With the introduction of the WWZ (Work and Security Act) on July 1, 2015, an employer can no longer choose the dismissal route themselves. For dismissal due to economic reasons or after two years of illness, they must request permission from the UWV. All other grounds for dismissal (underperformance, disturbed working relationship, and the like) are assessed by the subdistrict court judge.
Regardless of which of these two routes is taken, the employee who has been employed for at least two years is entitled to the statutory transition compensation. However, most employment relationships are still terminated by mutual agreement, with the termination arrangements recorded in a settlement agreement.
We often get asked whether there is then a right to a transition compensation, and whether the employee must claim this. The simple answer to that is no. The law explicitly states that only in the case of termination through UWV or the court does the employee have the right to transition compensation. For termination by mutual consent, there is freedom of contract, so the parties mutually determine what compensation is reasonable. Therefore, a termination compensation and not a transition compensation is agreed upon. A clause is often included stating that the employee waives the transition compensation. The employee can in principle agree to this without risk of losing unemployment benefits, as long as a reasonable termination compensation has been agreed upon. Since in termination through the court or UWV this right does exist, transition compensation will usually be the minimum for most employees in negotiations about a termination by mutual consent to reach an agreement.
