SETTLEMENT AGREEMENT

Exemption from work in settlement agreement: what does it mean for the employee in the Netherlands?

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What exactly does exemption from work under a settlement agreement mean and what do you need to be aware of as an employee? Read more about it here.

When an employer and an employee decide to terminate employment, a settlement agreement (VSO) is often drawn up. A crucial part of this agreement may be the exemption from work. But what exactly does this entail? In this blog, we explain what exemption from work in a settlement agreement means and what you, as an employee, should be aware of.

What is a settlement agreement?

A settlement agreement, also known as a termination agreement, is a legal document in the Netherlands in which the employer and employee mutually agree on the terms for ending the employment contract. This is usually done without the intervention of a judge. Important parts of the VSO include the end date of employment, any severance pay, and agreements on the notice period.

What does exemption from work mean?

Exemption from work means that after signing the settlement agreement, the employee no longer must work, while continuing to be paid wages until the official end date of the employment contract. This can take effect immediately after signing the VSO or later, depending on the agreements made.

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Advantages of exemption from work

More time to find a new job: Exemption from work allows employees to fully focus on finding a new job without work obligations.
Financial security: Despite no longer working, the employee's salary continues. This provides financial stability during the transition period.
Greater peace of mind: No longer having to work can reduce stress, especially if the work environment was perceived as stressful.

What should you look out for when having garden leave?

When entering into a work release settlement agreement, it is essential to be aware of the terms. Pay attention to the following:

Duration of the exemption: Make sure it is clear how long the exemption applies and the exact end date of the employment agreement.
Salary and benefits: Check whether the full salary will continue to be paid and whether arrangements have been made for vacation days, bonuses and other fringe benefits.
Non-competition and non-solicitation clauses: If there is a non-competition or non-solicitation clause in the contract, it may limit your ability to find a new job quickly. Discuss whether these clauses can be relaxed or eliminated.
Job search requirement: In some cases, the VSO agrees that the employee must actively apply for a job during the exemption period. Make sure the terms are clear.

Getting your settlement agreement checked?

Exemption from work under a settlement agreement can have advantages, such as extra time and space to apply for jobs, but it can also have disadvantages, such as the loss of networking opportunities and a greater distance from the work field. It is crucial that employees carefully read and consider the terms of the VSO. If necessary, we can provide you with legal advice to ensure that the agreements made are reasonable! Please contact us for this.

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