As a statutory director, you hold a special legal position that differs significantly from that of an ordinary employee. If you are faced with a settlement agreement, different rules apply — with less protection in some respects, but with full entitlements to fair compensation. Understanding what lies ahead begins with grasping how your position is structured in law.
The dual legal position of the statutory director
As a statutory director, you hold two roles simultaneously: you are formally appointed as a director of the company and you have an employment contract as an employee. That combination sounds powerful, but in practice it works against you in the event of dismissal. The General Meeting of Shareholders (GMS) or the Supervisory Board can dismiss you under company law pursuant to Article 2:244 of the Dutch Civil Code (for a private limited company) or Article 2:134 of the Dutch Civil Code (for a public limited company) — and that decision automatically brings your employment contract to an end as well.
The Dutch Supreme Court confirmed in the so-called ’15 April judgments’ that terminating the company-law relationship also brings the employment relationship to an end, unless a statutory prohibition on dismissal applies or the parties have agreed otherwise in writing. In practice, this means that the dismissal protection afforded to a statutory director is considerably more limited than that of a regular employee.
No UWV procedure, but a reasonable ground is still required
Unlike the dismissal of an ordinary employee, your employer does not need to seek permission from the UWV or initiate dissolution proceedings before the cantonal court in order to dismiss you. The dismissal resolution passed by the GMS or Supervisory Board is in principle sufficient to bring both your directorship and your employment contract to an end.
That does not mean anything goes. Your employer must still have a reasonable ground for your dismissal within the meaning of Article 7:669(3) of the Dutch Civil Code — such as underperformance, an irreparably damaged working relationship, or economic circumstances. Furthermore, the employer is required to investigate whether redeployment to another suitable role within the organisation is possible. In practice, this threshold is met quickly, as the directorial role has effectively become redundant following a dismissal resolution.
The settlement agreement as a way out for both parties
Because litigation is costly and uncertain for both sides, most director dismissals are concluded with a negotiated arrangement: the settlement agreement. For the employer, it is the quickest route to a fresh start; for you as a director, it is an opportunity to make use of your negotiating room to secure a favourable departure package.
Bear in mind that the employer holds a psychological advantage during settlement agreement negotiations: it can present the date of the GMS as a hard deadline. If no agreement is reached before that meeting, the employer can simply proceed with the dismissal. Do not let this catch you off guard — even under significant pressure, you are entitled to a carefully conducted process.
Procedural requirements for the dismissal resolution
Before a dismissal is legally valid, the employer must comply with a number of formalities. If these are not correctly followed, you can challenge the dismissal resolution:
- You must be given timely notice of the shareholders’ meeting at which the proposed dismissal is on the agenda.
- As a director, you have the right to give your advisory vote and to be heard on the proposed resolution.
- You must not be presented with a fait accompli; the hearing must be substantively meaningful.
- If these rules are not observed, the dismissal resolution may be voidable, in which case the employment contract revives.
No cooling-off period after signing the settlement agreement
Be aware of a crucial difference from ordinary employees: as a statutory director, you do not have a statutory cooling-off period of fourteen days after signing a settlement agreement. Regular employees may withdraw their signature within that period without giving reasons; that protection does not apply to you. Once the settlement agreement has been signed, the agreed terms are immediately final and binding. Always have the agreement reviewed by a specialist lawyer before signing.
Plan een vrijblijvend gesprek en ontdek wat we voor je kunnen betekenen.
Plan een gesprekEntitlement to a transition payment and fair compensation
As a statutory director, you are still entitled to the statutory transition payment, unless alternative arrangements have been agreed in writing in your employment contract. The maximum transition payment as of 1 January 2026 is €102,000 gross, or a maximum of one gross annual salary if that amount is higher. In practice, the transition payment in a settlement agreement often serves as a starting point for negotiation: employers are regularly willing to pay more in order to avoid proceedings.
If you are unable to reach an amicable settlement and the GMS has proceeded with the dismissal resolution, you may subsequently seek fair compensation from the court. This will succeed if the court finds that there was no reasonable ground for dismissal or that your employer acted in a seriously culpable manner. Importantly, reinstatement of the employment contract is excluded by law. You cannot therefore ask the court to take you back into employment.
Unemployment benefit (WW) after a settlement agreement as a director
Whether you are entitled to unemployment benefit (WW) after signing the settlement agreement depends on your shareholding situation. If you have an employment contract with the company and do not hold shares (or hold only a minority interest that does not allow you to block your own dismissal), you are in principle eligible for WW benefit. However, if you qualify as a director-majority shareholder (DGA) under the Designation of Director-Major Shareholder Regulations 2016, you are not insured under the employee insurance schemes and have no entitlement to WW benefit. This distinction is complex and warrants early legal advice.
Practical tips if you receive a settlement agreement as a director
- Never sign immediately: since the cooling-off period does not apply to you, it is all the more important to have the settlement agreement thoroughly assessed before signing.
- Check the procedural steps: were you given timely and proper notice of the meeting? Were you genuinely given the opportunity to put forward your position?
- Negotiate the compensation: the transition payment is a statutory minimum, not an endpoint. Where the dismissal file is weak, more may be achievable.
- Check your shareholding situation: this partly determines whether you are entitled to WW benefit after your departure.
- Pay attention to the notice period in the settlement agreement: a period that is too short can delay or jeopardise your WW benefit.
- Request a neutral description of the reason for dismissal: ensure that the reason stated in the settlement agreement is not described as being your fault.
- Report sick before receiving the notice of the GMS: a prohibition on dismissal due to illness only applies if you have reported sick before receiving the invitation.
Why Arbeidsjurist Eindhoven
At Arbeidsjurist Eindhoven, we have an in-depth understanding of the special position of the statutory director. Whether you are based in Eindhoven, Brabant, or elsewhere: we assess your settlement agreement on all crucial points, from the procedural lawfulness of the dismissal resolution to the level of compensation and your WW position. Contact us without obligation — so that you can approach the negotiating table with confidence and a well-founded position.
Frequently asked questions
Does a statutory director have a cooling-off period after signing a settlement agreement?
No. The statutory cooling-off period of fourteen days that applies to ordinary employees does not apply to statutory directors. Once the settlement agreement has been signed, the agreed terms are binding. It is therefore essential to have the agreement reviewed by a specialist lawyer before signing.
Is a statutory director entitled to a transition payment under a settlement agreement?
Yes, a statutory director is in principle entitled to the statutory transition payment upon termination of the employment relationship at the employer's initiative. The maximum transition payment as of 1 January 2026 is €102,000 gross, or a maximum of one gross annual salary if that amount is higher. A higher payment can be agreed in a settlement agreement. Unless alternative arrangements have been recorded in writing in the employment contract, the statutory rules serve as the starting point.
Can a statutory director demand reinstatement of the employment contract if the dismissal was unjustified?
No. The law expressly excludes the possibility of a court ordering reinstatement of the employment contract in the case of a statutory director. If there was no reasonable ground for dismissal, or if the employer acted in a seriously culpable manner, you may seek fair compensation from the court. Such a claim must generally be brought within two months of the end date of the employment contract.
Is a statutory director always entitled to unemployment benefit (WW) after dismissal?
Not automatically. If you have an employment contract and do not hold shares that would allow you to block your own dismissal, you are in principle eligible for WW benefit. However, if you qualify as a director-majority shareholder (DGA) under the Designation of Director-Major Shareholder Regulations 2016, you are not insured under the employee insurance schemes and have no entitlement to WW benefit. Seek legal advice promptly so that your situation can be assessed.
What if the GMS failed to comply with the procedural rules when passing the dismissal resolution?
If the employer did not follow the required procedural steps — such as failing to give timely notice of the shareholders' meeting or denying you your right to an advisory vote — the dismissal resolution may be voidable. If it is voided, the employment contract revives with retrospective effect. It is therefore essential to seek legal advice as quickly as possible if you have doubts about the lawfulness of the process that was followed.
We are happy to think along with you. For advice tailored to your situation we would gladly sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
