How does a settlement agreement ( termination agreement ) work in te Netherlands?

including example settlement agreement, template termination agreement

You are summoned by your boss. He presents you with a termination agreement or settlement agreement ( vaststellingsovereenkomst in Dutch), with the request to sign this agreement, preferably as soon as possible.
However, should you actually do this? Should you agree to your dismissal? Will you still be entitled to unemployment benefits (werkeloosheidswet)? Are you not entitled to a (higher) severance payment? And how about the mandatory notice periods? You can read the answers to your possible questions regarding the settlement agreement below. If you still have questions after reading this, or would you like your agreement to be assessed FREE OF CHARGE, you can contact us by phone or email. We can also negotiate better dismissal conditions for you, or prevent your dismissal.

Settlement agreement dismissal under Dutch law and unemployment benefits

It is possible to terminate an employment contract while maintaining the right to unemployment benefits through a settlement agreement.
This is an agreement in which two or more parties establish a binding arrangement for the prevention of or solution to a dispute. For example, an arrangement between employer and employee concerning the termination of an employment contract (dismissal). In the agreement, the conditions concerning the dismissal are recorded in writing. In the Dutch Civil Code, the settlement agreement is described (book 7 article 900 through 906). Another frequently used alternative term is the termination agreement. To maintain the right to unemployment benefits, it is no longer necessary to go through a district court procedure (kantonrechtersprocedure) or a procedure at the Employees Benefit Agency (UWV). However, a provision is that the text of the agreement is drafted properly, and that the correct notice time applicable for the employer is taken into consideration. Our ‘dismissal- specialists’ can assist you with drafting or reviewing the proper text and determining the notice time that should be taken into account.

Legal consequences of the settlement agreement in case of dismissal

Parties cannot, in general, after entering into an agreement, claim fraud or misrepresentation. Therefore, a settlement agreement can rarely be overturned, adjusted, or terminated. The rule: ‘what has been determined, is determined’. Therefore, it is of the utmost importance that you really understand which agreements are incorporated in the settlement.

Content of the agreement

What is incorporated in the agreement?
To start with, the general data of the parties are included, such as names, addresses, as well as the position of the employee and the commencement date of employment.
Furthermore, the reason for the termination of the employment contract is stated. To avoid problems with obtaining unemployment benefits, this must be a ‘neutral’ cause (e.g. business economic reasons or a disturbed employment relationship) not caused by the employee.
Furthermore, of course, the termination date of the employment contract must be included, and the possible severance payment, which the employee will be paid for the employment.

Additionally, the following agreements can be considered:
•If the employee will be exempt from work for the remaining period of the employment contract;
•If the employee will be paid the remaining vacation days or not;
•If the employee must return certain items belonging to the company (e.g. laptop, telephone);
•If the employee, after the termination of the employment contract, is still held to a non-competition clause or non- solicitation clause.

Finally, there will be a provision that the parties grant each other ‘full discharge’ after the arrangements made in the agreements are fulfilled. As parties declare that they have no obligations towards each other, it is essential that the made agreements concerning the rights and obligations of the parties are ‘complete’.

Settlement agreement in case of sickness

In most cases, it is not recommended to enter into a settlement agreement when you are sick. Then, obtaining unemployment benefits, or benefits under the Sickness Benefits Act, is often not possible. However, there are exceptions, in particular if the ‘sickness’ is connected with the labor relationship (situational invalidity). Also read: sickness during settlement agreements. In any case, ask for expert advice before you accept a settlement agreement in such a situation.

Settlement agreements in case of pregnancy

It is possible to enter into a safe unemployment benefit settlement agreement when pregnant. The only difference is when you are sick because of your pregnancy. However, it is not recommended to agree to a dismissal proposal with your employer too quickly. Namely, due to your pregnancy, you will have fewer opportunities in job interviews. As you also are granted additional dismissal protection due to your pregnancy, a better arrangement is often possible than your employer proposes. These might include, for example, postponing your dismissal date until after your maternity leave, or a higher severance payment. The lawyers/ attorneys at Dismissal Specialist often are able to accomplish that. Therefore, if you are pregnant and have to deal with dismissal: call or email us.

FAQ's

Am I entitled to a severance payment?
An employee who is dismissed is almost always entitled to the statutory transition allowance (“transitievergoeding”). The amount of this allowance is calculated based on the total duration of employment. The transition allowance amounts to one-third of a gross monthly salary per year of service.
The maximum statutory transition allowance was €84,000 in 2021. In 2025, the maximum amount will be €98,000 gross.
If the employee earns an annual salary higher than €86,000, the maximum transition allowance equals one annual salary.

Can I request a higher compensation?
As an employee, you may wish to be compensated for the financial consequences of your dismissal. Although the statutory transition allowance serves as a starting point, a higher compensation is often achievable. This is especially the case when the employer initiates dismissal due to (alleged) underperformance or a disrupted working relationship.
The lawyers and legal specialists at Ontslagspecialist have a proven track record of successfully obtaining higher settlements for employees. Contact us directly for assistance.

Other frequently asked questions about the settlement agreement

Who can review my settlement agreement?
Our lawyers and legal experts can review your agreement free of charge.

Can the terms of my settlement agreement be negotiated?
Yes, almost always. Email us your settlement agreement, and we will advise you on possible improvements. We can also negotiate on your behalf to achieve a better outcome.

How can I safeguard my right to unemployment benefits (WW)?
The wording of your agreement must be WW-proof (unemployment benefit–safe), and the employer’s statutory notice period must be respected.

Do I have a cooling-off period for a settlement agreement (VSO)?
Some employers offer only a short period to accept their proposal. If necessary, ask for an extension. Remember: after signing a VSO, you still have the right to revoke the agreement within 14 days.

Is signing a settlement agreement during illness a good or bad idea?
Usually, it is not a good idea — although in some cases it can be. Always seek advice from our specialists before signing if you are ill.

What does “final discharge” mean in a settlement agreement?
What you agree upon in a settlement agreement is binding. Agreed means settled. This means that once the agreement is signed, you generally cannot make additional claims beyond what has been recorded.

Non-compete or non-solicitation clause in the settlement agreement
It is often advisable for employees to have any non-compete or non-solicitation clause removed or amended when entering into a settlement agreement. Always check the content of your agreement carefully.

Am I entitled to a severance payment?
An employee who is dismissed is almost always entitled to the statutory transition allowance (“transitievergoeding”). The amount of this allowance is calculated based on the total duration of employment. The transition allowance amounts to one-third of a gross monthly salary per year of service.
The maximum statutory transition allowance was €84,000 in 2021. In 2025, the maximum amount will be €98,000 gross.
If the employee earns an annual salary higher than €86,000, the maximum transition allowance equals one annual salary

.Can I request a higher compensation?
As an employee, you may wish to be compensated for the financial consequences of your dismissal. Although the statutory transition allowance serves as a starting point, a higher compensation is often achievable. This is especially the case when the employer initiates dismissal due to (alleged) underperformance or a disrupted working relationship.
The lawyers and legal specialists at Ontslagspecialist have a proven track record of successfully obtaining higher settlements for employees. Contact us directly for assistance.-

Advice, FREE OF CHARGE!

Due to the large interests involved when entering into a settlement agreement, professional legal advice is recommended. Our dismissal specialists for expats have extensive experience and knowledge concerning this subject.
You can have your settlement agreement checked, free of charge, by our settlement specialists. Then you will know for sure that you will receive what you are entitled to and that your unemployment benefits are not jeopardized.
Our initial advice is FREE OF CHARGE! Therefore, you have nothing to lose, you can only win and benefit from our advice.

RESULTS GUARANTEE in negotiations concerning dismissal conditions

If you leave the negotiations concerning the termination of your employment contract up to our dismissal specialists, we will stand up for your interests, and will try get a better deal for you. Additionally we will try to have the costs for legal help reimbursed by your employer. Usually we succeed in this.! Also, in case your employer is not willing to reimburse the costs, we offer a unique guarantee that the negotiation efforts will not cost you anything (*), in case the negotiations do not result in a better arrangement than the employer offered you to begin with.

You can never lose! Therefore, enlist our professional legal assistance today to negotiate your settlement agreement with a good financial compensation for dismissal.
Call + 31 (0) 20 6160 120 or send us an e-mail 

Example settlement agreement, template termination agreement

if you need an example settlement agreement, you can download an example here.

(*) unless other agreements have been made with you

=====================================================================================

About the author: The above article was written by Edwin van Jaarsveld.

Edwin is a law graduate and has been providing legal assistance with dismissal and settlement agreements for over 25 years. Is dismissal imminent? Contact us immediately at 020 6160 120 or send us an e-mail