If you are ill and your employer places a settlement agreement on the table, one of the first questions you ask yourself is: what happens to my benefits? That is a legitimate concern, because signing such an agreement has direct consequences for your entitlement to unemployment benefit, sickness benefit, or disability benefit. Here you can read what may change for each type of benefit and what you need to pay particular attention to.
What is a settlement agreement during incapacity for work?
A settlement agreement (also known as a VSO or termination agreement) is a written arrangement by which you and your employer jointly decide to end the employment. That sounds straightforward, but if you are incapacitated for work at the time, there is much more at play. Special rules apply regarding benefits that differ from those in an ‘ordinary’ termination.
By signing a VSO, you voluntarily consent to the dismissal. This affects whether the UWV (Employee Insurance Agency) grants you a benefit, and if so, which one.
What happens to your unemployment benefit?
The basic rule for unemployment benefit is: you must not be personally responsible for the loss of your job. If you sign a settlement agreement, the UWV may regard this as culpable unemployment. However, that is not automatically the case.
The UWV assesses whether you have committed a so-called ‘prejudicial act’. This means: have you done something that has harmed your entitlement to benefits? Signing without good reason or without legal advice can be interpreted as negligent conduct.
Pay attention to the following points if you wish to safeguard your unemployment benefit:
- Ensure the VSO contains a neutral or non-culpable reason for dismissal.
- Check that the end date corresponds with the applicable notice period.
- Do not allow it to be recorded that you resigned of your own accord.
- Always request the cooling-off period and make use of it.
Sickness benefit after signing a VSO
If you are ill at the time of signing, your entitlement to continued salary payment by your employer lapses as soon as the employment ends. In that case, you may be eligible for sickness benefit via the UWV — provided you meet the conditions.
However, the UWV will not pay sickness benefit if you have unnecessarily worsened your own situation. It is therefore crucial that the VSO does not imply that you ended the employment on your own initiative. Furthermore, if the notice period is not observed (or the VSO fails to observe it), the UWV may impose a waiting period before the benefit commences.
What changes to your disability benefit?
Have you been ill for more than two years and do you expect to apply for disability benefit (WIA)? It is important to know that the WIA benefit is calculated on the basis of your previous salary. Signing a VSO does not in itself directly affect the amount of your WIA benefit, as this is linked to your employment history and degree of incapacity for work.
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Plan a conversationNevertheless, there are indirect risks:
- If your VSO has an earlier end date than expected, this may affect the waiting period.
- Agreements regarding severance payments may be classified as income, which can temporarily affect benefits.
- VSOs sometimes contain clauses obliging you to waive certain entitlements — always check this carefully.
Would you like to know more about the broader context of your rights in cases of illness and termination? Then also read our comprehensive page on the Settlement agreement during illness: everything you need to know.
The cooling-off period: your safety net
Once you have signed a settlement agreement, you are legally entitled to fourteen days in which to withdraw your decision without giving a reason. This cooling-off period exists for good reason. Use it to seek advice if you have not already done so.
If you have not made use of your cooling-off period within those fourteen days and later discover that your benefits are at risk, there is a strong chance you will no longer be able to undo the agreement. Never wait too long before consulting a specialist.
Practical steps you can take
In order to protect your benefit entitlements as effectively as possible, it is advisable to arrange a number of matters before signing:
- Have the VSO reviewed by an employment lawyer who also has expertise in benefit law.
- Ask your employer to formulate the reason for dismissal in neutral terms.
- Check that the notice period has been correctly incorporated into the end date.
- Do not allow it to be recorded that you are waiving certain benefit entitlements, unless you know precisely what you are signing.
- Ask for a pro forma dismissal procedure as an alternative, if that is more advantageous for your benefit entitlements.
Why Labour Lawyer Eindhoven
At Arbeidsjurist Eindhoven, we understand that being ill is already difficult enough — without having to worry about your benefits as well. Together with you, we examine the VSO, the consequences for your specific benefit situation, and what you can do to protect your interests.
Are you based in the Eindhoven or Brabant region and would you like to know where you stand? Please feel free to contact us without obligation. We are happy to think through the options with you.
Frequently asked questions
Will I lose my unemployment benefit if I sign a settlement agreement whilst ill?
Not automatically, but the risk exists if the VSO has been drawn up incorrectly. Ensure the reason for dismissal is neutral and that the notice period has been properly taken into account. Always have the agreement reviewed before you sign.
Am I entitled to sickness benefit after signing a VSO?
That depends on the circumstances. If you are incapacitated for work at the time of signing and the VSO does not imply that you left on your own initiative, you may be eligible for sickness benefit. The UWV assesses this on a case-by-case basis.
Does a settlement agreement affect my disability benefit?
The amount of a disability benefit is determined primarily by your employment history and degree of incapacity for work. Nevertheless, certain clauses in a VSO can have indirect consequences. Always have this assessed by a specialist.
How long is the cooling-off period after signing a VSO?
You are legally entitled to fourteen days in which to withdraw the VSO without giving a reason. Use this period to seek legal advice if you have not already done so.
We're happy to help you brainstorm ideas. For advice tailored to your specific situation, we'd be happy to sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
