If an employer incurs expenses to increase the employability of an employee, and therefore the employee's chances on the labour market, these expenses may be deducted from the transition fee payable upon dismissal on certain conditions. In the ‘Deduction of Expenses from Transition Fee Decree’, more detailed conditions are set on this point. Until 1 July 2020, this Decree only allowed the deduction of expenses from the transition fee of activities that increase the employability of an employee outside the own organization. The options were extended starting from 1 July. Expenses incurred for activities with the objective of promoting the employability of the employee within the own organization can now also be deducted from the transition fee.
Conditions
The change to the Decree has widened the option of deducting employability expenses from the transition fee. Employers are allowed to deduct employability expenses from the transition fee unless:
- the knowledge and skills acquired have been used predominantly to perform the job the employee held when the activities began; or
- the expenses are related to obligations of the employer in the context of (first- or second-track) reintegration.
These exceptions were inspired by the fact that employers are obliged by law to let employees follow such training as is necessary for the performance of their jobs, and to reintegrate employees who are ill. Importantly, expenses of retraining that were incurred as part of re-employment cannot be deducted from the transition fee.
Otherwise, the other conditions from the Decree remain in force as they applied before 1 July 2020. The main conditions are the following:
- the employee has to agree in writing in advance to the deduction of the expenses (specified by the employer);
- the costs have been incurred by the own employer; and
- the costs must be in reasonable proportion to the objective for which they were incurred.
The parties may jointly agree whether or not to deduct the employability expenses in full from the transition fee. This means that they may also agree that only part of the expenses will be deducted from the transition fee, or that a gradual scale is used.
Background of the Change
The purpose of the change to the Decree as of 1 July 2020 is to encourage employers to invest in the broader employability of employees during their employment. It is important that employees keep educating themselves. As employers are now allowed to deduct expenses of employability within their own organization, this may be an extra incentive for them to make such investments. Activities within the scope of broader employability of employees may lead to different positions at the same organization. This way, the employer himself will also benefit from the investment. To illustrate the above: a management training could be offered to an employee who is not a manager yet, but aspires to such a job within the organization.
In short
The consequence of the change as of 1 July 2020 is that employers can deduct employability expenses that are aimed at the broader employability of employees within their own organization, from the transition fee.
Do you have any questions about the change to the Decree? Please feel free to contact Eylard van Fenema or Marieke Opdam.
