How do I calculate my Dutch transition payment?

The Dutch transition payment (transitievergoeding) is one third of your gross monthly salary for every year worked, pro rata for the remaining days. Work seven years and four months at € 3,240 gross a month including holiday allowance, and the payment is € 7,921. The formula is in article 7:673(2) of the Civil Code (BW). Below: what counts as monthly salary, the statutory maximum, two worked examples, what you keep net, and when you have no right to it.

The formula

Transition payment = (gross monthly salary ÷ 3) × full years of service + (gross monthly salary ÷ 3) × (remaining days ÷ 365).

It applies from the first day of employment: the two-year waiting period was abolished in 2020. Also when a fixed-term contract is not renewed by the employer, you are entitled to the payment over the period worked (article 7:673(1) BW).

What counts as gross monthly salary

The monthly salary in the formula is more than the bare monthly wage. Under the Decree on the wage concept for the notification and transition payments (Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding) you add up:

• the gross monthly wage;
• holiday allowance, usually 8%, converted to a month;
• a fixed year-end bonus or thirteenth month, divided by twelve;
• the average overtime pay and shift allowance over the last twelve months;
• the average bonus, profit share or variable year-end payment over the last three years.

With varying hours, such as a zero-hours contract, take the average wage over the last twelve months. The employer's pension contribution and a company car do not count.

The maximum

The payment is capped at an amount adjusted every 1 January; in 2025 it was € 98,000. If you earn more than that a year, the cap is one gross annual salary (article 7:673(3) BW). For most employees the cap only matters after twenty to thirty years of service.

Two worked examples

Example 1. Gross monthly wage € 3,000, holiday allowance 8%, no other allowances. Monthly salary: € 3,240. Length of service: 7 years and 4 months.

• Per year of service: € 3,240 ÷ 3 = € 1,080.
• 7 full years: 7 × € 1,080 = € 7,560.
• 4 months (122 days): € 1,080 × 122 ÷ 365 = € 361.
• Transition payment: € 7,921 gross.

Example 2. Gross monthly wage € 5,000, holiday allowance 8%, thirteenth month € 5,000, average bonus € 6,000 a year. Monthly salary: € 5,000 + € 400 + € 417 + € 500 = € 6,317. Length of service: exactly 23 years.

• Per year of service: € 6,317 ÷ 3 = € 2,106.
• 23 years: 23 × € 2,106 = € 48,430 gross. That stays under the cap.

If you calculate it yourself, use the contract's end date as the reference date, not the date notice was given.

Gross and net

The transition payment is wages and is taxed at the special rate for one-off payments. What you keep depends on your income in the year of payment. In 2025 the rate was 37.48% up to € 76,817 and 49.5% above that. In example 1 you keep roughly € 4,950 net; in example 2, where part of the payment falls in the top bracket, around € 27,000. Payment in a year in which you otherwise earn little, for instance the year after the dismissal, can work out better net; that is something you can agree in a settlement agreement.

When you have no right to it

• You resign or take the initiative to end the contract yourself, unless the employer acted in a seriously culpable way (article 7:673(1)(b) BW). Before you resign, read What is the statutory notice period?.
• Seriously culpable conduct on your part, such as theft or fraud (article 7:673(7) BW). An ordinary summary dismissal is not automatically the same thing; see Instant dismissal: what now?.
• You have reached state pension age on the end date, or you are under 18 and worked on average at most twelve hours a week.
• Bankruptcy or suspension of payments of the employer (article 7:673c BW).

With a settlement agreement there is no statutory right to the transition payment, but in practice the statutory amount is the floor of what you agree. How to assess that is in Reviewing a settlement agreement: checklist (in Dutch).

After two years of illness

If you are dismissed after two years of illness, you are entitled to the full transition payment, calculated to the end date. The employer is compensated for it by the UWV (article 7:673e BW), so there is no reason to accept less. If the employer keeps the contract dormant to avoid the payment, it must at your request still cooperate with a termination with payment (Supreme Court, 8 November 2019, ECLI:NL:HR:2019:1734, Xella).

Costs the employer may deduct

Costs the employer incurred to make you more widely employable, such as training for a different role, may under conditions be deducted from the payment, but only if you agreed to that in writing beforehand (article 7:673(6) BW). Costs for your current role do not count.

Not paid? Three months

If the employer does not pay, you must file a request with the subdistrict court within three months after the end date (article 7:686a(4) BW). After that your right lapses. So send a written demand straight after the end date and do not let that period run out.

What to do

• List your monthly salary including holiday allowance, thirteenth month and average allowances; calculate to the end date.
• Check the employer's calculation for the wage components; the bare monthly wage is often too low.
• With a settlement agreement: the statutory payment is the minimum, and the payment date can make a difference net.
• Not paid: go to the subdistrict court within three months.