Last Friday, the Dutch Supreme Court decided that good employment practices require an employer to consent to an employee's proposal for termination of the employment contract by mutual agreement and to award the employee compensation equal to the statutory transition allowance.

It is justifiable for the calculation of the amount of the transition allowance to be based on the amount the employer would be required to pay if the employment contract were terminated the day after the 104-week qualifying period under the Work and Income (Capacity for Work) Act ends. If paying the transition allowance causes the employer financial hardship, the employer is allowed to make payment in instalments or to postpone payment until 1 April 2020, the day the new Transition Allowance (Compensation) Act takes effect.

For an application to the Employee Insurance Agency UWV under this act to be successful, the employer must have paid the full amount of compensation to the employee, which requires the employer to advance funding - at least for a short period.

Click here to read the full alert (in Dutch) by our Employment experts.