Settlement agreement check?
Have your settlement agreement reviewed by a dismissal specialist before you sign. Better severance terms and/or higher compensation can often be negotiated.
- Free quick scan of the agreement on key elements. Then negotiation.
- In more than 90% of cases, our help results in better dismissal conditions and higher severance pay.
- Quick clarity. The dismissal agreement can sometimes be signed in 24 hours.
Key provisions in a settlement agreement
A settlement agreement, also known as a termination agreement is a legally permitted way to end an employment contract. The settlement agreement contains the conditions under which that employment contract is terminated by "mutual agreement."
A number of elements are important for a legally correct settlement agreement. You also want the agreement to be "unemployment benefit - proof", or in other words, to be eligible for benefits from the Employee Insurance Agency. The most important provisions in a settlement agreement are:
To be entitled to benefits, it will have to be shown that the employee cannot be blamed for the dismissal. To this end, neutral grounds for dismissal are usually included, such as: "that there are business economic reasons (reorganisation)" or "that there is a difference of opinion between the parties about the performance of the job and that this difference of opinion cannot be bridged". It is then recorded that the initiative for the settlement agreement lies with the employer and that the employee initially opposed it. It is rare for the actual situation to be described because this usually leads to questions and the employee runs the risk of the Employee Insurance Agency stating that he is culpably unemployed, thus denying social benefits.
For the end date, the parties must take into account the statutory notice period or the longer period if it is stated in the employment contract or collective agreement. This term must be between the date of signing and the end date. Suppose the employment contract has lasted less than 5 years and no longer notice period has been agreed, then the following applies.
Example: if you sign 27 September, the month of October will count as the notice period and the last working day could be 30 October. As of November 1, you may then be eligible for social benefits. If you agree to a shorter term (for example, October 1), then you will not receive pay for the month of October and will also not be entitled to social benefits.
The statutory notice period
Duration of employment | Term of notice |
Less than 5 years | 1 month |
5 - 10 years | 2 months |
10 - 15 years | 3 months |
15 years or more | 4 months |
The employee must ask himself the question of what is reasonable compensation for cooperating with the dismissal. This varies from case to case and depends on the bargaining position. We think at least the statutory transitional allowance should be offered as compensation. If there are sufficient arguments then a higher severance payment can be negotiated.
The final employment settlement generally follows within four weeks of the termination date. This includes the severance pay, balance of holiday pay, final salary, balance of holidays, if any, and any other allowances that may be agreed. You will still receive a final pay slip that allows you to check what allowances have been paid and what levies have been withheld.
If the initiative for concluding a settlement agreement lies with the employer, it is usual that you will be given the opportunity to seek legal advice on the matter. The employer will then also be willing to cover the costs of this legal advice. If this is not yet included in the agreement, you can request the employer to do so.
You will often agree on the work you still have to do until the end date. If it is only a work transfer then the employer may choose to exempt you from having to do any other work. You will then have paid leave until the end date. Sometimes employers then want to offset the balance of leave days against the period you are exempted from work. If the initiative for this exemption from work lies with the employer and you don't mind continuing to work, then you could claim to be paid for these leave days.
The parties agree that they will have nothing more to claim from each other after execution of the arrangements they set out in the agreement. If you still have a claim then you can no longer claim it. You will therefore be wise to record everything properly in the agreement.
To be entitled to benefits, it will have to be shown that the employee cannot be blamed for the dismissal. To this end, neutral grounds for dismissal are usually included, such as: "that there are business economic reasons (reorganisation)" or "that there is a difference of opinion between the parties about the performance of the job and that this difference of opinion cannot be bridged". It is then recorded that the initiative for the settlement agreement lies with the employer and that the employee initially opposed it. It is rare for the actual situation to be described because this usually leads to questions and the employee runs the risk of the Employee Insurance Agency stating that he is culpably unemployed, thus denying social benefits.
For the end date, the parties must take into account the statutory notice period or the longer period if it is stated in the employment contract or collective agreement. This term must be between the date of signing and the end date. Suppose the employment contract has lasted less than 5 years and no longer notice period has been agreed, then the following applies.
Example: if you sign 27 September, the month of October will count as the notice period and the last working day could be 30 October. As of November 1, you may then be eligible for social benefits. If you agree to a shorter term (for example, October 1), then you will not receive pay for the month of October and will also not be entitled to social benefits.
The statutory notice period
Duration of employment | Term of notice |
Less than 5 years | 1 month |
5 - 10 years | 2 months |
10 - 15 years | 3 months |
15 years or more | 4 months |
The employee must ask himself the question of what is reasonable compensation for cooperating with the dismissal. This varies from case to case and depends on the bargaining position. We think at least the statutory transitional allowance should be offered as compensation. If there are sufficient arguments then a higher severance payment can be negotiated.
The final employment settlement generally follows within four weeks of the termination date. This includes the severance pay, balance of holiday pay, final salary, balance of holidays, if any, and any other allowances that may be agreed. You will still receive a final pay slip that allows you to check what allowances have been paid and what levies have been withheld.
If the initiative for concluding a settlement agreement lies with the employer, it is usual that you will be given the opportunity to seek legal advice on the matter. The employer will then also be willing to cover the costs of this legal advice. If this is not yet included in the agreement, you can request the employer to do so.
You will often agree on the work you still have to do until the end date. If it is only a work transfer then the employer may choose to exempt you from having to do any other work. You will then have paid leave until the end date. Sometimes employers then want to offset the balance of leave days against the period you are exempted from work. If the initiative for this exemption from work lies with the employer and you don't mind continuing to work, then you could claim to be paid for these leave days.
The parties agree that they will have nothing more to claim from each other after execution of the arrangements they set out in the agreement. If you still have a claim then you can no longer claim it. You will therefore be wise to record everything properly in the agreement.
Legal help with a settlement agreement
Depending on what the actual reason for entering into a settlement agreement is, you have the option to negotiate the terms that will be included in the agreement. You can get a higher severance payment, budget for training and/or outplacement and agree on a later termination date possibly in combination with a work release. Therefore, never agree directly to a dismissal proposal without seeking legal advice about it from an employment lawyer. The costs for this are often fully reimbursed. Arbeidsjurist Eindhoven can advise you, help you negotiate and ensure that entitlement to unemployment benefit and pension income are safeguarded. In most cases, we obtain better conditions and a higher severance payment after negotiation.
“It’s not how fast you go, it’s how you cross the finish line.”
Robert D. Hales
Frequently asked questions about a settlement agreement
Find answers to frequently asked questions by employees and employers about a settlement agreement.
You can sign a settlement agreement if you are sick. However, you run the risk of not being eligible for unemployment or sickness benefits. If you are fit for work by the end date or can work elsewhere, there are options for entering into a settlement agreement. It is important to seek advice in advance before signing an agreement.
After 104 weeks of illness, the employer's obligation to continue paying salary stops. In that case, the employer will also be able to choose to offer a settlement agreement. The alternative is to start a dismissal procedure with the UWV. Often parties mutually settle the dismissal after 104 weeks of illness with a settlement agreement. Read more in the blog sick leave with a settlement agreement.
Do you not accept the settlement agreement? Then the employment contract continues. You will have to perform the work and the employer must pay the salary. If the employer thinks he has a legitimate reason to fire you, for example because of dysfunction or sees the need because of bad business economics he may want to fire you unilaterally. If the UWV issues a dismissal permit or the subdistrict court grants permission only then may the employment contract be terminated unilaterally. In that case, you will only be entitled to a transition payment but you will not be culpably unemployed.
In 90% of cases, we can achieve better terms and a higher severance payment. In principle, it does not have to cost the employee anything because we will ask the employer to reimburse the costs. By the way, the quick scan is completely free of charge. We can then determine together whether we can be of added value.
You can revoke a signed settlement agreement. You can do so within 14 days if the settlement agreement includes a cooling-off period. If the cooling-off period is not included in the settlement agreement, then by law you have three weeks (21 days) to revoke the settlement agreement.
Under strict conditions, you are entitled to Social Security benefits from the UWV if you sign a settlement agreement. If you apply for benefits, the UWV may ask for a copy of the settlement agreement. The settlement agreement must show that you are not culpably unemployed. In other words, the initiative for the dismissal must lie with the employer. It is also for this reason that the settlement agreement never includes the actual reason for the dismissal. It is often chosen to include a neutral ground for dismissal "difference of opinion about performance." Such a ground ensures that the settlement agreement is "WW or UWV proof."
This depends on the situation and the negotiating position of both parties. Who takes the initiative and what is the actual reason? These circumstances play an important role for the outcome. Agreements are usually made about severance pay, any transition compensation (or higher severance pay) and any remaining vacation days. The length of the notice period, work release or outplacement arrangements may also be negotiated. It is important to be well advised and negotiated by an employment lawyer in this area, so that you will not face any surprises and can reach the best possible settlement.
As an employee, you have the right to request a settlement agreement yourself from your employer. The employer is not obliged to cooperate. Therefore, you can enter discussions with your employer to negotiate the termination of your employment. However, it is wise to prepare well for a possible conversation, for example by engaging an employment lawyer. After all, it is important to record the agreements carefully in the settlement agreement. Moreover, with adequate consultation and negotiation, you can ensure the most favorable termination situation for both parties.
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