Compensation for Transition Payment ends: are you at risk?

If you terminate the employment contract of an employee who has been on long-term sick leave after two years, you are required to pay a transition allowance. You can reclaim this amount from the UWV. However, if you have (more than) 25 employees, you will no longer be eligible for this compensation scheme as of July 1, 2026, and you will have to pay the full transition allowance yourself.

By Mirelle Klijs, founder of De Verzuimmakelaar

Why new legislation?
The government has indicated in the coalition agreement that this compensation scheme will be scaled back. With the new legislation, the government aims to motivate large employers to take (even) better care of their employees and invest in their health. Think of healthy, safe workplaces and optimal guidance for sick employees. The idea is that larger companies are better able to bear the costs involved.

Preventing dormant employment contracts
The scheme was originally introduced to prevent dormant employment contracts. After two years of illness, salary payment ends, and in principle, so does the employment contract. In such cases, the employee is entitled to a transition allowance, based on the salary and the number of years employed. Many employers therefore decided not to terminate the contract, which led to the phenomenon of dormant contracts. To put an end to this, the compensation scheme was introduced on April 1, 2020.

Even higher transition allowance
Employers who opt for dormant employment contracts assume that the respective employees will never work again. But if someone miraculously recovers, they can claim a job with you. If you do not have a suitable position available and therefore want to dismiss the employee, the years of the dormant contract also count towards the calculation of the transition allowance. This can become very costly. Also, if an employee turns out to be able to resume work and works fully for more than four weeks, the two-year salary payment obligation applies again in the event of a new sick leave. And you will have to start the Gatekeeper Improvement Act process all over again. In this way, the years of service and absenteeism costs continue to accumulate.

How much risk are you willing to take?
How do you, as an employer, want to deal with this change in the law? This is truly a crucial question. If you choose dormant contracts, you run a financial risk. That is the reason why the scheme was introduced in the first place. And that is also the reason why you should not want to do this.

Reducing long-term absenteeism
The best solution is actually to develop a good absenteeism policy, which can help you reduce (long-term) absenteeism. It is therefore important to enforce this policy and to pay structural attention to the personal (work) circumstances of your employees. Would you like to know what a good absenteeism policy can do for your organization? Don’t hesitate to contact me: mirelle@deverzuimmakelaar.nl.

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