The transition compensation at 50+
August 26, 2020
We understand that you have many questions and uncertainties when you lose your job aged over 50. Because what do you need to do from here on now and what about the transition payment, also known as severance payment, for people over 50 years of age? For example, are you entitled to a higher compensation than employees under the age of 50?
Since January 1, 2020, the transition compensation for people over 50 is the same as that for employees under 50. This means that employees over 50, who have been employed by the same employer for more than ten years, no longer have an advantage over their younger colleagues. The compensation is now calculated in the same way: 1/3 monthly salary per year worked.
Under the new scheme it is just as important that you receive the transition payment to which you are entitled. Has your employer paid you no compensation or do you think you are entitled to a higher amount? Read on to learn more and get in touch with us for assistance.
How much is the transition compensation for people over 50?
For a long time, there was a special scheme for employees over 50 who had been employed by an employer for at least ten years. Incidentally, the scheme did not apply to employees at small companies, with an average of less than 25 employees. The transition compensation was calculated differently for them.
It was arranged like this as it is generally more difficult for people over 50 to find a new job. This is because employers often prefer younger (and cheaper) applicants to more experienced (but more expensive) candidates.
Under the new scheme since January 1, 2020, you calculate your transition compensation at the age of 50 in exactly the same way as everyone else. For each year that you have been employed by your employer, you take 1/3 of your gross monthly salary. This is the wage from which no tax has yet been deducted, as stated in your contract. The calculation looks like this:
(1/3 gross monthly salary) x (number of months worked / 12)
An employee has a gross monthly salary of € 2,400 (including holiday pay) * and works for an employer for 2 years. Then the sum is as follows:
(2400/3 = 800) (800 x 24 months = 19,200) / 12 = € 1,600
* Any fixed gross components such as a bonus or 13th month must also be included.e maand moeten ook meegenomen worden.
With the new scheme, there is no difference in calculation for people over 50 who are dismissed after years at an employer and people over 50 with a temporary contract that is not renewed. You can read more about calculations and about the amount of the transition payment in our blog on this subject.
What was the transition payment for 50+ before 2020?
Before January 1, 2020, there was a special calculation for employees over 50 years of age, as a result of which they received a higher transition compensation . However, this only applied if you had been employed by your employer for at least ten years .
For each year after ten years of service and after the 50th birthday, they received an even higher compensation. The standard calculation of the transition payment applied for the first ten years.
Transition compensation for old scheme:
- For the first ten years of service:
(1/3 gross monthly salary) x (number of months worked / 12)
- After the tenth year of employment:
(1/2 gross monthly salary) x (number of months worked / 12)
- After 10 years and above 50:
(1 gross monthly salary) x (number of months worked / 12)
Employees over 50 could therefore be entitled to a transition payment based on half or even a full gross salary per year. We explain further how that worked in this example:
An employee of 56 years of age has a gross monthly salary of € 3000 (including holiday pay). He worked for his employer for twenty years. For the first ten years, the normal calculation of the transition payment applies, so:
(3000/3 = 1000) (1000 x 120 months = 120,000) / 12 = € 10,000
The following four years, so after his tenth year of service, the calculation based on half the monthly salary applies:
(3000/2 = 1500) (1500 x 48 months = 72,000) / 12 = € 6,000
For the last six years, after his fiftieth birthday, his transition payment is calculated on the basis of the full gross monthly salary:
(3000 x 72 months = 216,000) / 12 = € 18,000
In total that is therefore a transition payment of € 10,000 + € 6,000 + € 18,000 = € 34,000.
By comparison, the same employee earns under the new scheme (3000/3 = 1000) (1000 x 240 months = 240,000) / 12 = € 20,000. That is a difference of no less than € 14,000 with the old scheme!
Differences in severance pay via settlement agreement
The special scheme for people over 50 applied to dismissals appealed through a subdistrict court or the UWV. It may also be the case that after more than ten years of employment, you are dismissed outside the court or the UWV. Your employer will consult with you about the conditions for your dismissal in a settlement agreement.
In the negotiations, your employer can offer you an amount that does not depend on the legally determined transition compensation. It therefore happens that employers base the severance payment on the old scheme. That way, they can reward their employees for their long track record.
You can read more about dismissal by mutual consent in this blog.
As a person over 50, are you entitled to a transition compensation?
Have you been fired by the subdistrict court or the UWV or has your temporary contract not been extended? Then there is a good chance that you are entitled to a transition payment.
Enter your details below and we will investigate what you are entitled to and help you to claim this amount. You have nothing to lose with us: if you do not receive a transition compensation, you do not have to pay us a cent . So don't miss out on what you are legally 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?
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