Compensation for Severance Payment for Long-Term Incapacity.

More information about compensation severance payment

In these times, many entrepreneurs have a hard time financially may have missed that from 1 April 2020, a compensation can be applicable for paid severance payments in the event of dismissal of a long-term disabled employee.

Conditions for compensation

If your employee is incapacitated for work for 2 (two) consecutive years, the statutory prohibition of termination no longer applies. It is then possible to terminate the employment contract by mutual consent or to apply for a dismissal permit from the UWV.

The compensation can be requested retroactively, for the severance payments upon termination of employment contracts with long-term disability on or after 1 July 2015 and if the end of the two-year period of illness was on or after July 1, 2015. The UWV has listed conditions on its website to qualify for the compensation.

Level of compensation

The exact amount of the compensation will be accurately calculated by the UWV. The following applies in any case, according to the detailed regulation:

  • The compensation cannot exceed the amount actually paid, even if the statutory right to the severance payment [transitievergoeding] would be a higher amount.
  • In any case, the compensation cannot exceed the statutory maximum payment.
  • If there is a period in which insufficient efforts were made for the reintegration, the UWV can impose a wage penalty.  Over the period that the wage penalty applies, the employee also accrues the right to the severance payment. That part is not compensated.
  • We speak of dormant employment if after 2 (two) years of long-term disability the employment contract is not immediately terminated, even though this could be possible and the employee is still incapacitated for work. The employee will also accrue entitlement for a severance payment over that period. That part of the payment will not be compensated.

The request can be submitted within 6 months after payment of the severance payment. Has the transition payment been paid in full before April 1, 2020? Then employers can submit the application to 30 September 2020.

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