Update compensation scheme for transitional compensation for long-term disabled employee

Back in July 2018, Lonneke Nouwen informed you about the developments surrounding the Compensation for Transition Compensation Act. Meanwhile, a more detailed elaboration of the law has been published and it is certain that the law will enter into force on April 1, 2020. High time, therefore, for a new update.

Transition compensation scheme

If you employ a long-term sick employee who is no longer able to perform the agreed work due to illness or disability, or if you have recently terminated an employment contract with a long-term sick employee, the compensation scheme may offer a solution. Under this scheme, as of April 1, 2020, employers can apply to the UWV for compensation of the transition compensation upon termination of employment due to long-term disability with retroactive effect to July 1, 2015.

The compensation refers to the amount of the transition compensation as of the end of the waiting period of 104 weeks. If after the end of two years of illness you keep the employment contract dormant for longer or intend to do so, you should take into account that the transition fee will also increase further. The UWV will not compensate that part.

Labor Market Balance Act

Depending on the duration of (dormant) employment, it may still pay off to keep the employment of an unfit employee dormant. With the entry into force of the WAB (on January 1, 2020), the structure of the transition compensation will change and its amount will probably be lower than is currently the case. For employment contracts that have been dormant for a long time, it may therefore be advisable to keep them dormant for a little longer or at least have some calculations made.

What's New. Deadlines

The further explanation of the regulation now announces the deadlines by which applications for compensation must be submitted to the UWV.

The scheme distinguishes between "old" and "new" cases:

• 'Old' cases: between July 1, 2015 and April 1, 2020, did you or will you pay a transitional compensation to a long-term disabled employee? Then you have six months after April 1, 2020 to submit the application for compensation to the UWV. This should therefore be done before October 1, 2020. The UWV has a period of six months to respond to the application.
• 'New' cases: are you going to pay transition compensation to a long-term disabled employee on or after April 1, 2020? If so, you must submit it to the UWV within six months of paying the full compensation. The UWV then has eight weeks to respond to the application.

The application is made using a digital application form from the UWV.

Making an application? Save your documents!

The regulation also addresses the information the UWV needs to assess the compensation request. For example, the UWV needs at least the following information:

• That there was an employment contract;
• Its duration;
• That the employee left work sick;
• That the transition allowance has been paid;
• How it was calculated;
• How high the cost of continued pay during illness was.

In any case, you should keep the employment contract, pay stubs, bank statements of the final settlement and the settlement agreement or dismissal permit. The UWV recommends keeping all personnel and financial documents. Medical data, on the nature of the illness, for example, will not be requested.

Need help making an application?

Could you use our advice in making an application or have other questions in the meantime, please feel free to contact one of our attorneys.