What is a neutral reason for dismissal in a settlement agreement and why does it matter so much?

Why a neutral reason for dismissal in the settlement agreement is important

A neutral reason for dismissal in the settlement agreement is crucial for your unemployment benefit (WW). We explain why this is so important and how to arrange it properly.

With a settlement agreement, a great deal turns on the details, and the reason for dismissal is perhaps the most important detail of all. A neutral reason for dismissal protects both your entitlement to unemployment benefit (WW) and your reputation in the job market. Yet this element is underestimated or overlooked by many employees.

What do we mean by the reason for dismissal in the settlement agreement?

A settlement agreement (VSO) always states why the employment relationship is ending. This can range from an economic business reason to a disrupted working relationship or a difference of opinion about the direction of the company. The way in which that reason is worded has significant consequences for what happens after the dismissal.

A neutral reason for dismissal is a formulation that places no blame on the employee. Think of phrases such as: 'the employment contract is ending due to a difference of opinion regarding the future scope of the role' of 'the parties have reached the conclusion that the working relationship no longer meets their mutual expectations'. Such formulations are professional, factual and do not pass any judgement.

Why is the reason for dismissal so decisive for your unemployment benefit (WW)?

When assessing a claim for unemployment benefit (WW), the UWV considers whether you became unemployed through your own fault. If the settlement agreement contains anything that resembles underperformance, misconduct, or serious negligence, the UWV may conclude that you are to blame for the loss of your job. The consequence? A partial or complete refusal of your unemployment benefit (WW).

Even if the actual reason for the dismissal was a conflict, that does not necessarily mean that you were the guilty party. Nevertheless, an unfortunate form of wording in the settlement agreement can create precisely that impression. It is therefore essential that the reason for dismissal is worded carefully and neutrally.

What are examples of non-neutral formulations?

Employers sometimes write formulations that sound logical to them but can be damaging to you as an employee. Pay particular attention to these types of descriptions:

• References to 'underperformance' or 'repeated warnings'
• Phrases such as 'the employee has not complied with company rules'
• Descriptions that suggest you yourself requested or desired the dismissal
• Vague terms such as 'an irreparable breakdown of trust caused by the employee'
• References to earlier improvement plans or PIP procedures

Any of these formulations may arouse suspicion at the UWV and negatively affect the assessment of your unemployment benefit (WW) claim.

What is the effect on your next job?

In addition to unemployment benefit (WW), the reason for dismissal also plays a role when applying for jobs. Although you are generally not required to show a settlement agreement to a new employer, during a job interview you will almost always be asked why your previous employment ended. A neutral reason gives you the freedom to steer that conversation yourself and to come across professionally.

Moreover, some employers request references from your previous employer. If the settlement agreement has a negative tone, this increases the likelihood that the reference will also be coloured in that direction. A neutral formulation in the agreement sets the tone for how the conclusion of the employment relationship is perceived.

How do you ensure a neutral reason for dismissal?

Negotiating the reason for dismissal is a legitimate and sensible part of the settlement agreement process. You do not have to simply accept the first version your employer draws up. Practical tips:

• Always read the reason for dismissal carefully before signing anything
• Ask your employer to amend the wording if it sounds too specific or negative
• Use the fourteen-day cooling-off period to have the wording carefully reviewed (by a professional if needed)
• Have the wording assessed by an employment lawyer who is familiar with the UWV's unemployment benefit (WW) assessment process
• Ask whether an addition such as 'no fault on the part of the employee' can be included explicitly

For the broader context of what a settlement agreement in a conflict situation should contain, it is useful to visit the page Settlement agreement in a conflict situation: your rights and approach te raadplegen.

Frequently asked questions

Can I still change the reason for dismissal after I have signed?

In principle, no — unless both parties agree and sign a new version. That makes it all the more important to negotiate carefully before signing.

What if my employer refuses a neutral wording?

In that case, it is an important point of negotiation. An employment lawyer can help you put forward arguments and find wording that both parties can accept, without you putting your unemployment benefit (WW) entitlements at risk.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven, we know how important every sentence in a settlement agreement is. We not only check whether the payment is correct, but also whether the reason for dismissal protects your interests. That puts you in a stronger position with the UWV and in your next step on the labour market.

Would you like to know whether the reason for dismissal in your settlement agreement is safe? Contact us without obligation. We are happy to look at the situation together with you.

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.