More and more often, termination is arranged through a settlement agreement (VSO). This is a written agreement in which the employer and employee agree on the end of the employment contract. A VSO can be attractive, but it is important that you know your rights well before you sign.
In this article, we discuss how a VSO works, what the advantages and disadvantages are, and how you can get the most out of such an arrangement.
What is a settlement agreement?
A VSO is an agreement in which the employer and employee agree that the employment will end. The termination therefore takes place by mutual consent, without intervention by UWV or a judge.
The terms in the VSO cover, among other things:
-
The end date of the employment.
-
The amount of the severance pay (transition compensation or more).
-
Exemption from work during the notice period.
-
A positive testimonial or reference.
-
Communication to colleagues and third parties.
Why do employers choose a VSO?
-
It is faster than a UWV or court procedure.
-
There is less uncertainty about the outcome.
-
Parties can make tailored agreements in consultation.
Benefits for employees
-
Room to negotiate for higher compensation.
-
You retain (if it is properly recorded) the right to unemployment benefits.
-
You can make arrangements about extras, such as outplacement or a training budget.
-
You have a say in how you leave.
What should you watch out for in a settlement agreement?
-
Reason for dismissal
The reason must be neutral (for example, “reorganization” or “difference of opinion”), so your right to unemployment benefits is not put at risk. -
Severance pay
You are at least entitled to the statutory transition payment, but you can often negotiate more. -
Notice period
The end date must align with the statutory or collective-agreement notice period, otherwise you risk a gap in unemployment benefits. -
Garden leave
Have it recorded that you are released from work with continued salary, so you can apply for jobs. -
Other agreements
Think of having the non-compete clause waived, keeping a company car or laptop, and reimbursement of legal costs.
Examples from practice
-
Example 1: An employee received a standard settlement agreement with only transition compensation. After negotiations, he received 3 extra monthly salaries.
-
Example 2: An employee signed without advice and lost his unemployment benefits, because the reason for dismissal was formulated incorrectly.
-
Example 3: An employee negotiated that her non-compete clause would lapse, allowing her to start with a new employer immediately.
Checklist for a settlement agreement
-
📄 Is the reason for dismissal worded neutrally?
-
💶 Is the compensation calculation correct?
-
📅 Does the end date align with the notice period?
-
📝 Have agreements been made about release from work and a reference letter?
-
⚖️ Has the non-compete clause been removed or limited?
-
📑 Always have the settlement agreement checked by an employment lawyer.
Common mistakes
-
Signing without legal advice.
-
Agreeing too quickly to a compensation that is too low.
-
Not considering the consequences for unemployment benefits.
-
Not making agreements about ancillary matters such as a reference letter or non-compete clause.
Frequently Asked Questions (FAQ)
1. Am I entitled to unemployment benefits after a VSO?
Yes, provided the agreement is drafted correctly (neutral reason and correct notice period).
2. Will I always receive severance pay with a VSO?
At least the transition payment, but often more through negotiations.
3. Can I refuse a VSO?
Yes, you are never required to sign.
4. Does the employer pay my attorney fees?
Yes, a reimbursement for a legal review is often included (e.g., € 750).
5. How much time do I have to sign a VSO?
You have a statutory 14-day cooling-off period.
Why Arslan Advocaten?
-
Specialized in settlement agreements and dismissal
-
Check whether your rights and unemployment benefits are secured
-
Negotiate for higher compensation and better terms
-
Fast and clear support during negotiations
Conclusion
A settlement agreement can be a good solution, but only if the terms are in your favor. Therefore, always have the agreement legally reviewed and negotiate for better terms where possible.
Frequently Asked Questions
What is a settlement agreement (VSO) and how does it work?
A VSO is a written agreement where an employer and employee mutually agree to end the employment contract, avoiding court or UWV intervention. It typically covers the end date, severance pay, and other terms related to the termination.
What are the main advantages of signing a settlement agreement for employees?
Employees can negotiate for higher compensation, retain rights to unemployment benefits if properly recorded, and have a say in how they leave, including arrangements for outplacement or training funds.
What should I watch out for before signing a settlement agreement?
Ensure the reason for dismissal is neutrally worded to protect unemployment benefits, verify the severance pay is correct, and confirm the end date aligns with the notice period to avoid gaps in benefits.
Can I negotiate the terms of a settlement agreement?
Yes, you can negotiate terms such as additional severance pay, waiving non-compete clauses, or reimbursement of legal costs to better suit your needs before signing the agreement.