Self-insured employer and settlement agreement during illness: what does this mean for you?

Own-risk bearer status and a settlement agreement during illness

Is your employer an own-risk bearer and have you been offered a settlement agreement while you are ill? This has consequences for your benefit entitlement. We explain what to look out for.

If you are ill and your employer is a self-insurer (eigen risicodrager), a settlement agreement (VSO) may have different consequences for you than you might expect. It is important to understand what that status of your employer means before you agree to anything.

What is a self-insurer (eigen risicodrager)?

Employers can choose to bear the risk of sickness absence themselves rather than transferring it to the UWV. In that case they do not pay a Sickness Benefit Act (Ziektewet) premium through the public system, but instead take on financial responsibility for sick (former) employees themselves.

This has direct consequences for what happens to you if you are ill and your employment ends. Once you are no longer employed but are still incapacitated for work, responsibility for your Sickness Benefit Act (Ziektewet) payment may rest with your (former) employer — rather than with the UWV.

What changes when you sign a VSO with a self-insurer?

With an ordinary employer, a sick employee moves into the Sickness Benefit Act (Ziektewet) scheme via the UWV after leaving employment. With a self-insurer it is different: the employer pays the Sickness Benefit Act (Ziektewet) payment directly, or arranges for this to be done through a private insurer. This may sound technical, but it affects you on a very practical level.

When you sign a settlement agreement whilst you are ill and your employer is a self-insurer, the following situations may arise:

• Your employer — or their insurer — is responsible for paying your Sickness Benefit Act (Ziektewet) payment after the end of your employment.
• The amount and duration of the payment are determined by the Sickness Benefit Act (Ziektewet), but the administration rests with a private party.
• There may be an incentive for the employer to limit the cost of the payment, which influences how the VSO negotiations proceed.
• If the employer ceases to be a self-insurer or becomes insolvent, administration may revert to the UWV.

In short: who pays your benefit and how that is arranged depends greatly on the terms agreed in and around the settlement agreement.

Practical points to consider as an employee

Are you ill and have you been offered a settlement agreement while your employer is a self-insurer (eigen risicodrager)? If so, there are a number of things you need to pay particular attention to.

• Find out who will pay your Sickness Benefit (Ziektewet) after you leave employment — the employer directly, an insurer, or UWV.
• Check whether the amount of your benefit has been correctly recorded — and whether there are guarantees in place should the employer or insurer run into financial difficulties.
• Pay attention to the end date in the settlement agreement — exactly when does your employment end, and how does that relate to your reintegration process?
• Ask about the status of the self-insurance arrangement — is this public (via UWV self-insurance) or private (via an insurer)?
• Have the settlement agreement checked by an employment lawyer — especially if you have any doubts about the consequences for your benefit entitlements after leaving.

Negotiating: does the self-insurer status have an impact on the settlement agreement?

Yes, it certainly can. Because the employer bears the costs of your illness after you leave employment, they sometimes have an interest in reaching an agreement quickly — or in minimising the payment. This does not necessarily have to be disadvantageous for you, but it is something to be aware of during negotiations.

It is advisable, during negotiations, not only to look at the severance payment, but also to consider what arrangements have been made regarding your income during illness after signing. A settlement agreement that appears favourable because of a decent payment can still turn out to be disadvantageous if your benefit entitlements are not properly protected. For further background, also read the overview on Settlement agreement during illness: everything you need to know.

What if your employer fails to meet their obligations?

If an employer is a self-insured risk bearer and fails to meet its payment obligations, you can find yourself in serious difficulty. You do have rights, but enforcing them takes time and energy — at precisely the moment when you are ill and recovery should be the priority.

In most cases there is a private insurer or UWV as a safety net, but this does not always go smoothly. Make sure, therefore, that the settlement agreement contains clear arrangements about what happens to your benefit if the employer ceases to act as the paying party.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven we assist employees in the Eindhoven and Brabant region who are dealing with a settlement agreement during illness — including where their employer is a self-insured risk bearer. We look not only at the payment, but at the complete picture: your benefit, your rights, and your situation.

Have you received a settlement agreement and would you like to know what your employer's self-insured risk bearer status means for you? Feel free to contact us with no obligation. We are happy to think things through with you.

Frequently asked questions

What does it mean if my employer is a self-insured risk bearer?

It means that your employer is itself responsible for the costs of your illness and any Sickness Benefit (Ziektewet) after your employment ends, rather than UWV.

Will I still receive a Sickness Benefit (Ziektewet) if I sign a settlement agreement with a self-insured risk bearer?

In principle yes, but the administration then rests with the employer or a private insurer. Make sure this is properly arranged in or around the settlement agreement.

Does the self-insured risk bearer status affect my severance payment?

Not directly, but it can influence your employer's approach to negotiations. Seek advice on this from an employment lawyer.

What should I do if I have doubts about the consequences of a settlement agreement?

Do not sign anything until you have obtained legal advice. An employment lawyer can assess the settlement agreement and assist you with the negotiations.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.