In its judgement of 24 July 2025, the Central Appeals Tribunal (Centrale Raad van Beroep, CRvB) clarified how to interpret the phrase “payable in the twelve months preceding the end of the employment contract” in the Decree concerning Wage Definition relating to Compensation for Notice Period and Transition Allowance (Besluit loonbegrip vergoeding aanzegtermijn en transitievergoeding). The Tribunal ruled that, when calculating the transition payment, commission accrued over the reference period, and not only commission actually paid within that period, must be taken into account.
Background
The employee was employed by the employer since 26 August 1996, on the basis of a fixed monthly salary. As from 2001, the parties agreed on a commission scheme. In short, under this scheme the employee was entitled to commission if and insofar as, per calendar year, a specified threshold amount in fees was reached. In practice, the commission was calculated after the end of each quarter and paid out as an advance, and then definitively determined at the beginning of the following year.
The employment contract was terminated by means of a termination agreement with effect from 1 October 2021 in connection with the closure of the business due to retirement of the employer. The employee received a transition allowance (transitievergoeding) of EUR 72,131.20 from the employer. The employer subsequently applied to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) for compensation of this transition payment. The UWV, however, granted compensation of only EUR 55,868.64.
In calculating the transition payment, UWV did not include the commission for the third quarter of 2021. UWV took the position that because the commission was not yet due and payable during the reference period referred to in Article 2(3) of the Decree, namely the twelve months preceding the termination of the employment contract on 1 October 2021, it fell outside the calculations. According to UWV, the commission only became due after the end of the quarter, i.e. after the employment relationship had ended.
The employer objected against this decision, but UWV declared the objection unfounded. The District Court subsequently annulled the decision and held that the commission for the third quarter of 2021 should have been included in the calculation. UWV then appealed against that judgment.
Issue
In this case, the parties disagree on the interpretation of Article 2(3) of the Decree, in particular the phrase “payable in the twelve months”. The key question is whether the transition payment must be calculated on the basis of amounts actually paid during the reference period, or on the basis of amounts that became payable over that period. The text of Article 2(3) of the Decree does not clearly resolve this, nor does the explanatory memorandum provide an unambiguous answer.
Judgement
Article 5 of the Wage Components and Working Hours Regulations (Regeling looncomponenten arbeidsduur, the Regulation) clarifies, among other things, the meaning of variable wage components as referred to in Article 3(1)(c) of the Decree. The variable wage components identified in the Regulation, such as bonuses, are wage elements whose amount is determined by the employee’s performance, the results of the company, or a combination of both. In that context, it is most consistent to use as the benchmark the entitlements that accrue over the reference period, irrespective of when they are actually paid, since the payment date is, to some extent, arbitrary.
Article 7:624 of the Dutch Civil Code, which in paragraph 4 stipulates that monetary remuneration dependent on work results, such as commission, must be paid as soon as its amount can be determined, does not preclude this interpretation. That provision does not affect the fact that the right to variable remuneration arises earlier. For commission to be regarded as “payable”, it is therefore irrelevant whether its precise amount is already ascertainable.
The Tribunal therefore finds that the phrase “payable in the twelve months preceding the end of the employment contract” in Article 2(3) of the Decree must be understood as referring to the right to commission that arose during the reference period. The UWV therefore acted incorrectly in disregarding the commission for the third quarter of 2021 when calculating the transition payment. The UWV’s appeal must therefore be dismissed.