Have you been offered a settlement agreement and are wondering whether you are entitled to a transition payment? That is a perfectly valid question, because the rules for leaving by mutual consent differ from those that apply in a formal dismissal procedure. The good news is that in practice a payment is almost always agreed, and it is often negotiable as well.
No statutory entitlement, but a strong negotiating position
When dismissal is handled through the UWV (Employee Insurance Agency) or the cantonal court, you are in principle entitled to a statutory transition payment. When a Transition payment is arranged through a settlement agreement, things work differently. Strictly speaking, your employer is not obliged to pay a transition payment when you leave by mutual consent. The law grants this entitlement in cases of unilateral dismissal, whereas a settlement agreement is by its very nature based on mutual agreement.
In practice, almost every employer will nevertheless offer a payment. The reason is straightforward: without your agreement, your employer still has to go to the UWV or the cantonal court, and that is a process they would very much prefer to avoid. Your co-operation therefore has value, and you are entitled to assert that value in negotiations.
The transition payment as a starting point in negotiations
Although the payment in a settlement agreement is formally open to negotiation, the statutory transition payment acts in practice as a floor or reference point. The amount is calculated on the basis of your gross monthly salary and the length of your employment: for each complete year of service you accrue one third of a monthly salary, counting from your first working day. From 1 January 2026, a statutory maximum of €102,000 gross applies, or one gross annual salary if that is higher.
Some employers deliberately offer more than the statutory redundancy pay in order to avoid a time-consuming procedure or to reach an agreement quickly. Particularly if you have a long period of service, hold a specialist position, or if the employer would have little to stand on in a formal procedure, there may be more room for negotiation than the initial proposal suggests.
What should be included in a sound settlement agreement
A settlement agreement covers more than just the payment. Always check that the following points are properly addressed:
- Amount and payment date of the compensation — is the sum clearly stated, including when it will be credited to your account?
- Termination date and notice period — does the end date align with the correct notice period, so that your entitlement to unemployment benefit is not put at risk?
- Initiative resting with the employer — for your unemployment benefit claim it is essential that the dismissal originates from the employer, not from you.
- Redundancy — a reason such as business-economic circumstances or an irretrievably broken working relationship protects your unemployment benefit application.
- Full and final settlement — are you certain there are no outstanding entitlements, such as holiday days, a bonus, or expense allowances, before you agree to this?
- Non-competition and non-solicitation clauses — have it recorded that these clauses will lapse, so that you are free to move on.
- Reference letter I agree that you will receive a positive reference letter.
- Cooling-off period — after signing, you have a statutory period of fourteen days within which to withdraw from the agreement; if this period is not mentioned, three weeks will apply.
The cooling-off period and unemployment benefit protect your position.
The law offers you, as an employee, an additional safety net when leaving by mutual consent. After signing, you have a statutory right to withdraw from your decision without providing a reason. The cooling-off period is fourteen days, or three weeks if the period is not included in the agreement. Make good use of that time and always have the agreement reviewed before you sign, as making adjustments afterwards is much more difficult.
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Plan a conversationFor your unemployment benefit claim, precision in the wording is crucial. The UWV assesses the settlement agreement in order to determine whether you are entitled to unemployment benefit. If something is missing from the wording, that can have direct consequences for your benefit.
Practical tips before you sign
- Calculate the statutory transition payment yourself first, so that you know what the minimum reference point is.
- Compare the amount being offered with what a formal dismissal procedure would cost your employer.
- Do not allow yourself to be rushed: an employer cannot compel you to sign immediately.
- Check if a social plan or collective labour agreement applies that grants you additional rights.
- Always observe the cooling-off period and seek legal advice before signing.
- Pay attention to the full and final settlement clause: ensure that outstanding entitlements are expressly excluded or have already been settled.
Why Labour Lawyer Eindhoven
At Arbeidsjurist Eindhoven, we know the local labour market and understand precisely where the room for manoeuvre lies in negotiations over a settlement agreement. Whether you have just received a proposal or are already in the middle of discussions with your employer, we will scrutinise everything carefully and ensure that you make the right decisions. Contact us for a no-obligation consultation and discover how we can help you.
Frequently asked questions
Am I entitled to a transition payment under a settlement agreement?
Not automatically. When leaving by mutual consent through a settlement agreement, the employer is not legally obliged to pay a transition payment. In practice, however, a payment is almost always agreed, because the employer needs your consent and would otherwise have to go through a formal dismissal procedure.
How much is the transition payment in 2026?
The transition payment amounts to one third of a gross monthly salary for each complete year of service, counting from the first working day. From 1 January 2026, a statutory maximum of €102,000 gross applies, or one gross annual salary if that is higher. With a settlement agreement you can negotiate a higher payment with your employer.
Can I negotiate a higher payment than the statutory transition payment?
Yes, in a settlement agreement, payment is generally freely negotiable. Employers opt for a settlement agreement to avoid a lengthy UWV or court procedure, and are sometimes willing to pay more than the statutory transition payment. Factors such as the strength of the dismissal case, length of service, and your position in the labour market all play a role.
Will I lose my unemployment benefit if I sign a settlement agreement?
Not if the agreement is properly drafted. The UWV assesses whether the initiative for the dismissal lay with the employer, whether a neutral reason for dismissal has been stated, and whether there is no urgent cause. If these elements are missing or incorrectly worded, you risk having your unemployment benefit application rejected. Always have the agreement reviewed by a legal professional.
You have a period of 14 days after signing a settlement agreement to reconsider your decision.
After signing, you have a statutory cooling-off period of fourteen days during which you can withdraw from your decision without giving any reason. If the cooling-off period is not included in the agreement, a period of three weeks applies. Use this time to have the agreement checked before giving your final consent.
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.
