A settlement agreement (vaststellingsovereenkomst) is a written contract in which you and your employer end your employment by mutual consent, without the UWV or a court. Properly drafted, it keeps your right to unemployment benefit (WW) intact; the main exception is an agreement that suggests you chose to leave, which can cost you that benefit. Below you will find what the law requires, what the UWV checks, what you can negotiate, what to do if you are ill, and which mistakes to avoid.
Under Article 7:670b of the Dutch Civil Code (BW), the agreement must be in writing. After signing, you have fourteen days to dissolve it without giving reasons. No permission from the UWV is needed, and no application to the subdistrict court (kantonrechter) has to be made.
For an employee, the agreement is attractive for one reason above all: it can keep the entitlement to unemployment benefit 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 his or her own choice can end up with money and no benefit. This article is written for employees who have just received a proposal and need to know what to do with it.
What is a vaststellingsovereenkomst?
It is an agreement that ends the employment contract on a date and on terms that you and your employer set yourselves. No third party assesses whether there is a ground for dismissal.
Dutch practice uses several names for the same document: termination agreement (beëindigingsovereenkomst), VSO and settlement agreement. They mean the same thing. None of them changes your legal position.
How does it differ from a dismissal?
In an ordinary dismissal, a third party tests the reason. With a settlement agreement, nobody does.
For 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 right to benefit. The settlement agreement bypasses all of that. That is why employers offer it, and why employees are usually right to consider it seriously.
When are employees offered one?
Mostly when the employer’s own case for a dismissal is uncertain. The weaker that case would be in court, the more room you have to negotiate.
The situations are predictable. A reorganisation removes the position. The working relationship has broken down. The employer thinks you underperform but would struggle to prove it in court. Or there is a difference of opinion about the direction of the role. Knowing how strong the employer’s alternative is, is the single most useful thing before you reply.
A settlement agreement can also end a fixed-term contract before its end date. That works if the contract allows early termination, or if the parties agree to it anyway. The statutory rules below apply in exactly the same way.
What does the law require?
Article 7:670b BW requires the agreement to be in writing and gives you fourteen days after signing to dissolve it. An oral agreement to end the employment does not bind you.
You dissolve the agreement with a written statement to your employer, without giving a reason and without owing anything. The employment then simply continues. If the employer did not mention this right in the agreement itself, the period is three weeks instead of fourteen days. The right does not apply if you already used it for an agreement about the same employment within the previous six months. That prevents the mechanism from being used to negotiate endlessly.
Do you have a set time to consider the proposal before signing?
No. There is no statutory period before you sign; the fourteen days run after signature. But a good employer gives you reasonable time.
Article 7:611 BW requires the employer to act as a good employer (goed werkgeverschap). An employer that demands a signature within forty-eight hours and refuses to allow legal advice is not acting as one. An agreement signed under that kind of pressure can be challenged 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.
Are you entitled to a transition payment?
Not by law. The transition payment (transitievergoeding) of Article 7:673 BW is owed when the employer terminates the contract or does not continue it, not when the parties agree to end it.
In practice it works as the floor of the negotiation. You could refuse to sign and force the employer down the formal route, where the payment would be due. But it is a benchmark, not a right, and it must be written into the agreement to be owed. How the payment is calculated, and why the statutory cap that is indexed each year is not the ceiling everyone assumes, is set out in our article on the transition payment.
How do you keep your unemployment benefit?
By making sure the agreement shows you are not culpably unemployed (verwijtbaar werkloos). Three points in the text decide that: the initiative, the absence of blame, and the end date.
Under the Unemployment Insurance Act (Werkloosheidswet, WW), the UWV refuses benefit in two situations. The first is when the employment ended because of an urgent cause attributable to you. The second is when you ended the employment yourself without an important reason. A settlement agreement is drafted to keep your case out of both.
Who took the initiative?
The agreement should state that the employer took the initiative to end the employment. It should give a neutral reason and say expressly that there is no urgent cause and that you are not to blame.
A typical neutral reason is that the position has ceased to exist, or that the parties differ about how the role should be performed. Wording such as “at the employee’s request” or “by mutual wish” is exactly what should not be there. The UWV itself states that the agreement must show that the employer proposed the dismissal and that you did nothing wrong.
Does the end date respect the notice period?
It should. Set the end date as if the employer had given proper notice; otherwise your benefit starts later.
Count the applicable notice period from the date of the agreement. In the usual case, it ends at the end of a calendar month. If the parties agree an earlier end date, the UWV applies a notional notice period (fictieve opzegtermijn). The benefit then does not start until the date on which the contract would have ended. The severance payment does not fill that gap. An end date that is one month too early simply costs you a month of income.
Which ordinary conditions still apply?
The same conditions that apply to every WW claim, however the employment ended. You must have worked enough weeks in the reference period, be available for work, and register with the UWV in time.
How long the benefit lasts depends on your employment history, and the amount depends on your previous salary. The UWV calculates both and publishes the figures on its website, because they change regularly.
The practical rule: apply for the benefit as soon as the agreement is final, and in any event within one week after your last working day. A late application can lead to a reduced benefit. Send the signed agreement with your 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 can you negotiate?
Almost everything, and the first proposal is rarely the employer’s last position. Your starting point is the strength of the employer’s alternative.
If a court would probably refuse to dissolve the contract, the employer has good reason to improve its offer. The same applies if a court would award a fair compensation (billijke vergoeding) on top of the transition payment because of the employer’s conduct.
How much severance should you ask for?
Anchor the severance payment on the transition payment for your own service and salary. Then argue upwards on the basis of what is really at stake.
Relevant factors are your length of service, your age and realistic prospects on the labour market, and a specialised role that is hard to replace. So are the loss of a pension arrangement or a bonus that would have vested. Procedural weaknesses on the employer’s side also count, such as the absence of an improvement plan in an underperformance case.
Why does the end date matter so much?
The end date is worth as much as the payment, and it is often easier to move. Every extra month of employment means another month of salary, pension accrual and holiday accrual.
It also postpones the start of your benefit period. Release from work (vrijstelling van werkzaamheden) during the notice period, without the duty to remain available, lets you look for a new job while you are still paid.
Which other points matter?
The restrictive clauses, the amounts still owed to you, and the practical arrangements around your departure. Put amounts in the agreement, not just principles.
- Non-competition and non-solicitation clauses. Ask for them to be waived in full, or narrowed in scope and duration. 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.
- A reference, and an agreed internal and external message about your departure.
- A budget for outplacement or retraining, and a contribution to your legal fees, which employers commonly pay.
- The return of company property and arrangements for a lease car, telephone and laptop.
- Confidentiality. If it is imposed, it should be mutual, and it should never stop 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 have thought of yet, such as unpaid overtime or an incorrect pension contribution. If anything is still outstanding, exclude it from the discharge in so many words.
Should you sign while you are ill?
Not without specific advice. An employee who is ill is protected by a statutory prohibition on termination during the first two years of incapacity, and you give that protection away by agreeing to end the employment.
The benefit consequences are the real problem. Unemployment benefit requires that you are available for work, and an employee who is unfit for work is not. Sickness benefit under the Sickness Benefits Act (Ziektewet) is the alternative. But the UWV can refuse or reduce it if you acted to the detriment of 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, all at the same time.
Where the illness is the reason the relationship broke down, the order of steps matters. Reintegration obligations run on both sides for two years, and during that period the employer keeps paying wages within statutory limits. A settlement is normally only sensible once the reintegration route has been properly followed, or once you are fit again. Our article on what happens when reintegration fails sets out who carries the risk.
What should you check before you sign?
Go through the document once with a pen before anyone discusses money. Use the checklist below, then check the arithmetic.
- 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, and a reference is agreed.
- The final discharge is mutual and excludes anything still open.
The severance payment is taxed as wages in the year it is paid, so the payment date affects the net amount. Ask your employer or a tax adviser what the payment date means for you. Law & More does not give tax advice, but we will point out where the payment date is worth discussing with someone who does.
Once you have signed, keep the agreement, apply to the UWV promptly, and put the fourteen-day period in your diary. If something turns out to be wrong, that period is the cheapest remedy you will ever have.
Which mistakes cost employees the most?
Signing too fast, signing while ill, and accepting the first offer. Close behind are an end date that ignores the notice period, a forgotten non-compete, and a final discharge that swallows open claims.
Signing on the day the proposal arrives is the first mistake. The offer will still be there next week. 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. That quietly costs you a month or more of income, and nobody gains from it. 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 job offer you have. The sixth is signing a final discharge while an unpaid bonus, an expense claim or a pension issue is still open.
The last is going through it alone. Legal advice on a settlement agreement is quick. In most cases the employer pays for it as part of the package, or it is covered by a trade union membership or legal expenses insurance. The cost of not taking advice is measured in months of salary.
In summary
- A vaststellingsovereenkomst ends your employment by mutual consent, without the UWV or a court; it must be in writing (Article 7:670b BW).
- You can dissolve it within fourteen days after signing, or three weeks if the agreement does not mention that right.
- To keep your WW benefit, the agreement must show the employer’s initiative, no urgent cause, no blame, and an end date that respects the notice period.
- There is no statutory right to a transition payment in a settlement, but it is the usual floor of the negotiation.
- Do not sign while ill without specific advice, and check the final discharge for claims that are still open.
Frequently asked questions
Can I refuse a settlement agreement?
Yes. Nobody can be forced to sign. If you refuse, the employer must either accept that the employment continues or start a formal procedure. That means 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, if 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. You must also meet the ordinary conditions for the benefit. The UWV assesses the wording of the agreement, not the label on it.
How is the transition payment calculated?
Article 7:673 BW sets it at one third of a gross monthly salary for each 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 you earned more than that cap in a year, your 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 that ends an employment contract, fixed-term or indefinite. 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 your employer a written statement 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 does not apply 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 UWV approval. A court only becomes involved if there is no agreement and the employer applies to dissolve the contract. Or if a dispute arises afterwards about the agreement itself, for example about undue influence, mistake or an unpaid instalment.
How can we help with your settlement agreement?
You sign a settlement agreement once, and after the fourteen days it cannot be undone. The value of a review 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 & 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. See our page for a settlement agreement lawyer, our employment lawyer page, or read further in our employment law guides. Unsure where you stand? Tell us about your situation. We will let you know your options within one working day.
