Settlement agreement vs UWV dismissal: which route suits you?

A settlement agreement (vaststellingsovereenkomst) ends employment by mutual consent, quickly and on negotiated terms, while a UWV dismissal is a formal permit procedure the employer can start without your consent. The UWV route is only available for economic reasons or long-term illness; for every other ground the employer needs the subdistrict court (kantonrechter) or your agreement.

Which route is better depends on the ground for dismissal, the money on the table, your right to unemployment benefit and, for expats, your residence permit. Below we compare both routes and list what each side should check.

What is the main difference between the two routes?

A settlement agreement requires both parties to agree; a UWV dismissal does not. With a settlement agreement you negotiate the end date, payments and other terms, while in the UWV procedure the Employee Insurance Agency (UWV) decides whether the employer may give notice.

Dutch law has no “at-will” dismissal. Under Article 7:669 of the Dutch Civil Code (BW) an employer needs a reasonable ground and must first try to redeploy you. Our overview of how to terminate employment in the Netherlands describes all routes.

How does a settlement agreement work?

The employer and employee agree in writing that the contract ends on a set date and on set terms. The agreement must be in writing, and the employee has a statutory reflection period of 14 days to withdraw without giving reasons (Article 7:670b BW).

If the agreement does not mention this reflection period, it is extended to three weeks. Typical clauses cover the end date, the severance payment, release from work (garden leave), holiday entitlement, the non-compete clause, a reference and legal fees. Our article on what to look out for in a settlement agreement discusses these clauses in more detail.

How does the UWV dismissal procedure work?

The employer applies to UWV for a dismissal permit, and you may respond in writing. UWV then decides, usually after a second round of written responses and advice from a dismissal committee.

• Grounds: only the loss of jobs for business-economic reasons (Article 7:669(3)(a) BW) or long-term incapacity for work after 104 weeks of illness (Article 7:669(3)(b) BW).
• Notice: with a permit the employer may give notice, and the notice period may be shortened by the duration of the procedure, to a minimum of one month.
• Payments: you are entitled to the statutory transition payment (transitievergoeding).
• Objection: you cannot appeal UWV’s decision, but you can ask the subdistrict court for reinstatement or fair compensation within two months after the contract ends.

Our guide to reorganisation and redundancies explains the selection rules UWV applies.

What do you receive in each route?

After a UWV dismissal, the law gives you a transition payment of one third of a monthly salary per year of service, capped at €102,000 in 2026 or one annual salary if higher. In a settlement agreement there is no statutory payment: everything is negotiated.

In practice employers usually offer at least the transition payment in a settlement, often more, because they avoid the time and risk of a procedure. Our article on the transition payment shows how it is calculated, and our page on severance payments in the Netherlands covers negotiated amounts.

Do you keep your right to unemployment benefit?

Yes, in both routes, provided the agreement is well drafted. With a settlement agreement, UWV accepts your claim for unemployment benefit (WW) if the initiative came from the employer, there is no urgent cause for dismissal and the agreed end date respects the notice period.

If the end date is earlier than the notice period allows, UWV does not pay WW for the shortfall. A UWV dismissal does not normally cause WW problems, as long as you did not cause the dismissal yourself.

What if you are ill?

During illness the employer may in principle not give notice: the prohibition on dismissal during illness (Article 7:670 BW) applies to the first 104 weeks. UWV will not grant a permit on economic grounds while you are ill, except in limited cases such as when the illness started after the application was received.

Signing a settlement agreement while you are ill is legally possible but risky: you may lose your entitlement to sickness benefit or WW. Our article on employee sickness rights explains the protection that applies.

What should expats and highly skilled migrants consider?

If your residence permit depends on your employer, the end date determines when your search period starts. For highly skilled migrants the IND gives three months to find a new recognised sponsor, or six months if you lose your job on or after 22 May 2026 and have held the permit for two years or more.

The search period cannot run beyond your permit’s validity. A later end date, for example with garden leave in a settlement agreement, gives you more time on the payroll. The expatriate tax facility (30% ruling) has its own rules on gaps between employers; have these checked by a tax adviser before you agree an end date.

What should you check as an employee?

Do not sign a settlement agreement on the day it is presented. Use the 14-day reflection period, and check these points first.

• Does the agreement state that the initiative came from the employer and that there is no urgent cause?
• Does the end date respect your notice period, so that your WW is not affected?
• Is the severance at least equal to the statutory transition payment?
• Is the non-compete clause waived, and is there a neutral reference?
• If you are an expat: when does your search period start and how long does it last?

What should you check as an employer?

Choose the route that fits your ground for dismissal. UWV only grants permits for economic reasons or long-term illness; for poor performance or a disturbed working relationship you need the subdistrict court or a settlement.

• Check whether your file supports a UWV application, including redeployment efforts.
• For economic dismissal, apply the reflection principle (afspiegelingsbeginsel) for selection.
• Calculate the transition payment and any accrued holiday and bonus entitlements.
• Mention the 14-day reflection period in the settlement agreement.
• Check whether the employee is ill before starting either route.

What can we do for you with a settlement agreement or UWV dismissal?

Our settlement agreement lawyers act for employees and employers in both routes.

• We review a settlement agreement within the 14-day reflection period and identify WW risks.
• We calculate the transition payment and negotiate the severance and end date.
• We draft or respond to a UWV dismissal application.
• We request reinstatement or fair compensation from the subdistrict court within the two-month deadline.
• We check the residence and search-period consequences for expat employees.

Summary

• A settlement agreement ends employment by mutual consent; a UWV dismissal is a permit procedure for economic reasons or long-term illness only.
• The employee has a 14-day reflection period after signing a settlement agreement (three weeks if it is not mentioned).
• After a UWV dismissal the transition payment is due by law; in a settlement everything is negotiated.
• A well-drafted settlement agreement keeps your right to WW; the end date must respect the notice period.
• Expats should check their search period of three or six months before agreeing an end date.

Frequently asked questions