For many small employers, long-term sickness is not an abstract HR topic but a very real cash-flow problem. Two years of continued salary, replacement costs, and then, if dismissal follows, a transition payment. Until now, there was at least some relief: the government compensated that transition payment. From 1 July 2026, that relief is set to shrink. If the proposal passes, only small employers will still receive compensation by default; medium and large employers will not.

In plain terms, the transition payment is a legally required sum paid when an employment contract ends after two years of illness. The idea behind the change is simple: larger employers are considered strong enough to absorb that cost themselves. The state saves money, about €380 million a year. For micro and small businesses, the rule matters because it quietly redraws where financial risk lands when illness turns into exit.

The line between “small” and “not small” will no longer be a matter of interpretation. The Tax Authority already classifies employers annually, and you can see your category in the letter about the differentiated Whk premium, the disability and unemployment insurance contribution. From July 2026, UWV will follow that classification. This means the definition sits outside your control, and it can change from year to year as your workforce fluctuates.

There is a timing element that deserves attention. If the two-year salary continuation for a sick employee ends before 1 July 2026, medium and large employers may still apply for compensation afterward. If it ends on or after that date, the door closes. For small employers, compensation remains, but even there the assessment method may change in specific cases like business closure. None of this is dramatic on paper, yet it directly affects how predictable the cost of a long illness really is.

The law is not final. Parliament still has to approve it. But waiting for certainty is rarely a strategy. For small business owners, this is a moment to quietly tighten the basics: keep your sickness cases well documented, know your employer category each year, and factor the transition payment into longer-term financial planning rather than treating it as an exception. Not because panic is needed, but because clarity, early on, is cheaper than surprise later.