Settlement Agreement During Redundancy: What Should You Look Out For?

Is your position being abolished due to a reorganisation and has your employer presented you with a settlement agreement? It may be tempting to sign quickly, especially if pressure is being applied. Nevertheless, it is worth thoroughly reviewing the agreement before you put your signature to it. A few details can make a significant financial and legal difference.

What is a settlement agreement in a reorganisation?

In a reorganisation, an employer may decide to end the employment relationship by means of a settlement agreement (VSO) rather than through a formal dismissal procedure at the UWV. You then voluntarily agree to the termination of your employment contract, usually in exchange for a payment and certain arrangements regarding the settlement.

Although a settlement agreement is reached by mutual consent, that does not mean its contents are automatically fair or complete. You generally have fourteen days to reconsider after signing, but it is better to go through everything carefully beforehand.

Why is checking so important?

Reviewing a settlement agreement in a reorganisation is essential because the wording has direct consequences for your financial situation, your entitlement to unemployment benefit (WW) and your future in the labour market. Correcting missing or incorrect provisions after you have signed is legally almost impossible.

Furthermore, the agreement has been drafted by the employer, who naturally safeguards their own interests. It therefore stands to reason that certain clauses may work to your disadvantage if you do not identify them in time.

The most important points to check

Below you will find the elements you should in any case go through before making a decision.

1. The end date and the notice period

Check whether the agreed end date corresponds to the statutory or contractual notice period. An end date that is too early may affect your unemployment benefit (WW) application. The benefit cannot start any earlier than after the notice period has expired.

2. The amount of the payment

Check whether the offered payment is correct. In the case of a reorganisation, you are in most cases entitled to a transition payment. Verify that this amount has been calculated correctly on the basis of your years of service and salary. Sometimes a social plan provides more generous payments than the statutory minimum payment.

3. De WW-uitkering

For unemployment benefit (WW), it is crucial that the agreement states that the initiative for the dismissal lay with the employer and that you did not become unemployed through your own fault. If this wording is absent or incorrect, you risk UWV refusing or delaying your unemployment benefit (WW).

4. Any non-competition clause

Check whether the agreement contains a non-competition or non-solicitation clause, or whether an existing clause is expressly waived. An active non-competition clause may restrict your next step in the labour market.

5. Release from duties and holiday days

Has it been agreed that you will be released from work until the end date? If so, make clear how any outstanding holiday days and holiday pay will be handled. Will these be paid out or set off?

6. Finale kwijting

Almost every settlement agreement contains a so-called full and final settlement clause. This means that after signing you can no longer make any further claims against your employer. Make sure you know exactly which mutual obligations have been settled before you agree to this.

Practical tips when going through a settlement agreement

• Always take the full fourteen-day cooling-off period and never sign under direct pressure.
• Compare the offered payment with the statutory transition payment and with what your employer's social plan prescribes.
• Have the agreement checked by an independent employment lawyer before you sign.
• Ask for amendments if clauses are missing or incorrectly worded; a settlement agreement is negotiable.
• Check whether anything has been included regarding an outplacement budget or other reintegration support.
• Pay attention to the wording surrounding the reason for dismissal: this partly determines your entitlement to unemployment benefit (WW).

What if you disagree with the content?

A settlement agreement is not a final destination that you simply have to accept. You are entitled to negotiate the payment, the wording, and any additional arrangements. Employers are often more willing to do so than they initially let on, particularly when a significant reorganisation is under way.

Would you like to know what room for manoeuvre you have? You can also read more about your rights and the procedures surrounding dismissal via Reorganisation and dismissal: everything you need to know | Employment Lawyer Eindhoven.

Have your settlement agreement reviewed during a reorganisation

At Arbeidsjurist Eindhoven we help employees in Eindhoven and the rest of Brabant to have their settlement agreement reviewed clearly and fairly. We look not only at the text, but also at what is missing or could be improved. That way you can be certain you are making a well-considered decision.

Have you received a settlement agreement and would you like it examined? Contact us without obligation. We are happy to think things through with you.

Frequently asked questions

Am I allowed to negotiate a settlement agreement in the event of a reorganisation?

Yes, absolutely. A settlement agreement is by definition an arrangement reached through mutual consultation. You are entitled to discuss the content, propose amendments, and request a higher payment. Having an employment lawyer support you in this will give you the best outcome.

What happens if I do not sign the settlement agreement?

If you do not sign, your employer must choose a different route to end the employment relationship — for example, through a dismissal procedure at UWV. That process takes more time and also affords you greater legal protection as an employee. Not signing is therefore certainly not an automatic disadvantage.

Will I lose my right to unemployment benefit (WW) if I sign a settlement agreement?

Not if the agreement is drafted correctly. It must clearly state that the dismissal is taking place at the employer's initiative and that you are not at fault for becoming unemployed. If that wording is incorrect or absent, UWV may refuse your benefit. Always have this checked before you sign.

Frequently asked questions

Am I entitled to a settlement agreement in a reorganisation?

An employer is not obliged to offer a settlement agreement, but often does so to arrange dismissal by mutual consent. You are never obliged to sign and can negotiate the terms.

Will I keep my unemployment benefit (WW) if I sign a settlement agreement during a reorganisation?

Yes, provided the agreement is drafted correctly. The initiative must lie with your employer, there must be no urgent reason for dismissal, and the notice period must be correct. Always have the agreement checked before you sign.

Can I negotiate the terms in a reorganisation?

Often yes. Think about the level of the payment, the end date, exemption from work, and the full and final settlement clause. An employment lawyer in Eindhoven can assess where there is room to negotiate.

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.