Settlement agreement during redundancy: the risks of signing too quickly

Signing a settlement agreement in a reorganisation?

Your employer presents you with a settlement agreement on the grounds of a reorganisation. The pressure to sign quickly can sometimes be considerable, but anyone who agrees without careful consideration risks losing important rights. In this article you can read about the pitfalls involved and what you can do to protect yourself.

Why employers opt for a settlement agreement

During a reorganisation, an employer has two routes to part ways with employees: a dismissal procedure via the UWV, or dismissal by mutual consent by means of a settlement agreement (VSO). In practice, many employers opt for the VSO because it avoids a substantive review by the UWV. That may seem straightforward for you as an employee, but it also means that you yourself must ensure the terms are correct. The VSO only becomes legally valid once you consent to it freely — you can therefore never be forced to sign.

The dangerous pitfall of time pressure

Employers sometimes set a short deadline within which you must make a decision. That time pressure may feel like a matter of course, but legally speaking you are entitled to sufficient time to reflect before signing. After signing, there is also a statutory cooling-off period of fourteen days. Within that period you may revoke the agreement in writing without giving any reason. If your employer has not drawn your attention to that cooling-off period, it is extended to three weeks. That extra breathing space exists for good reason: use it.

What can go wrong in the wording of the VSO

A settlement agreement (VSO) in a reorganisation stands or falls on the precise wording used. Minor mistakes or ambiguous passages can have significant consequences, particularly for your unemployment benefit (WW). Consider the following risks:

• Initiative not with the employer: for your entitlement to unemployment benefit (WW) it is essential that the settlement agreement (VSO) makes clear that the employer took the initiative to end the employment and that there is no urgent reason (such as summary dismissal) underlying it.
• Incorrect or too short an end date: between the signing and the end date of your employment there must be a period equal to the statutory notice period applicable to the employer. A fictitious notice period that is too short can lead to a delay in or refusal of your unemployment benefit (WW).
• Transition payment set too low: the statutory transition payment amounts to a maximum of € 102,000 gross in 2026, or one gross annual salary if that is higher. You accrue one third of a monthly salary for each full year of service. If the settlement agreement offers a lower amount without proper justification, you are leaving money on the table.
• Full and final settlement without reservation: a broad release clause means that after signing you can no longer bring any claims, even if it later emerges that mistakes were made in applying the mirror-image selection principle or the selection procedure.
• Absent or inadequate social plan arrangements: in the case of a larger collective dismissal there is often a social plan. The mere existence of such a plan does not automatically mean that your individual settlement agreement is optimal or that a tailored arrangement is out of the question.

Check whether the mirror-image selection principle has been applied correctly

Before signing the settlement agreement, it is wise to verify whether your employer has declared the right person redundant within the selection process. In the case of dismissal on economic grounds, the mirror-image selection principle applies: employees are selected for dismissal per age group and per interchangeable job category. If this has not been done correctly, it directly affects your position. By signing the settlement agreement without checking this, you may be giving up that line of defence. If in doubt, consult a Reorganisation and Redundancy in Eindhoven specialist before you agree.

Negotiating is normal and sensible

Many employees assume that the offer in the settlement agreement is fixed. This is a misconception: a settlement agreement (vaststellingsovereenkomst) is negotiable. You can enter into discussions about the level of the payment, the end date, release from work during the notice period, payment of outstanding holiday days, and any training or outplacement budget. Negotiating is common practice in reorganisations and is also expected by employers. As long as you have not signed, nothing is set in stone.

Practical steps before you sign

Take your time and work through at least the following steps before putting your signature to anything:

• Have the settlement agreement checked by an employment-law adviser, even if the contents seem reasonable to you at first glance.
• Calculate your transition payment yourself on the basis of your years of service and salary, and compare this with the amount stated in the settlement agreement.
• Check that the end date is correct and that the notional notice period corresponds to what is required by law or the applicable collective labour agreement.
• Verify that the settlement agreement states that the initiative lies with the employer and that there is no urgent reason for the dismissal.
• Find out whether a social plan applies and what it means for you in addition to the settlement agreement.
• Record in writing (by e-mail) when you received the offer, so that the cooling-off periods are clearly established.

Help before you sign a settlement agreement in a reorganisation

At Arbeidsjurist Eindhoven we understand how it feels to have to make a far-reaching decision under time pressure. We know the labour market in the Brainport region and can help you quickly and practically: from reviewing the settlement agreement to conducting negotiations with your employer. Would you like to know whether your agreement is in order and whether there is scope for better terms? Feel free to contact us with no obligation. An initial consultation costs you nothing, but could be well worth your while.

Frequently asked questions

Do I have to sign a settlement agreement in the event of a reorganisation?

No, you are never obliged to sign a settlement agreement. If you do not sign, the employer must apply to the UWV for a dismissal permit on the grounds of business-economic reasons. That process affords you greater legal protection, but takes longer. Always seek advice on the best course of action in your particular situation.

How long is my cooling-off period after signing a settlement agreement?

After signing, you have a statutory cooling-off period of fourteen days under Article 7:670b of the Dutch Civil Code. Within that period you may revoke the agreement in writing without giving any reason. If the employer has not informed you of this cooling-off period, it is extended to twenty-one days.

What is the maximum transition payment I can receive in 2026?

In 2026 the maximum transition payment is €102,000 gross. If you earn more than €102,000 per year, your gross annual salary serves as the maximum. The accrual rate is one third of a monthly salary for each full year of service completed.

Can I negotiate the settlement agreement if a social plan is already in place?

Yes, even if a social plan applies, in most cases you can still negotiate individually. The social plan sets the collective framework, but that does not mean that a higher amount, a different end date, or additional provisions such as an outplacement budget are out of the question.

What happens to my unemployment benefit (WW) if I sign a settlement agreement?

You retain your right to unemployment benefit (WW) provided the settlement agreement clearly states that the employer took the initiative, that there is no urgent reason for dismissal, and that the notional notice period has been correctly observed. Errors in the wording or an end date that is too early can lead to a delay or refusal of your unemployment benefit (WW) by UWV.

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.