Severance
pay after dismissal
1. What is Severance Pay?
The severance
pay is a one-time payment in cash, which the employer must pay to
his employee when the working relationship with the employee terminates.
This payment
is calculated on the basis of the number of years of service by
the employee. The legal ground for the payment lies in the immaterial
damage that the employee suffers through the dismissal and the loss
of seniority.
The severance
payment results from a legal obligation of the employer, stated
in the Severance Ordinance (Cessantia-landsverordening) (P.B. 1983,
no. 85).
2.
Who is entitled to a severance payment?
An employee
in the Netherlands Antilles, whose working relationship terminates
other than through his or her own fault, is entitled to a severance
pay. This right originates after the first full year of service
of the employee.
When an employee
is dismissed due to a reason, which is accountable to, himself or
herself, he or she cannot derive any rights from the Severance Ordinance.
This is the case, for example, when an employee is dismissed on
the spot due to a legally urgent reason, like a serious form of
theft.
An employee
also doesn't have a right to severance pay when he or she quits
his or her job, unless he or she ends the working relationship because
of an urgent reason caused by an act of the employer.
Whether or not
one is entitled to a severance pay, it does not matter if the employee
is in permanent service, or works on the basis of a temporary contract
(provided that the duration of it is longer than one year).
Public servants
or employees working in the public sector and teachers in subsidized
denominational education are not entitled to severance pay.
3. When
does not a right to severance pay exist?
When an employee
passes away, there is no right to severance pay for the next of
kin. On the other hand, when an (former) employee already had a
severance claim on the (former) employer, at the moment of his passing
away, his next of kin (like his wife or children) can claim the
right to this payment.
Furthermore,
there is no need to pay severance pay if the employee receives at
the end of his service a pension or a benefit by way of a pension.
The amount of this pension or benefit has to be the same or more
than the amount of the then valid legal old-age pension. If the
legal old-age pension is deducted as a whole or partially form the
above-mentioned company pension or benefit by way of a pension,
this pension or benefit must be at least the same as twice the amount
of the then valid legal old-age pension.
Whether or not
one is entitled to severance pay is not attached to a certain age,
like reaching the majority age or the pensionable age.
4. What
is the amount of the severance pay?
The amount of
the severance pay is calculated as follows:
· For
the first till the tenth full years in service: one week’s
wage per year in service;
For the eleventh
till the twentieth full years in service: one and a quart times
the week’s wages per year in service;
For the next full years following: twice the week’s wages
per year in service.
Mind you: in a collective working agreement a more convenient way
of calculation can be used for the employee!
For the calculation
of full years in service a period of more than six months after
the first year of service counts as a full year of service.
A week’s
wage can be calculated by multiplying a month’s wages with
12 and dividing it then by 52. The hours’ wage can be deduced
from the week’s wages by multiplying the hours’ wage
by the number of working hours per week, a day’s wage by multiplying
it by the number of working days per week.
Example
An employee has been working for 14 years and 8 months for the same
employer for a lastly enjoyed gross monthly payment of NAfl. 1.800,-.
The employer dismisses this employee due to business economical
reasons. The employer must now pay to the employee a one-time severance
pay for the first till the tenth years of service one week’s
wage (calculation of week’s wages: NAfl. 1.800,- * 12 = NAfl.
21.600,- : 52 = NAfl. 415,38 per week). Multiplied by ten gives
NAfl. 4.153,80. For the eleventh till the fifteenth years of service
(the last 8 months count as a full year of service) the employer
will have to pay five times one and an quart the week’s wage.
This is five times (1,25 * NAfl. 415,38 =) NAfl. 519,23 = NAfl.
2.596,15. In total the employer will have to pay the employee a
severance pay of NAfl. 6.749,95.
5. The
claim of the employee to severance
The employee
must claim his severance pay from the employer within one year;
otherwise his right to severance will become superannuated.
If an employer
goes broke, has asked for a letter of license, or is in a position
where he has stopped paying (this is to be judged by the Social
Security Bank), the employee can make a claim on the Social Security
Bank (Severance fund), however, till a certain amount.
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