Good news for employers dealing with employees on long-term sick leave: the proposed restriction of the compensation scheme for transition payments to small employers has been postponed. The intended effective date has been moved from 1 July 2026 to 1 January 2027. This means employers can continue to make use of the current compensation scheme for the time being.
After two years of sickness absence, an employer may in principle terminate the employment agreement due to long-term incapacity for work. In that case, the employee is entitled to a statutory transition payment. To compensate employers for these costs, a compensation scheme through the Dutch Employee Insurance Agency (UWV) is currently available.
The original plan was to limit this compensation scheme to small employers as of 1 July 2026. That proposal has now been postponed. Reasons include the required parliamentary process and implementation challenges for UWV.
At the same time, the future of the scheme remains uncertain. The Dutch government is also considering whether the compensation scheme should be further amended in the future or possibly abolished altogether.
For now, nothing changes. Medium-sized and large employers can therefore continue to rely on the current compensation possibilities.
Nevertheless, employers should remain alert. The compensation scheme is clearly under discussion and future legislative changes could affect the costs associated with long-term employee absence.
It is advisable to already identify which long-term sickness cases may reach the end of the statutory waiting period in 2026 or 2027. The timing of the termination of an employment agreement may have financial consequences if the rules change in the meantime.
Maintaining a clear overview of these cases helps employers make timely decisions and avoid unexpected costs.
Would you like to know what the proposed Legislation restriction the compensation scheme for transition payments in cases of long-term incapacity for work could mean for your organisation? Please contact Renée Huijsmans-Zwijnenburg or one of our specialists within the Employment, Employee participation & Mediation team!
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