dat is dus het bedrag dat jouw werkgever volgens de wet moet betalen. Toch kan je onderhandelen met je werkgever over de hoogte van je vergoeding. Zeker wanneer er ontslag met wederzijds goedvinden is. Meestal doet jouw werkgever een aanbod en gaan ze er al vanuit dat jij met een tegenbod komt. Ga dus nooit meteen akkoord.

### Maximum severance pay

The maximum severance payment is € 83,000 or an annual salary if it is higher than this amount. On average, a dismissed employee in the Netherlands receives a gross amount of € 24,000, of which € 12,000 is severance pay and € 8,000 is exemption from work (salary, without having to work).

**Need help calculating your severance pay?**

Do you need help calculating your severance payment or applying for your compensation? We are happy to help you. Fill in the form below and we will get you what you are entitled to!

We often use the term severance pay instead of the official term transition payment. This is because people will understand it more easily that way. Want to know more?

Alweer anderhalf jaar hebben we te maken met de WAS en de daarbij behorende transitievergoeding. Met de invoering in 2020 heeft deze ontslagvergoeding zijn intrede gemaakt. Toch blijkt keer op keer dat mensen deze regels erg lastig vinden en niet erg snappen. Veel werknemers waarvan de baan stopt, vergeten deze vergoeding bij hun vorige werkgever […]

**I want my severance pay**

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