Severance pays for senior executives in the (semi) public sector

Publication number: 2015-72
Authors: S. van der Werff, M. Imandt, H. Bennaars & R. Knegt
Commissioned by:
Ministry of the Interior and Kingdom Relations
Published by:
SEO Amsterdam Economics

Within the context of the assessment of the Public and Semi-public Sector Senior Officials (Standard Remuneration) Act (WNT), SEO Amsterdam Economics and the Hugo Sinzheimer Institute (HSI) were commissioned by the Ministry of the Interior and Kingdom Relations (BZK) to study the effects of the stipulations regarding the termination of employment. Senior officials’ redundancy payments are maximized at €75,000, but exceptions to this rule are possible. The study shows that senior officials who were made redundant in 2013 or 2014 and to whom the WNT applied, received a total of €94,000 in benefits on average. This is higher than the €75,000 ceiling, but cases to which transitional provisions applied or that were otherwise exempt from the maximum standard were included in the calculation of this average. In about half of the cases the benefits were below the WNT ceiling. The court system is reluctant to grant benefits that exceed the WNT standard, even though it isn't bound by this maximum norm. Only if applying the maximum leads to an unfair result, can there be reason to deviate from the maximum.

For this study, internal supervisory bodies, institutions and lawyers were surveyed, amongst others. One third of the institutions find the rules difficult to implement in practice. Amongst other things, they mention the fact that the WNT is at odds with other agreements. They also sometimes have difficulty with the readability of the legal text and its translation into practical situations. In this respect, the maximum amount of €75,000 is considered too low. The reason is that the remuneration that would result from applying the subdistrict court formula is generally higher. For most respondents, this subdistrict court formula serves as a point of reference for the benefits amount. Moreover, the scheme is said to result in additional consultancy and legal fees. There's also a broad need for simplifying the rules, so that they are easier to implement. Many respondents would like to see greater consistency with the schemes that apply to regular employees, as stipulated at present in the Work and Security Act (Wwz). In this regard they specifically mention that the Wwz allows a maximum transitional compensation of €75,000 or a one-year salary (if the latter is more), whereas in the WNT the maximum standard for compensation upon termination is a one-year salary with a maximum of €75,000.

This study is part of the broad evaluation of the WNT.

Category: 2015, Siemen van der Werff, Labour & Education