A settlement agreement (vaststellingsovereenkomst, often shortened to VSO) is a written agreement in which an employer and an employee end the employment relationship by mutual consent. It is the route used in the large majority of Dutch dismissals, because it avoids both the UWV procedure and proceedings before the subdistrict court.
Legal basis
The settlement agreement itself rests on Article 7:900 of the Dutch Civil Code. For employment specifically, Article 7:670b requires the agreement to be in writing and gives the employee a cooling-off period of fourteen days in which the agreement can be dissolved without giving reasons. If the agreement does not mention that right in writing, the period is three weeks. The employee does not have to explain the withdrawal and owes nothing for it.
What the agreement has to get right
Most of the drafting effort goes into protecting the employee’s unemployment benefit. The UWV will only grant benefit if the agreement shows that the initiative came from the employer, that the reason is neutral (usually a difference of insight or a business-economic ground), that there is no urgent reason attributable to the employee, and that the applicable notice period has been observed in setting the end date. A single careless sentence about the employee’s performance or conduct can cost the benefit entirely.
Beyond that, the agreement typically settles the severance amount, the final holiday balance and any bonus, the return of company property, the handling of a non-compete or non-solicitation clause, confidentiality, a reference, and a final discharge. Whether the statutory transition payment is paid, exceeded or waived is a matter for negotiation; there is no obligation to follow it once the parties settle by agreement.
Where it goes wrong
Employees regularly sign within days because the employer sets a short deadline. That pressure is rarely real: the cooling-off period runs from signature, and an employer who wants a clean exit has every reason to keep negotiating. The other recurring problem is the end date. An end date that ignores the notice period creates a benefit gap for which the employee, not the employer, carries the cost.
Related terms
See also transition payment (transitievergoeding), notice period (opzegtermijn) and the UWV dismissal procedure.
Our employment lawyers in the Netherlands review and negotiate settlement agreements for both employers and employees.
