Calculating a Severance Package in a Dutch Settlement Agreement

Calculating a severance package in a Dutch settlement agreement (vaststellingsovereenkomst) means determining which compensation is reasonable when an employment contract ends by mutual consent. You look at the statutory transition payment, possible additional compensation, outplacement support and other arrangements such as salary continuation. This article explains how to calculate your severance in a settlement agreement, how outplacement fits into the package and which Dutch legal rules you must take into account. The focus is on the Dutch context, employees’ rights and the role of professional guidance.

What is a Dutch settlement agreement (vaststellingsovereenkomst)?

A settlement agreement, in Dutch called vaststellingsovereenkomst or VSO, is a written agreement between employer and employee to end the employment by mutual consent. Instead of dismissal through the UWV (the Dutch public authority for employee insurances) or the court, both parties agree on conditions such as the end date, the reason for termination and the financial arrangements. This route usually offers more flexibility to negotiate the form and amount of the severance package.

The severance in a VSO often consists of the statutory transition payment plus any additional compensation or facilities. The transition payment is the minimum statutory payment that many employees are entitled to when the employer initiates the dismissal and the employee has not acted in a seriously culpable way. On top of that, a VSO may include arrangements on outplacement, training budgets, extended notice periods or payment of pension contributions.

Because a VSO is concluded outside court, it must still comply with Dutch labour law and the conditions applied by UWV for unemployment benefits (WW). The agreement must clearly state that the initiative to end the contract lies with the employer and that the employee is not at fault. These legal details directly influence how you structure and calculate the severance package.

• A VSO is a mutual agreement to end the employment relationship.
• The severance package usually includes at least the statutory transition payment.
• The wording must be aligned with UWV requirements to safeguard unemployment benefits.
• There is room to negotiate on both the level and the structure of the package.

What elements can be part of a severance package in a VSO?

In everyday language, people often think of severance as one lump sum paid to the employee. In reality, a severance package in a Dutch settlement agreement typically consists of several elements. Each of these elements has its own tax treatment and its own impact on your position on the labour market and your WW rights.

The core is the transition payment based on your gross monthly salary and years of service. In addition, there may be extra payments, for example compensation for loss of a bonus scheme, an additional month of salary or a budget for outplacement support. Continued use of a company car, phone or laptop during the notice period also has a financial value, just like early release from work with pay.

It is therefore important to look at the entire package rather than only the lump sum. Sometimes a slightly lower cash amount combined with a well-designed outplacement programme is more valuable in the long run. Outplacement is professional guidance from work to work, usually provided by a specialised agency such as Care4Careers, helping you process the dismissal and find new employment.

• The severance package often combines cash payments and non-cash benefits.
• The statutory transition payment is usually the minimum component.
• Additional compensation and facilities can be negotiated.
• Outplacement as part of the package can improve your chances on the labour market.

The Dutch statutory transition payment as a starting point

The statutory transition payment is the starting point for calculating severance in a Dutch settlement agreement. Under Dutch labour law, employees are generally entitled to this payment when the employer initiates the dismissal, both for permanent and fixed-term contracts, unless there is serious culpable behaviour. The amount depends on the duration of the employment and the gross monthly salary.

The calculation uses a formula based on the number of years of service and your gross monthly salary. The salary includes not only your basic pay, but also fixed allowances such as structural shift allowances or a fixed thirteenth month. Variable bonuses are usually not fully included unless they have a structural and predictable character.

A simplified example illustrates this. Suppose you have worked for five years and your gross monthly salary including fixed allowances is 3,000 euros. The statutory transition payment will then amount to several months’ salary. For an exact calculation you should use up-to-date Dutch calculation tools or legal advice. Care4Careers typically regards the transition payment as a legal minimum, on top of which additional arrangements can be negotiated in a VSO.

• The transition payment is strictly regulated by Dutch law.
• The calculation is based on years of service and gross monthly salary.
• Fixed allowances form part of the salary for this calculation.
• Specialised tools or legal advice are recommended for exact figures.

Step-by-step: how to calculate your severance in a VSO

To calculate your severance package in a settlement agreement, a step-by-step approach is helpful. First you determine the legal minimum, then you add all other elements that have financial or career value. This gives you a complete picture and helps you negotiate a balanced outcome.

A practical sequence could be:

• Determine the statutory transition payment based on years of service and salary.
• List all other financial items, such as bonus compensation or unused holidays.
• Calculate the value of any paid garden leave or extended notice period.
• Identify budgets for outplacement and training.
• Combine these into a total overview of gross amounts and non-cash benefits.

Assume your employer offers a package consisting of a 15,000 euro gross transition payment, three months’ garden leave with full pay and a 3,000 euro outplacement budget. On paper, the severance might seem to be 15,000 euros only, but in reality the total value is much higher. You receive salary for three extra months and professional support in finding new work.

At this stage, it is also wise to assess other clauses in the VSO, such as the end date, the reason for termination and the wording towards UWV. Background information in Dutch on what a settlement agreement contains and on settlement agreements and WW rights helps you understand how your severance fits into the broader legal framework.

The role of outplacement within the severance package

Outplacement is professional guidance from job to job after or during dismissal. An outplacement agency such as Care4Careers supports you in dealing with the emotional impact of dismissal, exploring your strengths and finding new, suitable work. In the context of calculating severance in a VSO, outplacement is not just an add-on but an integral part of the overall package.

Employers often allocate part of the dismissal budget to an outplacement programme. This may range from a few months of coaching to a comprehensive programme including career assessment, labour market orientation and intensive application training. The costs differ, as explained in the Dutch article on the cost of an outplacement programme, and are usually paid directly by the employer as part of the severance package.

For you as an employee, the main value of outplacement lies in faster and more sustainable re-employment. Where a one-off payment can be spent quickly, good guidance can help you secure a new position that matches your skills and health. This is especially relevant if you have been declared redundant or your position disappears due to reorganisation, topics that are dealt with in more detail in Care4Careers’ Dutch knowledge centre. In negotiations on your VSO, it is therefore reasonable to ask for outplacement as a specific component of your severance.

• Outplacement is frequently part of the overall severance package.
• The employer usually pays the outplacement costs directly.
• Guidance increases your chances of finding sustainable new employment.
• Outplacement has both career and emotional value after dismissal.

Legal context: UWV, unemployment benefits and notice periods

When calculating and negotiating severance in a VSO, the Dutch legal framework and UWV practice are essential. UWV assesses whether you are entitled to unemployment benefits (WW) after your employment ends. For that, it matters that the employer initiates the termination and that there is no serious culpable behaviour on your side.

The wording in the VSO is therefore crucial. Many agreements state that there is a difference of opinion, organisational changes or a reorganisation, explicitly without fault on the employee’s side. In cases of dismissal due to reorganisation, employers could also opt for a formal UWV dismissal route. If they choose a VSO instead, the text still needs to match UWV’s criteria so that your WW rights remain intact.

The fictitious notice period is another important concept. UWV assumes a notice period that the employer should have observed under Dutch law. If the end date in your VSO is earlier, WW may start later than you expect. Dutch-language articles on the fictitious notice period in settlement agreements and on the notice period for permanent contracts explain this in detail. For your severance, this means that a longer salary continuation during the notice period can sometimes be more beneficial than a higher lump sum.

• UWV checks WW entitlement after a VSO based on Dutch rules.
• The reason for termination and the wording in the VSO are decisive.
• The fictitious notice period influences when WW can start.
• A balanced package combines a realistic end date, salary continuation and severance.

Severance, outplacement and your future career

Dismissal affects both your income and your professional identity. Therefore, when calculating severance in a Dutch settlement agreement, it is wise to look beyond the immediate cash amount. The key question is how the package supports a sustainable next step in your career. This is where outplacement and career guidance become highly relevant.

Care4Careers offers tailored outplacement support, with programmes that may include career coaching, labour market analysis, application training and practical support in networking. Dutch articles on outplacement coaching and on who outplacement is intended for show that needs differ strongly between individuals. Someone with a long tenure and specialised role may need different support than someone early in their career.

In negotiations on your VSO, you can therefore discuss with your employer how much of the overall budget is allocated to outplacement and how much is paid as cash severance. In some situations it is fiscally more efficient to invest part of the package in training or coaching. By combining financial security with professional guidance, you increase the likelihood that the end of one job becomes the beginning of a more sustainable and satisfying career phase.

• Severance should be seen in the light of your long-term career.
• Outplacement and training can be financed as part of the package.
• Tailor-made guidance is important, depending on your background and sector.
• A balanced mix of cash and support often works better than cash alone.

Summary: bringing severance and settlement agreement into balance

Calculating severance in a Dutch settlement agreement is more than a technical exercise. You start from the statutory transition payment and then build a complete package that may include extra compensation, salary continuation, garden leave, outplacement support and training budgets. All these elements together determine the real value of your severance.

The Dutch legal framework, UWV rules and WW conditions set the boundaries within which you negotiate. The wording of the VSO, the fictitious notice period and the reason for termination must all be aligned with those rules. At the same time, your future on the labour market is central: how does this package help you move towards new, sustainable employment?

By carefully weighing the financial, legal and career-related aspects, you can achieve a severance package that not only compensates you for the end of your current job, but also supports you in building the next step in your professional life. In that sense, severance within a settlement agreement is both an ending and a new beginning.