Settlement Agreement with a Fixed-Term Contract: Your Rights in Eindhoven

Have you, as an employee on a fixed-term contract, suddenly been offered a settlement agreement (VSO)? If so, you find yourself in a particular legal situation that differs from a permanent employment contract in several respects. Your position is sometimes stronger than you might think, but the pitfalls are also more real. In this article you can read about your rights and what to look out for before you sign anything.

When might you receive a settlement agreement on a fixed-term contract?

A fixed-term contract normally comes to an end on the agreed end date. In that case, no settlement agreement is required. The situation changes when your employer wants to end the contract early, or when you yourself want to leave sooner. In such cases, a settlement agreement can be the solution for parting ways by mutual agreement and making clear arrangements regarding compensation, release from work duties, and other practical matters.

There are also employers who offer a settlement agreement (VSO) precisely before the point at which a succession of fixed-term contracts would automatically convert into a permanent contract. This makes your negotiating position particularly strong in such a case: the employer has every interest in you agreeing.

The early-termination clause is crucial

The most important thing to check when a settlement agreement is offered during a current fixed-term contract is whether your employment contract contains an early-termination clause. This clause largely determines what you can do legally and whether you retain your entitlement to unemployment benefit (WW).

Staat zo'n beding er possibility to have included? In that case, your fixed-term contract can be terminated early, provided your employer also has valid grounds, such as a reorganisation or underperformance. Is the clause not niet included? Then your position is in fact strong: your employer is in principle not permitted to terminate the contract early and is generally obliged to continue paying you until the agreed end date.

You should also be alert to the fact that when a fixed-term contract is renewed, the early-termination clause must be expressly confirmed or enclosed as an annex. If a clear reference is missing, the clause may be invalid in a subsequent contract.

Your unemployment benefit (WW) entitlement and a settlement agreement on a fixed-term contract

Entitlement to unemployment benefit (WW) is one of the most risky aspects of a settlement agreement involving a fixed-term contract. Pay attention to the following points:

• No early-termination clause in place? In that case, you risk UWV determining that you are only entitled to unemployment benefit (WW) from the original end date of your contract, and not before.
• Initiative on the part of the employer: The settlement agreement must state clearly that the initiative to end the employment relationship lies with the employer. If this is not included, UWV may refuse your unemployment benefit (WW) application.
• Correcte opzegtermijn: The end date in the settlement agreement must take into account the statutory notice period. If the end date has been set too early, the point at which you can receive unemployment benefit (WW) will be pushed back.
• Wekeneis: To qualify for unemployment benefit (WW), you must have worked for at least 26 weeks out of the 36 weeks before you became unemployed. Periods of release from work during which you continue to receive salary also count towards this.

Transition payment for fixed-term contracts too

Many employees are unaware that they are also entitled to a transition payment under a fixed-term contract. That entitlement exists from the first day of employment. The payment amounts to one third of the gross monthly salary for each year of service completed; for shorter periods this is calculated on a pro-rata basis. The statutory maximum is, as of 1 January 2026, €102,000 gross, or one gross annual salary if that is higher.

In the case of a settlement agreement, the employer is not automatically required by law to pay the transition payment, but it is customary and reasonable to use this amount as a starting point in negotiations. If you sign a settlement agreement without any payment, you may inadvertently waive money to which you are legally entitled. Furthermore, the remaining duration of the contract can be an additional argument for negotiating a higher payment: the more months remaining, the stronger your position.

Your employer has forgotten the notification obligation

Do you have a fixed-term contract of six months or longer? If so, your employer is required to inform you in writing no later than one month before the end date whether or not the contract will be renewed. If your employer forgets to do this, or does so too late, you are entitled to a notification compensation of up to one gross monthly salary. This is a separate entitlement that is independent of the transition payment and can be included in your negotiations.

The successive contracts rule and your right to a permanent contract

One point that is sometimes overlooked in a settlement agreement involving a fixed-term contract is the so-called successive contracts rule. Under Article 7:668a of the Dutch Civil Code, a permanent contract arises automatically when an employee has had more than three fixed-term contracts with the same employer, or when the total duration of consecutive contracts exceeds three years, with intervals of no more than six months.

If you sign a settlement agreement at a point when you were already entitled to a permanent contract, you are waiving that right. Always have this checked before you sign.

Practical tips before you sign

• First, check whether there is a valid interim termination clause in your contract, including in any renewed contracts.
• Calculate the remaining duration of your contract: this partly determines the level of a reasonable payment.
• Establish whether, under the successive contracts rule, you may already be entitled to a permanent contract.
• Check whether the settlement agreement is WW-proof: the initiative must lie with the employer, the correct notice period must be observed, and the reason for dismissal must be neutral.
• Pay attention to the notification obligation: if it has not been fulfilled or was fulfilled too late, you are entitled to a notification compensation.
• Make use of the statutory cooling-off period of 14 days after signing: within this period you can revoke the settlement agreement in writing without giving any reason.
• Never sign without having the settlement agreement checked by an employment law specialist, especially if you are ill or pregnant.

Would you like to know exactly what a settlement agreement must contain to protect your rights? On the page you will find comprehensive information to help you enter the conversation fully prepared.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven, we know that a settlement agreement involving a fixed-term contract in Eindhoven and the Brabant region requires extra attention. We not only check whether the agreement is legally sound, but also whether you are not financially worse off and whether your entitlement to unemployment benefit (WW) is protected. Would you like your settlement agreement reviewed, or would you like to know how strong your negotiating position is? Please feel free to contact us. We will help you promptly and personally.

Frequently asked questions

Do I need to sign a settlement agreement if my fixed-term contract simply expires?

No, that is not necessary. A fixed-term contract ends automatically on the agreed end date without the need for a settlement agreement. A settlement agreement only becomes relevant if your employer wishes to terminate the contract early, or if you want to record additional arrangements, for example regarding a payment or release from work duties.

Am I entitled to a transition payment as an employee on a fixed-term contract?

Yes. Since the introduction of the Wet arbeidsmarkt in balans (WAB) in 2020, you have been entitled to a transition payment from the very first day of your employment, including on a fixed-term contract. The payment amounts to one third of a gross monthly salary for each year of service worked. Please note: if you sign a settlement agreement that does not include the transition payment, you may inadvertently waive this entitlement.

What is the risk to my unemployment benefit (WW) if I sign a settlement agreement on a fixed-term contract?

The greatest risk is that UWV will reject your unemployment benefit (WW) claim if the settlement agreement has not been drafted correctly. Crucial conditions are: the initiative for the termination must lie with the employer, a valid interim notice clause must be included in your contract, and the end date must take account of the statutory notice period. If the interim notice clause is absent, UWV may determine that you are only entitled to unemployment benefit (WW) from the original contract end date.

What is an interim notice clause and why is it so important?

An interim notice clause is a provision in your fixed-term contract that gives both parties the right to terminate the contract before the end date. Without this clause, your employer is in principle obliged to continue paying you until the end date. This gives you a strong negotiating position. Furthermore, the clause is a requirement for retaining your entitlement to unemployment benefit (WW) if you leave earlier by means of a settlement agreement.

Can I reverse a settlement agreement after I have signed it?

Yes, after signing you have a statutory cooling-off period of 14 days. Within that period you can revoke the settlement agreement in writing without having to give a reason. It is important that your employer is aware of this cooling-off period and that this right is stated in the agreement. If that is not the case, the cooling-off period is extended to 21 days.

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.