The bill restricting the statutory compensation scheme for a transitional allowance on termination of employment after long-term disability to small employers is in internet consultation. Online responses are possible until 19 March 2025. The scheme is scheduled to take effect on 1 July 2026.
From 1 April 2020, employers will be compensated (subject to conditions) for the cost of transition compensation paid upon dismissal due to long-term disability. The scheme then entered into force retroactively to 1 July 2015.
Small employer
Only employers classed as small by the tax authorities will soon be eligible for compensation of transition fees paid, subject to conditions. Around 20% of employees are employed by a small company. Limiting the compensation scheme to small employers from 1 July 2026 will therefore lead to a decrease in the number of awards by around 80%.
It has been chosen to match the definition of 'small employer' as it applies to funding in the disability scheme, so that it is unambiguous and workable for employers and implementation.
The employer size classification for a calendar year is made on the basis of the employer's total contributory wages two years earlier. A start-up employer is classified as a small employer in the first two calendar years of its existence, because, according to this system, the employer's wage data are not yet known then. The small employer receives a notice from the Tax Administration, the medium and large employers receive a decision from the Tax Administration indicating the size of the employer.
Also in the event of business closure
A different definition of small employer is used in the compensation option of the transitional compensation in case of termination of the company's operations. However, it has been found that the above definition is preferable because the wage bill is more relevant when assessing financial capacity and the employer has been informed of the classification small/medium and large. Therefore, for the sake of unambiguity within the statutory compensation scheme, it is proposed to use the same definition in the compensation scheme in case of termination of the company's operations.
As a reference point to determine whether the employer is small, the date of the first application to the UWV or the first petition for dissolution that resulted in a granted dismissal permit or dissolution by the subdistrict court is used. Connecting to this date is easy for UWV to implement. For subsequent terminations of employment contracts by the employer at that business termination, that day of the first request is always used. For all compensation applied for within one business termination, which can be done by means of multiple applications, one and the same moment will be used to test whether an employer is small.
Note: Thus, the approximately 34,000 medium and large employers will soon no longer receive compensation if they have to pay transitional compensation to employees whose employment contracts are terminated or ended by law after two years of disability.
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