Subdistrict court formula (Kantonrechtersformule)
The subdistrict court formula is the guideline drawn up by the joint subdistrict courts in the Netherlands for determining the amount of the so-called dissolution or severance payments. The subdistrict court formula also serves as a guideline in negotiations for the mutual termination of employment agreements.
The formula includes 3 components A, B and C that have to be multiplied to obtain the outcome of the severance payment calculation. The component A corresponds to the number of weighted years of service, component B corresponds to the monthly renumeration and component C being a correction factor.
The number of weighted years of service depends on the number of years of service and the age of the employee. The number of weighted years of service of an older employee will be more than the number of weighted years of service of a younger employee with the same number of years of service.
It is important to note that the monthly salary is the starting point, however if an employee for example also receives a 13th month and/or other fixed allowances, these will also form part of the renumeration.
The correction factor indicates to whose fault the circumstances leading to the dissolution (the ground for dissolution c.q. culpability) is attributed. The subdistrict court can use a correction factor of 0 (zero) or higher, for example 0.5, 1, 2 or anywhere in between. The correction factor 1 is used as a starting point for negotiations in the event of mutual termination.
The subdistrict court formula is a recommendation, meaning that parties (and the judge) can deviate from the outcome of the formula.