Continued sick pay and a settlement agreement: how does it work?

Continued payment of wages during illness and a settlement agreement

Continued payment of wages during illness and a settlement agreement often raises questions. We explain what rights you retain to wages and benefits.

Once you are ill, your employer is obliged to continue paying your salary. But what happens if negotiations over a settlement agreement are taking place at the same time? Questions then arise about when that continued salary payment obligation ends and what that means for your financial position. This article explains how this works legally and what you should look out for.

What does the continued salary payment obligation entail?

If you as an employee become ill, your employer is in principle obliged to continue paying your salary for a maximum of two years. In the first year this is generally 100% of your salary, and in the second year 70%. This is laid down in the Civil Code and forms an important protection for employees who are ill.

For as long as you are ill and still employed, that obligation simply continues. Your employer cannot simply stop it part-way through, even if discussions are under way about terminating the employment.

What changes when a settlement agreement comes into the picture?

A settlement agreement (VSO) is a written arrangement between you and your employer to end the employment by mutual consent. Once both parties have signed the agreement and the end date has been reached, your employment ceases to exist. And with that, your employer's obligation to continue paying your salary also ends.

That may sound logical, but it has significant consequences. For as long as you are ill and still in employment, you are accruing rights. Once you sign and the employment ends, those entitlements to continued salary payments lapse. It is therefore essential that you fully understand what you are giving up at the moment you put your signature to the document.

What do you receive in the period up to the end date?

An end date is agreed in the settlement agreement. Until that date your employer remains obliged to continue paying your salary, unless you make other arrangements in that regard. In some cases it is agreed that you are released from work with immediate effect, but that the salary continues to be paid until the end date. That arrangement must then be explicitly stated in the VSO.

After the end date you no longer have any right to continued salary payments from your employer. What income you receive after that depends on the arrangements in the VSO and the conditions applied by benefit agencies such as the UWV.

Practical points to consider regarding continued salary payment and a VSO

When assessing or signing a settlement agreement, bear the following points in mind:

• Controleer de einddatum: Is it realistic? Do you have sufficient time to properly assess your situation and arrange income if necessary?
• Read what it says about continued salary payment up to the end date: Does the VSO state clearly that your salary will continue to be paid up to and including the last day?
• Pay attention to the severance payment: A transition payment or other severance payment does not automatically compensate for the salary you miss out on if you sign prematurely.
• Find out what happens after the end date: Are you entitled to a Sickness Benefit (Ziektewet) through the UWV? This is not always a given and depends on your specific situation.
• Do not wait too long to seek advice: When a settlement agreement is involved, you always have the right to seek legal advice before signing. Make use of that opportunity.

What if your employer stops continued salary payment before the end date?

In principle, that is not permitted. As long as you are ill and the end date in the settlement agreement has not yet been reached, the obligation to continue paying your salary remains in force. If your employer stops paying without good reason, you have legal options to take action against this.

Situations of this kind call for prompt action. In such a case it is advisable to contact an employment lawyer immediately who can guide you through the process.

The importance of the correct order of events

Many employees are unaware that the order in which you act can be decisive for your rights. If you sign first and only then realise what the consequences are for your continued salary payment or possible benefits, it is often too late to reverse that. Particularly in cases of illness, the picture is complex, as several schemes may overlap.

You can find more background information about your rights in this situation on the overview page Settlement agreement during illness: everything you need to know.

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. Together with you, we look at the specific arrangements in the settlement agreement, the consequences for your continued salary payment, and what you need in order to make a well-considered decision.

Would you like to know what your situation looks like? Contact us without obligation. We are happy to think things through with you.

Frequently asked questions

Does continued salary payment during illness stop as soon as I sign a settlement agreement?

Continued salary payment runs until the end date specified in the settlement agreement is reached. Only after that does your employer's obligation to pay your salary lapse.

Is my employer obliged to continue paying my salary if we are already negotiating a settlement agreement?

Yes. As long as you are ill and still employed, the obligation to continue paying your salary remains in force. That obligation does not end by virtue of the fact that negotiations are taking place.

What happens to my income after the end date in the settlement agreement?

After the end date, you are no longer entitled to continued salary payments from your employer. Whether you qualify for a benefit, such as through the Sickness Benefits Act or unemployment benefit (WW), depends on your personal situation. It is advisable to have this looked into thoroughly in advance.

Is my employer allowed to stop salary payments before the agreed end date?

In principle, your employer is not permitted to do this without a valid reason. If your employer stops paying while you are still ill and the end date has not yet been reached, you can take legal steps. In such a situation, seek advice as quickly as possible.

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.