End of transition payment compensation as of January 1, 2027
29 May 2026
As of 2027, employers will no longer be entitled to compensation for transition payments paid in cases of dismissal due to long‑term incapacity for work. This also applies to the compensation scheme for business termination due to the employer’s retirement or death. The previous government had already proposed initially abolishing the compensation for larger employers in such cases as of 1 July 2026.
This means that there will be no change to the existing scheme in 2026 for:
- compensation in cases of long‑term incapacity for work, and
- compensation in the event of business termination.
Current scheme (unchanged)
- Employers may apply for compensation for the transition payment paid upon termination of the employment contract due to long‑term incapacity for work.
- The application must be submitted within six months after payment of the transition payment.
- Both small and large employers will, for the time being, continue to be entitled to compensation.
Background
Previously, the intention was to limit the compensation scheme as of 1 July 2026 to small employers only (fewer than 25 employees, with a maximum wage bill of €1,082,500, based on an average insurable wage of €43,300 in 2024 × 25). This restriction will, however, not take effect on 1 July 2026.
The government has now decided to abolish the compensation schemes for both large and small employers as of 1 January 2027. The amended legislative proposal was submitted to the House of Representatives on 29 May. This measure is intended to contribute to keeping public finances sustainable in the long term.
For up‑to‑date information and the submission of applications, please refer to:
- UWV – transition payment compensation
- Government of the Netherlands – termination of employment contracts and compensation schemes
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