What is a settlement agreement?

A settlement agreement (in Dutch: vaststellingsovereenkomst or VSO) is a written agreement in which you and your employer mutually decide to end your employment contract.
In this case, your employer does not need approval from the UWV or the court.
This helps avoid lengthy procedures and makes it possible to arrange the termination in mutual agreement.

In return, the employer usually offers better conditions — such as a higher severance payment or guidance towards a new job through an outplacement program.

What should a settlement agreement include?

A settlement agreement defines the terms of your dismissal.
It should at least include the following key elements:

• Termination date – must align with the start date of your unemployment benefits.
• Severance payment – this can be a statutory transition allowance or a higher, negotiated amount.
• Release from duties – agreements about handover and final work period.
• Final payment – payout of remaining vacation days, bonuses, and holiday allowance. More details in final settlement after dismissal.
• Return of company property – such as your phone, laptop, or car.
• Confidentiality clause – ensures company-sensitive information remains confidential.
• Non-compete and relationship clauses – make sure they are explicitly canceled in writing.
• Reference or testimonial – agree that the employer provides a positive reference.
• Final discharge – confirms that both parties cannot make further claims after signing.
• Legal costs – the employer should cover the cost of having your VSO reviewed by a lawyer.

Conditions for unemployment (WW) eligibility

The UWV (Dutch unemployment office) will check whether the agreement meets all legal WW requirements.
Make sure these points are explicitly stated in the document:

• The termination is initiated by the employer.
• The reason for termination is neutral (e.g., reorganization or redundancy).
• There is no urgent cause (such as theft or misconduct).
• The termination is based on mutual consent.
• The termination date matches the start of unemployment benefits.

If these statements are missing, the UWV may deny your benefits.
Always have your settlement agreement reviewed before signing.

Notice period: when does your unemployment start?

Your employer must respect the statutory notice period before your employment officially ends.

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During this period, your employment continues, and you still receive your salary.
Only after this notice period ends can your unemployment benefits begin.
Always check that the termination date in your settlement agreement matches the legally correct end date.

Advantages of a settlement agreement

1. Quick and practical
   A court or UWV procedure can take months, while a settlement agreement can be completed within weeks.
2. Amicable termination
   There’s no need for accusations or legal disputes — this helps maintain a professional relationship.
3. Clear and comprehensive terms
   All arrangements are neatly outlined, from payment to non-compete agreements, providing peace of mind.
4. Employer covers legal fees
   Make sure it’s stated that the employer will pay for legal review of your VSO.
5. 14-day reflection period
   After signing, you have 14 days to change your mind and withdraw from the agreement.

Disadvantages of a settlement agreement

1. Pressure to sign
   Some employers push for a quick signature. Take your time and have the document reviewed by a lawyer first.
2. Sick during termination? Do not sign.
   During illness, you are protected from dismissal. If you sign a VSO while sick, you may lose your right to benefits. Learn more in dismissal during illness.
3. Employer not fulfilling agreements
   In rare cases, the employer might fail to pay the agreed compensation. Legal action would then still be required.

Strong or weak negotiation position

Your reason for dismissal determines how strong your position is.
A weak reason often gives you better leverage for negotiation:

• Poor performance without documentation – if your employer lacks proof or an improvement plan, you’re in a strong position.
• Workplace conflict – if your employer hasn’t tried to resolve the conflict, the court may reject a dismissal request.
• Insufficient economic justification – during reorganization, the employer must provide solid financial evidence.

The weaker the justification, the higher your chances of negotiating a better severance package or extra benefits — such as outplacement or career coaching.

What to do when you receive a settlement agreement

• Have it reviewed – a legal expert can check if you maintain WW eligibility and whether the terms are fair.
• Negotiate if needed – you can often request a higher severance or additional benefits.
• Sign only when everything is correct – take your time and don’t let yourself be pressured.