Doing Business in the Netherlands 2012 - American Chamber of ...

With effect from 1 January 2009, factor (A) is calculated differently
based on published revised recommendations of the courts. The age
brackets have been revised, as well as the value of service years
worked in those age brackets. The years of service until the age of 35
are now multiplied by 0.5; those between 35 and 45 are now counted
as 1; those between 45 and 55 are multiplied by 1.5 and those from
age 55 and over are now multiplied by 2. Periods of six months plus
one day (and longer) are rounded off to whole years of service.
The basis for the average monthly salary (B) is the most recent fixed
(gross) monthly salary plus all fixed and agreed upon salary
components: holiday allowance, 13th month pay and average bonus
payments if these have been paid on a regular basis. Other
perquisites, such as pension premiums, are in principle not taken into
account. Case law, however, shows that under certain circumstances,
courts consider stock benefits to be part of the employee’s salary and,
for that reason, take the rights under a Stock Option Plan into account
when calculating severance pay. It may even rule to continue a Stock
Option Plan after termination of an employment contract.
In a “neutral” situation, i.e., in which neither party is to blame, the
adjustment factor (C) is set at 1. If termination of the employment
contract may be blamed on the employer, the factor will be set at a
higher level. If the employee is to blame, the factor will be set at less
than 1.
As of 1 January 2009, in fixing factor (C), the courts pay more
attention to the employee’s labor market position and the employer’s
financial position. If the employer is able to demonstrate, by means of
an annual report, accounts and well-documented forecasts, that it is
incapable of paying compensation, the adjustment factor may be
adjusted downwards. In addition, employers that have invested in
their employees’ training courses may be required to pay lower
severance payments. Furthermore, employees performing work in a
branch of industry with a major shortage of labor may be awarded
lower severance payments, considering that these employees require
less financial protection.
126 Baker & McKenzie