A vaststellingsovereenkomst, in English a settlement agreement or termination agreement, is a written contract in which employer and employee end the employment by mutual consent. It replaces a dismissal procedure: no permission from the UWV is needed and no application to the subdistrict court (kantonrechter) has to be made. Article 7:670b of the Dutch Civil Code (Burgerlijk Wetboek, BW) requires the agreement to be in writing and gives the employee fourteen days after signing to dissolve it without giving reasons.
For an employee the agreement is attractive for one reason above all: properly drafted, it keeps the entitlement to unemployment benefit (WW) intact, which a resignation does not. That is also why the wording matters more than the amount. An employee who negotiates a generous payment but signs a text suggesting the departure was their own choice can end up with money and no benefit.
This guide explains what the law requires, what the UWV checks, what is genuinely negotiable, what happens if you are ill, and which mistakes cost employees the most. It is written for employees who have just received a proposal and need to know what to do with it.
What a vaststellingsovereenkomst is
A vaststellingsovereenkomst ends the employment contract by agreement between the parties, on a date they choose and on terms they set themselves. Dutch practice uses several names for the same document: beeindigingsovereenkomst (termination agreement), VSO, and settlement agreement. They mean the same thing, and none of them changes the legal position.
What distinguishes it from every other route out of employment is that no third party assesses the ground for dismissal. In an ordinary dismissal the employer needs either a permit from the UWV, for redundancy or long-term incapacity, or a court order dissolving the contract on one of the grounds in article 7:669 BW. Both take months and both can fail. Summary dismissal (ontslag op staande voet) requires an urgent cause, takes effect immediately and normally destroys the employee’s benefit entitlement. The settlement agreement bypasses all of that, which is why employers offer it and why employees are usually right to consider it seriously.
The situations in which employees are offered one are predictable: a reorganisation in which the position disappears, a working relationship that has broken down, underperformance the employer would struggle to prove before a court, or a difference of opinion about the direction of the role. The weaker the employer’s case would be in court, the more room there is to negotiate. That is the single most useful thing to know before replying.
The agreement can also be used to end a fixed-term contract before its end date, provided the contract allows interim termination or the parties agree to it anyway. The statutory rules described below apply in exactly the same way.
What the law requires: writing and the fourteen-day right to reconsider
Article 7:670b BW imposes two requirements and one important protection. The agreement must be in writing; an oral agreement to end the employment does not bind the employee. And after signing, the employee may dissolve the agreement within fourteen days by a written statement to the employer, without giving any reason and without owing anything. The employment then simply continues.
If the employer has failed to mention that right in the agreement itself, the period is three weeks instead of fourteen days. The right is not available if the employee has already exercised it once for an agreement about the same employment within the preceding six months, which prevents the mechanism from being used to negotiate indefinitely.
Two misunderstandings are worth clearing up. First, there is no statutory period for considering a proposal before you sign. The fourteen days run after signature, not before it. What does exist is an unwritten standard of good employment practice under article 7:611 BW: an employer that demands a signature within forty-eight hours and refuses to allow legal advice is not acting as a good employer, and an agreement signed under that kind of pressure can be attacked on the grounds of undue influence or mistake. In practice a reasonable employer allows one to two weeks and contributes to the cost of legal advice.
Second, there is no statutory entitlement to a transition payment in a settlement agreement. The transition payment of article 7:673 BW is owed when the employer terminates or does not continue the contract, not when the parties agree to end it. In practice it functions as the floor of the negotiation, because the employee could otherwise refuse and force the employer down the formal route where the payment would be due. But it is a benchmark, not a right, and it has to be written into the agreement to be owed. How the payment is calculated, and why the annually indexed statutory cap is not the ceiling everyone assumes it to be, is set out in our article on the transition payment.
Keeping your unemployment benefit: what the UWV checks
The UWV refuses unemployment benefit where the employee is culpably unemployed (verwijtbaar werkloos). Under the Unemployment Insurance Act that is the case in two situations: the employment ended because of an urgent cause attributable to the employee, or the employee themselves brought the employment to an end without an important reason for doing so. A settlement agreement is drafted to keep the case out of both categories, and three points in the text decide whether it does.
The first is the initiative. The agreement should state that the employer took the initiative to end the employment and give a neutral reason, typically that the position has ceased to exist or that the parties differ about the way the role should be performed. It should state expressly that there is no urgent cause and that the employee is not to blame. Wording such as at the employee’s request, or by mutual desire, is exactly what should not be there.
The second is the notice period. The end date should be set as if the employer had given proper notice: the applicable notice period, counted from the date of the agreement, ending in the usual case at the end of a calendar month. If the parties agree an earlier end date, the UWV applies the notional notice period (fictieve opzegtermijn) and the benefit simply does not start until the date on which the contract would have ended. The severance payment does not fill that gap, so an end date that is a month too early costs a month of income.
The third is the ordinary set of conditions that apply to every WW claim regardless of how the employment ended: enough weeks worked in the reference period, availability for work, and registration with the UWV in time. The duration of the benefit depends on the employment history and the amount on the previous salary; both are calculated by the UWV, and the figures are published on its website because they are adjusted regularly.
The practical rule is to apply for the benefit as soon as the agreement is final, and in any event within a week of the employment ending, and to send the UWV the signed agreement with the application. If anything in the text is likely to raise a question, it is better to have that discussion before you sign than after your first payment fails to arrive.
What is negotiable
Almost everything in a settlement agreement is negotiable, and the first proposal is rarely the employer’s last position. The starting point for the negotiation is the strength of the employer’s alternative: if a court would probably refuse to dissolve the contract, or would award a fair compensation on top of the transition payment because of the employer’s conduct, the employer has good reason to improve its offer.
The severance payment is the obvious point. Anchor it on the transition payment as calculated for your own service and salary, then argue upwards on the basis of what is actually at stake: length of service, age and realistic prospects on the labour market, a specialised role that is hard to replace, the loss of a pension arrangement or a bonus that would have vested, and any procedural weakness on the employer’s side such as an absent improvement plan in an underperformance case.
The end date is worth as much as the payment and is often easier to move. Every extra month of employment is a month of salary, pension accrual and holiday accrual, and it postpones the start of the benefit period. Release from work (vrijstelling van werkzaamheden) during the notice period, with the obligation to remain available dropped, lets you look for a new job while still being paid.
Beyond that, the points that matter most in practice are these. The non-competition and non-solicitation clauses: ask for them to be waived in full or narrowed in scope and duration, because they survive the end of the employment unless the agreement says otherwise, and their reasonableness is a live issue in Dutch case law, as our article on non-compete clauses under Dutch employment law explains. Outstanding holiday days, holiday allowance, a pro rata bonus or thirteenth month, and any expense claims: state the amounts, not just the principle. A reference and an agreed internal and external communication about the departure. A budget for outplacement or retraining, and a contribution to your legal fees, which employers commonly pay. The return of company property and the treatment of a lease car, telephone and laptop. Confidentiality, if it is imposed, should be mutual, and it should never prevent you from giving information to the UWV or the tax authority.
Finally, check the final discharge clause (finale kwijting). It ends every claim either party could still bring, including claims you may not yet have thought of, such as unpaid overtime or an incorrect pension contribution. If anything is still outstanding, it must be excluded from the discharge in so many words.
Signing while you are ill
Do not sign a settlement agreement while you are unfit for work without specific advice. An employee who is ill enjoys a statutory prohibition on termination during the first two years of incapacity, and that protection is given away by agreeing to end the employment.
The benefit consequences are the real problem. Unemployment benefit requires availability for work, which an employee who is unfit for work is not. Sickness benefit under the Sickness Benefits Act is the alternative, but the UWV can refuse or reduce it where the employee has performed an act prejudicial to the benefit fund, and cooperating in ending the employment while ill is treated as exactly that. The result can be no wage, no sickness benefit and no unemployment benefit at the same time.
Where the illness is the reason the relationship has broken down, the sequence matters. Reintegration obligations run on both sides for two years, the employer keeps paying wages during that period within statutory limits, and a settlement is normally only sensible once the reintegration route has been properly followed or once the employee is fit again. Our article on what happens when reintegration fails sets out who carries the risk.
What to check before you sign
Work through the document once with a pen before anyone discusses money. The employer took the initiative and the reason given is neutral; there is no urgent cause and no blame attached to you; the end date respects the applicable notice period; the severance payment, its amount and the date and manner of payment are stated; holiday days, holiday allowance and any bonus are settled by amount; the non-competition, non-solicitation and confidentiality clauses are dealt with expressly; the fourteen-day right to dissolve is mentioned; company property and any lease car are arranged; a reference is agreed; and the final discharge is mutual and carves out anything still open.
Then check the arithmetic. The severance payment is taxed as wage in the year it is paid, so the timing of payment affects the net amount; ask your employer or a tax adviser what the payment date means for you. Law and More does not give tax advice, but we will flag where the payment date is worth discussing with someone who does.
Once you have signed, keep the agreement, apply to the UWV promptly, and diarise the fourteen-day period. If something turns out to be wrong, that period is the cheapest remedy you will ever have.
The mistakes that cost employees the most
Signing on the day the proposal arrives is the first. The offer will still be there next week, and an employer that says otherwise is negotiating, not informing. Signing while unfit for work is the second, for the reasons above. Treating the first figure as fixed is the third: the transition payment is a floor in a negotiation, not a verdict.
The fourth is accepting an end date that ignores the notice period, which quietly transfers a month or more of income from you to nobody. The fifth is leaving the non-competition clause in place because it feels like a detail, and discovering three weeks later that it blocks the only offer you have. The sixth is signing a final discharge while an unpaid bonus, an expenses claim or a pension issue is still outstanding.
The last is going through it alone. Legal advice on a settlement agreement is quick and, in most cases, paid for by the employer as part of the package or covered by a trade union membership or legal expenses insurance. The cost of not taking it is measured in months of salary.
Frequently asked questions
Can I refuse a settlement agreement?
Yes. Nobody can be obliged to sign. If you refuse, the employer must either accept that the employment continues or start a formal procedure: a permit application to the UWV for redundancy or long-term incapacity, or an application to the subdistrict court to dissolve the contract on one of the statutory grounds. Refusing is a legitimate negotiating position, and it is often the reason a better offer follows.
Do I keep my unemployment benefit after signing?
Yes, provided the agreement makes clear that the employer took the initiative, that there is no urgent cause and no blame on your side, and that the end date respects the notice period, and provided you meet the ordinary conditions for the benefit. It is the wording of the agreement, not the label on it, that the UWV assesses.
How is the transition payment calculated?
Article 7:673 BW sets it at one third of a gross monthly salary for each calendar year of service, calculated pro rata for part-years from the first day of employment. The monthly salary includes fixed components such as holiday allowance and a fixed thirteenth month. A statutory maximum applies, which is adjusted each year and published by the government; if the employee earned more than that cap in a year, the annual salary applies instead of the cap.
Does the fourteen-day period apply to a fixed-term contract?
Yes. Article 7:670b BW applies to any agreement terminating an employment contract, fixed-term or indefinite, and the right to dissolve within fourteen days, or three weeks if the agreement does not mention it, applies in the same way.
What if I change my mind after signing?
Send a written statement to your employer within the period, saying that you dissolve the agreement under article 7:670b BW. No reason is needed and no compensation is owed. The employment continues on its existing terms. The right lapses if you already used it for an agreement about the same employment within the previous six months.
Is a court involved?
No. A settlement agreement takes effect between the parties without any court or administrative approval. A court only comes into the picture if there is no agreement and the employer applies to dissolve the contract, or if a dispute arises afterwards about the agreement itself, for instance about undue influence, mistake or an unpaid instalment.
Advice on your settlement agreement
A settlement agreement is signed once and cannot be unpicked after the fourteen days have run. The value of having it reviewed lies less in the headline figure than in the clauses that decide whether your benefit starts on time, whether you are free to take the next job, and whether anything you are still owed survives the final discharge.
Law and More reviews and negotiates settlement agreements for employees, usually within a few working days, and acts in dismissal proceedings before the subdistrict court and in UWV procedures. We work in English and Dutch and advise employees throughout the Netherlands. Send us the proposal and we will tell you where it stands: see our page for a settlement agreement lawyer, our employment lawyer page, or read further in our employment law guides.
