How does the transition payment compensation scheme work for employers?

The transitional compensation scheme (compensatieregeling transitievergoeding) gives employers the opportunity to reclaim the transition payment they made to the UWV when they have had to dismiss a long-term sick employee after two years of illness. The scheme has been in place since 2020 and is designed to prevent employers from viewing the transition payment as a barrier to ending the employment relationship. In this article, we answer the most frequently asked questions about the compensation, the application process, and its relationship to reintegration.

Which employers are eligible for the compensation scheme?

Employers are eligible for the transitional compensation scheme if they have dismissed an employee following an uninterrupted period of illness of at least two years, and if they have actually paid a transition payment. The scheme applies to all employers in the Netherlands, regardless of company size.

The following conditions specifically apply:

• The employment contract was terminated after two years of illness, through a dissolution procedure or a settlement agreement
• The employee was entitled to a transition payment at the start of their illness
• The employer has demonstrably paid the transition payment
• The application is submitted within six months of payment of the compensation

Important: employers who have entered into a settlement agreement instead of a formal dismissal procedure may also be eligible, provided all other conditions are met. The UWV assesses the application on its merits and requests the necessary documentation for this purpose.

How much compensation can employers reclaim?

The compensation equals the statutory transition payment made by the employer, but is capped at the amount that was owed at the point when the employee had been ill for two years. Costs accrued after that point — for example, due to an extended employment period — are not reimbursed.

Two additional limitations are relevant:

• Cap at two years of illness: If the employee remained employed for longer than two years after reaching the two-year illness threshold, that additional period does not count toward the compensation.
• Deduction for transition payment from a previous employment: If the employer has previously paid a transition payment to the same employee, this may be deducted.

The compensation therefore never exceeds the statutory transition payment owed at the point of two years of illness. Above-statutory payments agreed upon in a settlement agreement fall outside the scope of the scheme.

How do you apply for compensation from the UWV?

You apply for the transitional compensation digitally through the UWV employer portal. The application must be submitted within six months of the transition payment being paid in full to the employee.

Follow these steps to submit a correct application:

1. Log in to the UWV employer portal using eHerkenning
2. Complete the application form for the compensation scheme
3. Attach the employment contract and termination documents
4. Upload proof of the illness period, such as the first-year evaluation or the reintegration report
5. Include proof of payment of the transition payment, such as a bank statement
6. Submit the application and keep a copy of the confirmation

The UWV may request additional documents, such as the action plan or the employee’s WIA decision. It is therefore important to ensure that the reintegration file is complete and well-documented before submitting your application.

How long does it take for the UWV to pay out the compensation?

The UWV is legally required to reach a decision within six weeks of receiving the application, but in practice the processing time can extend to a maximum of eight weeks. For complex cases or incomplete applications, the UWV may extend this period.

If the UWV requires additional information, the decision period is suspended until the requested documents have been provided. It is therefore advisable to submit the application as completely as possible. Once approved, the compensation is typically transferred to the employer’s bank account within a few business days.

What if the employee leaves employment while sick but has not been ill for two years?

If an employee leaves employment while sick but has not yet completed an uninterrupted illness period of two years, there is no entitlement to the transitional compensation scheme. The scheme is specifically intended for situations in which the employment relationship is terminated due to long-term incapacity for work following the full waiting period of 104 weeks.

In such situations, the employer may still owe a transition payment, but this does not fall under the compensation scheme. Examples include a settlement agreement concluded during illness, or a dismissal for a reason other than long-term illness. The WIA transitional compensation is therefore explicitly tied to the two-year waiting period, not simply to the fact that an employee is sick at the time of leaving employment.

What is the difference between track 1, track 2, and the compensation scheme?

Track 1, track 2, and the compensation scheme are three separate components of the reintegration process, each playing its own distinct role. They are related to one another, but should not be confused.

Track 1 focuses on reintegration within the employee’s own organization. The employer and employee work together toward a return to the employee’s original role or an adapted position within the same company. This process begins as early as possible after the employee reports sick.

Track 2 focuses on reintegration outside the employee’s own organization. This process begins while the employment relationship still exists and is not a consequence of dismissal — it is a reintegration obligation during the continued payment of wages during illness. Around the first-year evaluation, typically between weeks 46 and 52, an assessment is made as to whether track 1 is still sufficient or whether track 2 needs to be initiated. This decision is made by the employer, not the UWV. You can find more information about this process on our page about track 2 reintegration.

The compensation scheme is not a reintegration process, but a financial reimbursement arrangement. It only comes into play after the employment relationship has ended and the transition payment has been made. The UWV retrospectively assesses, as part of the WIA application, whether sufficient reintegration efforts were made. If those efforts are deemed insufficient, the UWV may impose a wage sanction of up to 52 additional weeks of continued wage payment.

When is it wise to bring in reintegration support?

It is wise to bring in reintegration support as soon as it becomes clear that an employee will not make a full recovery in the short term — and certainly when track 1 offers insufficient prospects. The earlier professional guidance is engaged, the greater the chance of a successful reintegration outcome and the lower the risk of a UWV wage sanction.

Specific moments when support is particularly valuable:

• Around the first-year evaluation, when the decision about track 2 comes up
• When the occupational physician identifies residual capacity for work, but a return to the employee’s original role is not realistic
• When the employee becomes stuck in the reintegration process due to psychological or motivational barriers
• When the reintegration file risks being incomplete ahead of the WIA application

Acting in a timely manner protects not only the employee, but also the employer. A well-documented and active reintegration process increases the likelihood of receiving compensation for the transition payment and reduces the risk of a wage sanction.

How UFIND supports reintegration and the compensation scheme

We support employers and employees with complex reintegration challenges, particularly when a return to the employee’s own organization is no longer feasible. Our track 2 program is fully tailored to the individual, developed in consultation with the employer, and focused on maximizing the employee’s chances of finding new professional fulfillment.

What we offer:

• Customized track 2 reintegration programs, tailored to the employee’s unique situation
• Guidance from a single dedicated coach throughout the entire process
• Application of the ACT methodology to transform psychological barriers into positive action
• More than 15 years of experience with complex and challenging reintegration cases
• Support with building the case file so that the application for transitional compensation is as strong as possible

Would you like to find out what we can do for your situation? Get in touch with us and we will be happy to think things through with you.

Related Articles

• Track 2 for chronic illness (MS, rheumatism, diabetes, etc.)
• What kind of volunteer work can you do during track 2?
• Can you choose your own reintegration company in track 2?
• When can the employee or employer request this?
• How do I choose a good Track 2 company as an employer?