Get a Free Check of Your Settlement Agreement Before Signing
Why a Settlement Agreement Review Can Protect Your Rights in Case of Dismissal
Settlement agreements, known as vaststellingsovereenkomsten in Dutch, are commonly used in the Netherlands when an employer and employee wish to terminate their employment contract. A settlement agreement allows both parties to end the employment on mutually agreeable terms, and provides certainty about issues like notice period, severance payment, and eligibility for unemployment benefits.
However, settlement agreements can be complex legal documents full of difficult language. Many employees sign these agreements without fully understanding what they are agreeing to. This article will explain what settlement agreements are, what to expect in case of dismissal, and why it’s essential to get your agreement reviewed by an employment lawyer before signing. A free check can ensure your rights are protected and prevent costly mistakes.
Outline of Settlement Agreements and Dismissal in the Netherlands
Here is an outline of the key things this article will cover about settlement agreements, termination, dismissal laws and your options as an employee in the Netherlands:
- What is a settlement agreement and when is it used?
- What are the requirements for a valid agreement?
- What does Dutch law say about dismissal and notice periods?
- What severance payment may you be entitled to?
- Can you still get unemployment benefits?
- Should you agree to a non-competition or training clause?
- What if you don’t agree with the dismissal?
- How much time do you have to consider?
- Why get legal advice before signing?
- Where can you get a free check of the agreement?
What is a Settlement Agreement and When is it Used?
A settlement agreement, known in Dutch as a ‘vaststellingsovereenkomst’, is a legally binding document between an employer and employee which sets out the terms for ending the employment.
It is used when both parties agree to terminate the contract, either due to dismissal by the employer or resignation by the employee. The agreement allows a clean break, avoiding potentially lengthy court procedures.
The document states the date employment ends, whether any notice period or garden leave applies, and what severance payment and other conditions have been agreed. It requires the signature of both parties.
Once signed, the settlement agreement prevents either party from making further claims relating to the employment or termination. This provides certainty and a ‘clean break’ for both employer and employee.
What Are the Legal Requirements for a Valid Agreement?
For a settlement agreement to be legally valid under Dutch employment law, certain conditions must be met:
- The agreement must be in writing and signed by both the employer and employee.
- It must state the date on which employment ends.
- The agreement should specify if any notice period or garden leave applies.
- Any transition payment or severance pay must be clearly stated.
- Terms related to confidentiality, non-competition, training costs or return of company property need to be included if applicable.
- The employee’s right to apply for unemployment benefit from UWV must be mentioned.
- It must clearly state that both parties enter into the agreement voluntarily and waive the right to further claims.
- 14 days’ reflection period must be provided during which the employee can withdraw consent.
Having the agreement reviewed ensures all mandatory terms are included in the correct way.
What Does Dutch Law Say About Dismissal Notice Periods?
Dutch employment law sets out minimum notice periods that must be observed in case of dismissal, based on the length of employment:
- 0-5 years employment: 1 month notice
- 5-10 years: 2 months notice
- 10-15 years: 3 months notice
- Over 15 years: 4 months notice
These notice periods also apply when an employee resigns, unless the employment contract states otherwise.
The employer and employee can agree on a longer notice period in the settlement agreement. Or they may agree on immediate termination with payment of the remaining notice period (‘vrijstelling van werk’).
What Severance Payment May You be Entitled To?
If dismissed by the employer through no fault of your own, you may be entitled to a transition payment (’transitievergoeding’).
This severance payment is calculated as 1/3 month’s salary for each year worked. For example, after 5 years employment an employee would get roughly 5/3 = 1.67 months salary as a transition payment.
The total payment is capped at around €85,000 or one year’s salary, whichever is lower. Any months not worked are pro-rated.
Make sure any transition payment you are entitled to is correctly included in the settlement agreement.
Can You Still Get Unemployment Benefits After a Settlement Agreement?
Yes, even after signing a settlement agreement you remain entitled to unemployment benefits (‘ww’) from the UWV, if you meet the standard conditions such as being available for work.
The agreement must mention that the employee retains this right to claim benefits. Your work history will determine how long you can receive unemployment payments.
Do not sign any clause stating you waive the right to claim ww. Getting unemployment benefits should be agreed separately from the severance payment.
Should You Agree to Non-Competition, Training Costs or Other Clauses?
Think carefully before agreeing to restrictive clauses the employer proposes, like non-competition, tuition reimbursement, or waiving the right to future claims.
Non-compete clauses can limit your ability to work in your profession. You may be asked to repay training costs. Make sure you understand and negotiate any clauses that don’t solely relate to ending the employment.
What If You Don’t Agree With the Dismissal or Terms Offered?
If you believe there is no valid reason for the dismissal, or you are not satisfied with terms like notice period or severance pay, do not feel pressured to sign the agreement.
You have options:
- Negotiate for better terms
- Refuse to sign and let a court decide
- Lodge an objection and go through dismissal proceedings
- Speak to a lawyer about claiming unfair dismissal
Carefully consider your options before signing away your rights. 14 days is provided for this.
How Much Time Do You Have to Review a Settlement Agreement?
Dutch law grants employees a 14 day reflection period after getting a settlement proposal.
Within these 14 days you can seek legal advice, negotiate with the employer, and ultimately decide whether to sign or not. You cannot be dismissed during this period.
If you do sign, you have 14 more days in which you can change your mind and nullify the agreement.
Don’t rush into signing on the spot. Use the reflection period to carefully review your options.
Why Have a Lawyer Review Your Settlement Agreement First?
Before signing any legally binding document, it always pays to have an expert review it first.
Employment lawyers can check that your settlement agreement meets all legal requirements, that the terms are fair, and that nothing is missing or incorrect.
They will ensure your rights are protected and avoid you signing away anything you are entitled to, like severance payment or unemployment benefits. A lawyer can also negotiate better terms on your behalf if needed.
Where Can You Get a Free Check of Your Settlement Agreement?
We offer a free review of settlement agreements, known as a ‘second opinion service’. This costs nothing but can prevent expensive mistakes.
We provide a free check of any agreement within 24 hours. Our experienced employment lawyers will review the document and inform you of your rights and options.
Don’t sign a settlement agreement in the Netherlands without getting proper legal advice first. A free check takes no time but gives you peace of mind that your rights are protected.
In Summary – Key Points to Remember
- Settlement agreements allow employer and employee to terminate employment under agreed conditions
- Valid agreements must meet legal requirements under Dutch law
- You are entitled to a notice period and may get severance pay
- Check that unemployment benefit rights are mentioned
- Consider any non-compete, training or other clauses carefully
- You have 14 days to review an agreement and can cancel within 14 days of signing
- Always get legal advice before signing away employment rights
- Use the free check services available to protect yourself
Know your rights and options before signing a settlement agreement in the Netherlands. A free review from a knowledgeable employment lawyer can prevent costly mistakes and ensure you get everything you are entitled to.