Transition payment settlement agreement: your rights on leaving by mutual consent

Transition payment upon dismissal by mutual consent

Have you been offered a settlement agreement and are you wondering whether you are entitled to a transition payment? That is a valid question, because with dismissal by mutual consent the rules are different from those 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

In the case of dismissal via UWV or the subdistrict court you are in principle statutorily entitled to a transition payment. With a transition payment settlement agreement, it works differently. Strictly speaking, your employer is not obliged to pay a transition payment in the case of dismissal by mutual consent. The law grants this entitlement in the case of unilateral dismissal, whereas a settlement agreement is by its nature based on mutual consent.

In practice, virtually every employer will nevertheless offer a payment. The reason is straightforward: without your agreement, your employer still has to go to UWV or the subdistrict court, and that is a process they would much rather avoid. Your cooperation therefore has value, and you are entitled to make that value count in the negotiations.

The transition payment as a starting point in negotiations

Although the compensation in a settlement agreement is formally freely negotiable, the statutory transition payment acts in practice as a floor or benchmark. The amount is calculated on the basis of your gross monthly salary and the length of your employment: for each full year of service you accrue one third of a monthly salary, counted from your first working day. From 1 January 2026 a statutory maximum of €102,000 gross applies, or one gross annual salary if that amount is higher.

Some employers deliberately offer more than the statutory transition payment in order to avoid a time-consuming procedure or to reach agreement quickly. Particularly if you have a long period of service, hold a specialist position, or if the employer would have a weak case in formal proceedings, there may be more room for negotiation than the initial proposal suggests.

What should a good settlement agreement contain

A settlement agreement covers more than just the compensation. Always check that the following points are properly included:

• Amount and payment date of the compensation — is the sum stated explicitly, including when it will be credited to your account?
• Dismissal date and notice period — does the end date align with the correct notice period, so that your entitlement to unemployment benefit (WW) is not put at risk?
• Initiative on the part of the employer — for your unemployment benefit (WW) it is essential that the dismissal originates from the employer, not from you.
• Neutrale ontslagreden — a reason such as economic circumstances or an irreparably damaged working relationship protects your WW claim.
• Final discharge — are you certain there are no outstanding entitlements, such as holiday days, a bonus or expense reimbursements, 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.
• Getuigschrift — agree that you will receive a positive reference letter.
• Bedenktermijn — after signing, you have a statutory period of fourteen days in which to withdraw from the agreement; if that period is not stated, a period of three weeks applies instead.

The cooling-off period and unemployment benefit (WW) protect your position

The law provides you, as an employee, with an additional safety net in the event of dismissal by mutual consent. After signing, you have a statutory right to withdraw from your decision without giving reasons. That 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, because making changes afterwards is much more difficult.

Precision in the wording is crucial for your unemployment benefit (WW). The UWV assesses the settlement agreement to determine whether you are entitled to unemployment benefit (WW). If anything is missing from the wording, this can have direct consequences for your benefit.

Practical tips before you sign

• Start by calculating the statutory transition payment yourself so that you know what the minimum benchmark is.
• Compare the amount offered with what a formal dismissal procedure would cost your employer.
• Do not let yourself be rushed: an employer may not force you to sign immediately.
• Check whether a social plan or collective 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 any outstanding entitlements are expressly excluded or have already been settled.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven we know the local labour market and understand exactly where room for negotiation exists in settlement agreement discussions. Whether you have just received a proposal or are already in the midst of talks with your employer, we provide a critical review and ensure you make the right decisions. Contact us without obligation and find out what we can do for you.

Frequently asked questions

Am I entitled to a transition payment under a settlement agreement?

Not automatically. In the case of dismissal 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 full year of service, calculated 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. Under a settlement agreement, you can negotiate a higher payment with your employer.

Can I negotiate a higher payment than the statutory transition payment?

Yes, with a settlement agreement the compensation is in principle freely negotiable. Employers opt for a settlement agreement to avoid a time-consuming UWV or court procedure, and are sometimes willing to pay more than the statutory transition payment. Factors such as the strength of the dismissal file, the length of your employment and your position in the labour market all play a role in this.

Will I lose my unemployment benefit if I sign a settlement agreement?

Not if the agreement is drafted correctly. 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 involved. If these elements are missing or incorrectly worded, you run the risk of your unemployment benefit (WW) application being rejected. Always have the agreement checked by a legal professional for this reason.

How much time do I have to reconsider after signing a settlement agreement?

After signing, you have a statutory fourteen-day cooling-off period in which you can withdraw your decision without giving any reason. If the cooling-off period has not been included in the agreement, a period of three weeks applies. Use that time to have the agreement reviewed before you give your final consent.

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.