18 January 2021

Employment-law: Changes as of 1 January 2021

Category: Employment law

Transitional allowance

The maximum amount of transitional allowance is adjusted annually. For 2021, the maximum amount has been set at € 84,000 or the applicable gross annual salary (if higher).

In addition, since 1 January 2021, compensation can be requested for the transitional allowance paid to employees in connection with company closure due to the retirement or death of a ‘small’ employer (less than 25 employees). For compensation of the transitional allowance due to retirement, it is required that the employee has actually reached the state pension age or will reach it in the short term (6 months). It is also required that a dismissal permit has been obtained from the UWV for at least one employee on the grounds of company economic reasons, company closure.


Every year, the minimum wage is indexed. For 2021, the minimum wage (for employees aged 21 and over) has been set at € 1,684.80 gross per month.

tax-free Travel Allowance

In 2020, employers were allowed to (continue to) pay the fixed travel allowance to employees tax-free, also when the employee was working from home, despite the fact that these travel expenses were not actually incurred. This rule will remain valid until at least 1 February 2021. There is a condition that these travel expenses were already paid to the employee before 13 March 2020.

Pension Of Payroll Employee

Payroll employees have the right to an adequate pension provision as of 1 January 2021. In short, an adequate pension provision exists if the plan is the same as the pension plan of the employees with the same or similar position, employed by the company for which the payroll employee performs activities (hirer). The payroll employer will have to take out a pension for its employees itself if it is not possible to join the pension scheme of the hirer or sector. 

High WW Premium for Overtime

On 1 January 2020, the Labour Market in Balance Act (Wet Arbeidsmarkt in Balans) came into effect. This Act includes a regulation with regard to the WW premium differentiation, whereby a distinction is made between a high and a low WW premium. In principle, a low WW-contribution is payable by employees working on the basis of an employment contract for an indefinite period with a fixed number of hours. This contribution can be adjusted from the low rate to the high rate if the employee has worked more than 30% of the employee’s workload in overtime in a year. It has been decided not to apply an adjustment of the low rate to the high rate in 2020 and 2021, as in some sectors a large amount of overtime is needed due to the corona crisis.

Lump Sum law, RVU and Leave Savings Scheme

The ‘Lump Sum Law, RVU and Leave Savings Scheme’ includes a regulation which makes it possible for older employees to stop working earlier without a fiscal penalty being imposed on the severance payment (Regeling Vervroegde Uittreding “RVU levy”) which has been agreed upon. This is a temporary relaxation of the RVU levy and will apply from 1 January 2021 to 31 December 2025. As a result, older employees will have the possibility to stop working three years before the state pension age.

In addition, the Act provides for an extension of the possibilities to save up for taxable leave. Employees will be able to save up to 100 weeks of tax-supported holiday leave and compensatory leave, which can be used at any time in their career (e.g. also before retirement).

The date of entry into force of the above Act is not yet known but it will apply retroactively from 1 January 2021.


Should you have any questions in connection with the above, please feel free to contact our lawyers in the Employment Law team.