A founder sits with a payroll report, an employment contract and two years of correspondence. The employee has been ill for a long time. Regular wage payment has ended, dismissal permission has been obtained and the final calculation should be straightforward.
Yet the leave balance says one thing, the payroll labels suggest another and the available cash says: get this right.
That tension sits at the heart of a Rechtbank Amsterdam ruling dated 20 July 2026. The court rejected a claim for €8,991.45 gross in holiday hours linked to an unpaid third sickness year. It also awarded €2,462.23 gross in additional transition payment.
The additional payment followed two findings. A mobility budget functioned as remuneration, and the recognition-premium calculation contained an error. One employment relationship therefore produced separate questions about wages, holiday hours, budgets and termination pay.
The quiet third year
The 104-week point often feels like the end of the main process. Employers normally continue wage payment during sickness for up to two years. UWV then assesses eligibility for a WIA benefit. The employment relationship and its administration, however, can remain very much alive.
A third sickness year can take different forms. Regular wage payment may have ended, or UWV may have imposed an extra payment period because the employer’s reintegration efforts fell short. That difference changes the cost forecast and the position around leave.
Rijksoverheid’s guidance says that statutory holiday entitlement continues during full or partial sickness. The statutory minimum is four times the employee’s weekly working hours each year. Contracts and collective labour agreements may set separate arrangements for above-statutory hours.
The Amsterdam court addressed a narrower point. It held that holiday hours connected with an unpaid third sickness year could not be converted into cash when employment ended. Rechtbank Rotterdam has referred the wider question to the Supreme Court. Employers should therefore keep the wage timeline and leave record together while the issue develops.
A balance is not a conclusion
Small employers often keep one visible leave total. That is understandable. A number feels definite, particularly when payroll software has produced it. Accrual, expiry and payment at termination, however, remain separate questions.
Statutory and above-statutory hours can follow different expiry periods. The employee’s ability to take leave also matters. The final settlement then requires a further decision: which remaining hours can be paid out when the contract ends?
The payroll balance records hours. It does not explain when they arose, which category they belong to, whether they expired or what wage position applied at the time. Software can hold the arithmetic while leaving the decision unresolved.
Return to the founder at the table. If the report shows 320 hours, the useful question is not only whether the number is correct. It is what the number contains. Payroll, HR and the employment terms need to answer that together.
Pay labels meet economic reality
The transition-payment part of the judgment carries the clearest control lesson. The employer continued paying a mobility budget during sickness, despite the absence of commuting costs. The court treated the payment as remuneration and included it in the transition-payment calculation.
That finding does not turn every allowance or budget into salary. It does show why a label cannot settle the matter by itself. A mobility payment, premium, flexible benefit or personal budget needs to be read through its written basis and its practical operation.
Small companies are building richer pay packages. Base salary may sit beside mobility budgets, home-working payments, recognition awards and flexible benefits. These arrangements can be useful. They also create more places where the final calculation can drift from the actual pay structure.
A transition-payment error rarely stays isolated. It can trigger an employee claim, corrective payroll work and a revised cash requirement. It can also complicate the documents needed for UWV compensation, including the calculation, payslips, termination evidence and proof of full payment.
The cash timing deserves attention
UWV continues to offer compensation for qualifying transition payments after dismissal because of long-term incapacity. The employer must first pay the full amount and apply within six months. In some circumstances, UWV compensation can be lower than the statutory transition payment.
For a small company, that creates a funding gap before reimbursement arrives. The gap follows two years that may already have brought wage costs, replacement staff, occupational-health support, reintegration expenses and management time. A correction of a few thousand euros can therefore land harder than its face value suggests.
On 29 May 2026, the cabinet announced a bill intended to abolish transition-payment compensation schemes from 1 January 2027. Parliament still has to decide. Employers with long-term sickness cases approaching termination should keep timing, payment records and the supporting file under close review.
The sensible discipline starts before figures are exchanged. Reconcile the sickness timeline, wage status after week 104, leave categories, recurring pay components and expected settlement while there is room to resolve differences calmly. Once full payment has been made, put the six-month UWV deadline in the cash calendar.
A long illness is first a human matter. It should not be reduced to payroll mechanics. Accurate closure is part of respectful treatment. The employee deserves a calculation that reflects what was actually earned, and the employer deserves to know the real cost before signing.
After two years, the quiet part of the sickness process can carry the greatest financial detail. The answer is not a clever label or a hurried spreadsheet. It is a patient account of hours, pay, dates and decisions, clear enough for both sides to understand.
Want a practical review of payroll records, the settlement calculation and cash timing before the contract ends?
The data, sourcing, and analysis behind this article were conducted by Paolo Maria Pavan. AI was not used to identify sources, build the factual basis, or produce the analytical judgment contained here. AI was used only as a drafting aid. The final English text was personally reviewed, edited, and approved by Paolo Maria Pavan before publication.
