By: Transition Pay
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What to Do if You are Sick and No Longer Able to Work
The Netherlands has some of the world’s most protective employment laws, including generous provisions for employees who are ill and unable to work. Not only is there a safeguard against dismissal during sick leave, if you work in the Netherlands and you become ill, your employer is obligated to continue paying a percentage of your wages during the first two years of illness, at which point you can collect transition compensation if your employer decides to terminate your contract. Beyond that, if your illness or disability prevents you from working long-term, you may qualify for an unemployment or disability benefit. There are strict regulations in place for sick pay, transition compensation and disability benefits, and certain procedures must be followed by the employee and employer to ensure compliance. If you work in the Netherlands and an illness or disability prevents you from working, contact our knowledgeable employment law attorneys today to discuss your legal options.
- Sick Leave Entitlements in the Netherlands
- Continued Salary Payments
- Employer Obligations During Sick Leave
- Your Right to Transition Pay Upon Dismissal
- Transitional Compensation Fee Scheme
- Termination by Settlement Agreement
- Employee Insurance Benefits for People Who are Ill or Disabled
- Consult Our Reputable Dutch Employment Law Attorneys
Sick Leave Entitlements in the Netherlands
If you have an employment contract in the Netherlands and you have fallen ill, you should inform your employer of the illness as soon as possible. Dutch law states that employers must report sick leave to the company doctor or health and safety agency within four working days of receiving notice from the employee. In the case of a prolonged illness, employers should register the employee’s illness with the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen in Dutch, or UWV), at which point the employee will be notified how much he or she is entitled to in terms of sick pay. A doctor will be appointed to monitor the progression of the employee’s illness and reports will be submitted regarding the employee’s continued incapacity for work. Details about what to do when you get sick are typically included in your employment contract or collective labor agreement.
Continued Salary Payments
Employers in the Netherlands are generally prohibited from dismissing employees who are on sick leave, with certain specified exceptions (i.e. if the dismissal occurs during a probation period, if the company is bankrupt, or if the company is closing down altogether). In fact, Dutch employers are required by law to continue making salary payments to employees who are on sick leave for up to 104 weeks (two years). If you are on sick leave in the Netherlands, you are entitled to receive a minimum of 70% of your regular salary and holiday allowance during the sick-leave period, or a higher percentage, if such a provision is contained in your employment contract or collective labor agreement. Some Dutch employers may even pay 100% of the employee’s salary during sick leave.
Employer Obligations During Sick Leave
Because the law in the Netherlands prevents employers from terminating employees who are sick, it becomes important for employers to support ill employees, assist them in their health and recovery, and take every reasonable measure to help them return to work, if possible. This may include working with the employee to develop and implement a reintegration plan intended to get the employee back to work in his or her former position or in some other capacity. If you are able to resume your previous work after sick leave, but not at the same level, it may be necessary for your employer to temporarily reduce your work hours, adjust your working conditions, or modify your responsibilities and tasks to accommodate any limitations due to your illness. Keep in mind that you are required to cooperate with your employer and comply with the reintegration plan, or you risk losing your eligibility for sick leave benefits. In the event that the nature or severity of your illness or disability prevents you from returning to work in your former position, your employer should do everything possible to find a suitable alternative position either within the company or externally.
Your Right to Transition Pay Upon Dismissal
The sick leave benefit in the Netherlands is helpful for short-term illnesses, but there is always the possibility that an employee may suffer a serious long-term illness. If it has been more than two years and you are still unable to work due to a long-term illness or disability, and your employer has fulfilled his or her legal obligations during the sick-leave period, your employer can legally terminate your employment contract with authorization from the UWV. If, however, the UWV determines that your employer has not fulfilled his or her obligations or provided you with adequate assistance during your sick-leave period, the two-year limit may be extended.
If the UWV grants the dismissal permit and your employment contract is terminated, your employer has one month to pay you the transition compensation you are entitled to for your total duration of employment. Under the Labor Market in Balance Act (Wet arbeidsmarkt in balans, WAB), which entered into force on January 1, 2020, the transition compensation you are entitled to is equal to one-third of your gross monthly salary for each year you worked, plus a proportionate amount for any additional amount of time you worked that falls short of a full year. The maximum amount of transition pay in the Netherlands is currently capped at €83,000. However, if your annual salary is greater than €83,000, you are entitled to a transition payment that is equal to one year’s gross salary.
Transitional Compensation Fee Scheme
Some Dutch employers see it as a burden to be forced to pay a transition allowance after paying an ill employee’s salary for two years, and may allow the employment relationship with an ill employee to drag on in order to avoid incurring the transition fee. Fortunately, Dutch lawmakers recognized this issue and implemented the Transitional Compensation Fee Scheme, effective April 1, 2020, which allows employers to submit a request to the UWV for reimbursement of transition payments made upon dismissal of long-term incapacitated employees. The intention here is to encourage employers to terminate so-called “dormant” employment contracts and pay the employee’s transition compensation. The fee scheme retroactively applies to dismissals dating back to July 1, 2015, whether the dismissal was accomplished by UWV decision or by court ruling. The conditions for reimbursement are as follows:
- The employee has been made redundant due to long-term illness,
- The employee was entitled to transition pay upon dismissal, and
- The employer paid the transition payment.
Termination by Settlement Agreement
In some situations, dismissal due to long-term incapacity for work may occur via a settlement agreement, also known as a termination agreement, meaning the employer and employee were able to reach an agreement to terminate the employment contract. In the case of termination by mutual consent via a settlement agreement, the employer can still apply for reimbursement of the transition payment, so long as the agreement clearly states that long-term illness or disability is the reason for the dismissal.
Employee Insurance Benefits for People Who are Ill or Disabled
Employees in the Netherlands who are unable to work because of an illness or disability may be entitled to benefits under several different Dutch employee insurance schemes, including the following:
- Sickness Benefits Act (Ziektewet, ZW) – Requires Dutch employers to continue paying ill employees a percentage of their salary for the first two years of sickness.
- Work and Income (Capacity for Work) Act (Wet werk en inkomen naar arbeidsvermogen, WIA) – Created for those who have been out of work for more than two years due to long-term illness or disability. The benefits distributed to disabled individuals under this act will depend on whether their disability is deemed to be total, partial, permanent or temporary. The WIA is meant to replace the WAO.
- Fully Disabled Workers Income Scheme (Inkomensvoorziening Volledig Arbeidsongeschikten, IVA) – Provides benefits to employees who have little or no income due to an illness or disability.
- Return to Work Scheme for the Partially Disabled (Werkhervatting Gedeeltelijk Arbeidsgeschikten, WGA)– Provides supplemental income to employees who are only partially fit for work.
- Disability Insurance Act (Wet op de arbeidsongeschiktheidsverzekering, WAO)– Employees who are below retirement age can receive benefits under this act if they are at least 15% unfit for work after being disabled for 52 weeks. The amount of the benefit depends on the employee’s age, last-earned wage and degree of disability. This act only applies to those who became unfit for work before January 1, 2004.
- Unemployment Insurance Act (Werkloosheidswet, WW) – Provides temporary benefits to Dutch employees who lose their jobs to compensate them for the loss of income.
Consult Our Reputable Dutch Employment Law Attorneys
Losing your job for any reason is distressing, but when job loss occurs because of a long-term illness, the consequences can be devastating for you and your family. Fortunately, Netherlands’ labor and employment laws are extremely protective of employees, especially employees who are unable to work because of a prolonged illness. If you work in the Netherlands and a long-term illness or disability prevents you from working in full or in part, contact our experienced Dutch labor and employment law attorneys as soon as possible to discuss your legal options. Depending on your specific situation, you may qualify for sick pay, transition pay, disability benefits or unemployment benefits in accordance with Dutch law, and our legal team can help.