You've received a settlement agreement and somewhere near the bottom there’s a sentence about ‘full and final settlement’. Many employees skim over it, yet this is precisely the clause that determines whether you can still make any claims against your employer after your dismissal. Understanding what full and final settlement means is therefore essential before you sign.
What exactly is full and final settlement
Full and final settlement – also referred to as a settlement clause or discharge provision – means that, once all the obligations set out in the agreement have been fulfilled, you and your employer have no further claims against each other whatsoever. All outstanding matters are thereby conclusively closed. The legal basis for the settlement agreement itself is found in Article 7:900 of the Dutch Civil Code, with the settlement clause included as an additional provision to prevent future disputes.
In practice this means: once all agreed amounts have been paid and all other obligations have been met, your employer cannot recover costs from you, but equally you can no longer claim any additional compensation or arrears of salary. The book is closed — for both sides.
What is typically covered
The scope of full and final settlement is broad. In most cases, the clause, upon signing, covers all entitlements connected with your employment and its termination. In concrete terms, this typically includes:
- Arrears of salary or unpaid holiday pay
- Outstanding holiday days and overtime
- Bonuses or profit sharing not yet paid out
- The statutory redundancy pay or any additional redundancy payment
- Claims for damages, for example, following a workplace accident
- Future entitlements of which you are not yet aware
If you forget to mention something or fail to raise it during negotiations, there is a strong chance that entitlement will be permanently lost. That is precisely why thorough preparation is so important before you sign a Settlement Agreement.
Does full and final settlement always apply to everything
No, not always. Although the starting point is that the settlement operates comprehensively, there are situations in which a court may still find room for exceptions. This may arise in the case of:
- Unknown claims: Claims whose existence was unknown to the parties at the time of signing do not automatically fall within the full and final settlement. For example, the Amsterdam Court of Appeal (ECLI:NL:GHAMS:2018:1641) ruled that fraud discovered only after signing may fall outside the settlement.
- Unclear wording if the wording of the clause is vague, a court may determine what the parties could reasonably have intended – the so-called Haviltex criterion.
- Defects of consent: Did you sign the document under duress, based on incorrect information (a mistake), or as a result of fraud? If so, grounds may exist to have the agreement set aside.
- Express exceptions: pension rights are regularly excluded from the settlement; non-compete or confidentiality clauses may, conversely, be explicitly stated to remain in force.
The precise wording is therefore decisive. A broadly drafted clause closes off more than a carefully worded provision containing targeted exceptions.
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Plan a conversationFull and final settlement and the cooling-off period
As an employee, you have a statutory cooling-off period of fourteen days after signing a settlement agreement. Within that period, you may revoke the agreement in writing, without giving reasons, and before the full and final settlement has taken effect. Please note: if the cooling-off period is not mentioned in the agreement, a period of twenty-one days applies. Make deliberate use of this time – once the period has elapsed without revocation, the dismissal and the accompanying settlement become, in principle, final.
Practical tips before you sign
Take your time and don't feel pressured. A few specific points to consider:
- Check that outstanding amounts (holiday pay, bonus, overtime) are explicitly stated in the agreement
- Consider whether there may be a claim of which you do not yet have a full picture, such as pension contributions or workplace accident damages
- Have it specified which post-contractual provisions (non-compete, confidentiality) will or will not remain in force
- Request an exception to the full and final settlement for any matters you expressly wish to preserve
- Check that the fourteen-day cooling-off period is included
- Have the entire agreement, including the settlement clause, assessed by an employment law specialist
Negotiating the scope of the full and final settlement is possible in many cases. Your employer also has an interest in ensuring the agreement is clear, as otherwise they too may face claims they believed had been settled.
Why Labour Lawyer Eindhoven
At Arbeidsjurist Eindhoven, we understand how significant a dismissal can be, particularly when you are uncertain about exactly what you are signing. We review the complete settlement agreement, assess whether the settlement clause is correctly and fully worded, and identify whether you are giving up rights that you ought to have retained. We do this in a straightforward, personal manner and without legal jargon — in plain, clear language, right here in the Eindhoven and Brabant region. Please feel free to contact us without obligation; an initial conversation costs you nothing and will give you immediate clarity about your situation.
Frequently asked questions
What does full and final settlement mean in a settlement agreement?
Full and final settlement means that, once all the obligations set out in the settlement agreement have been fulfilled, you and your employer have no further claims against each other whatsoever. All entitlements connected with your employment and the termination of it are thereby conclusively closed.
Can I still make a claim against my employer after signing?
In principle, no, but there are exceptions. Claims that were not yet known to either party at the time of signing can sometimes fall outside the full and final settlement. There may also be legal scope where the wording is unclear or where there are defects of consent such as mistake or duress. Always have this assessed by a specialist.
Does full and final settlement also apply to my pension?
In practice, pension rights are regularly expressly excluded from the full and final settlement. Whether this is the case in your agreement depends on the precise wording. Always check this before you sign, because if pension rights are not excluded, you will no longer be able to claim them at a later stage.
Can I negotiate the full and final settlement?
Yes, you can. The clause isn't set in stone. You can request that certain entitlements be expressly excluded from the settlement, or ask for a more precise description of what is and isn't covered. An employment lawyer can negotiate the exact scope on your behalf.
You have a period of 14 days after signing a settlement agreement to reconsider your decision.
After signing, you as an employee have a statutory cooling-off period of fourteen days, during which you can revoke the agreement in writing without giving any reason. If the cooling-off period is not stated in the agreement itself, a period of twenty-one days applies. Once this period has elapsed without revocation, the agreement — including the full and final settlement — becomes, in principle, final.
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.
