Many employers have trouble with the fact that they have to pay their employee the mandatory transition allowance after 2 years of illness. The result was "dormant" employment contracts (i.e. no dismissal permit was applied for, so there was no right to a transition allowance). Now that the Senate has also approved the bill that regulates compensation for this allowance, there are a number of matters you must consider.
As of when?
The law is intended to take effect on 1-4-2020, and has a retroactive effect until 1-7-2015 (effective date WWZ). So we are talking about old (from 1-7-2015) and new (from 1-4-2020) cases.
What is the difference?
- The old cases concern payments to employees, after 2 years of illness, which you made before 1-4-2020.
- The new cases concern payments to employees, after 2 years of illness, which you made starting 1-4-2020.
You can request a refund from the Employee Insurance Agency (Dutch UWV), who will arrange the refund electronically (through the UWV Employer Portal).
What do you need for this?
Because the legislation and its execution are still in development, more will be known about this at a later date. For now, it is a good idea to supplement your dismissal file with the following:
- The employment contract with your employee
- The decision showing that the UWV (or the subdistrict court) has granted permission to terminate (or dissolve) the employment contract due to long-term incapacity for work
- A possible termination agreement by mutual consent after 2 years of illness and expiry of the notice period
- Proof of incapacity for work in the form of the incapacity for work benefits (Dutch WIA or ZW) decision. If you do not have these you can ask the company doctor for a statement
- A copy of the pay slip
- A calculation of the transition allowance
- Proof of payment of the transition allowance (copy bank statement) to employee.
What are the deadlines?
- For old cases: you must submit the request before September 30, 2020.
- For new cases: No longer than 6 months after payment (in full) of the allowance to employee
How is this scheme funded?
The compensation is paid out of the General Unemployment Fund (Dutch Awf), the premium for this will increase.
Moreover, this compensation scheme appears to coincide with other agreements from the coalition agreement that have been worked out in the proposed Balanced Labour Market Act, which should be a revision of the 2015 Work and Security Act (Dutch WWZ).
Source: XpertHR, HR Rendement