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

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

What is a self-insured employer?

Employers can choose to bear the risk of sickness absence themselves rather than transferring it to the UWV. Instead of paying a premium for Sickness Benefit through the public system, they take on the 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, the responsibility for your Sickness Benefit may rest with your (former) employer — rather than with the UWV.

What changes if you sign a settlement agreement with a self-insured employer?

With a standard employer, a sick employee moves onto Sickness Benefit via the UWV after leaving employment. With a self-insured employer, it works differently: the employer pays the Sickness Benefit 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 self-insured, the following situations may arise:

• Your employer — or their insurer — is responsible for paying your Sickness Benefit after the end of your employment.
• The amount and duration of the benefit are determined by the Sickness Benefits Act, but the administration is handled by a private party.
• There may be an incentive for the employer to limit benefit costs, which can influence how the settlement agreement negotiations proceed.
• If the employer ceases to be self-insured or goes bankrupt, administration may revert to the UWV.

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

Practical points to consider as an employee

Are you ill and have you been offered a settlement agreement whilst your employer is self-insured? There are a number of things you should pay particular attention to.

• Ask who will pay your Sickness Benefit after your employment ends — the employer directly, an insurer, or the UWV.
• Check that the amount of your benefit has been correctly recorded — and whether there are guarantees should the employer or insurer run into 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 nature of the self-insured status — is this public (via UWV self-insurance) or private (via an insurer)?
• Have the settlement agreement reviewed by an employment lawyer — particularly if you have any doubts about the consequences for your benefit after leaving.

Negotiating: does self-insured status affect the settlement agreement?

Yes, it certainly can. Because the employer bears the costs of your illness after your employment ends, they sometimes have an interest in reaching an agreement quickly — or in minimising the compensation. This need not necessarily be to your disadvantage, but it is something to be aware of during negotiations.

It is wise during negotiations to look not only at the redundancy payment, but also at what has been arranged regarding your income during illness after signing. A settlement agreement that appears favourable due to a reasonable compensation amount can still turn out to be disadvantageous if your benefit entitlements are not properly protected. For further background, see the overview at Settlement agreement during illness: everything you need to know.

What if your employer fails to meet their obligations?

If an employer is self-insured and fails to meet their payment obligations, you may find yourself in 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 the UWV as a safety net, but this does not always run smoothly. It is therefore important to ensure that the settlement agreement contains clear provisions about what happens to your benefit should the employer cease to be the administrator.

Why Labour 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 self-insured. We look not only at the compensation, but at the full 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 status means for you? Contact us without obligation. We are happy to think things through with you.

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.

Written by

Roy

Employment lawyer at Employment Lawyer Eindhoven

Roy is an employment lawyer at Arbeidsjurist Eindhoven, part of Adviesgroep Eindhoven. He assists employees and employers with dismissal, settlement agreements and transition payments, always clear, personal and persistent. That is reflected in more than 85 five-star client reviews.

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