News - Transition payment when a Collective Labour Agreement expires

Transition payment when a Collective Labour Agreement expires

Much has changed this year when it comes to the Employment and Security Act. Severance payment has been scrapped and replaced by transition payment. An employee with a minimum length of service of two years, is eligible for this payment in the event of involuntary dismissal or if their employment contract is not renewed. But what is the situation with the transition payment when the CLA expires?

The objective of the transition payment is on the one hand as compensation for redundancy, and on the other hand to support the transition from one job to another. The payment amounts to one third of the monthly salary for the first ten years of service and half of the monthly salary for subsequent years, up to a maximum sum of € 75,000 gross (or an annual salary if this is a higher sum). This payment is also owed if an employee leaves employment after two years of sickness.

Tide-over allowance or severance payment

Where a compensation is included in the current CLA in the event of employment termination (for example a tide-over allowance or severance payment), the employer is not obliged to pay the transition payment as long as the new CLA has not yet come into force. There can be no accumulation of both a compensation from the CLA and the transition payment, because an employer would then have to pay twice. Therefore, until the new CLA becomes applicable, no transition payment has to be paid if the employer already has an obligation to make payment on the grounds of the existing CLA.

With thanks to Pascal Kruit, Employment lawyer at Ten Holter Noordam Advocaten.

Datum van publicatie: 18 August 2015