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Dismissal in the Netherlands via a settlement agreement

Laatst bijgewerkt: 28-08-2024 10:38:51

Persbericht - It is not easy to fire employees in the Netherlands. Terminating the employment contract through a settlement agreement is a good alternative

What is a settlement agreement?

Dismissal is a major event, for the employer, but certainly for the employee. It will therefore come as no surprise that employers and employees often dread a dismissal procedure with the UWV or the subdistrict court ( kantonrechter ) which authorities in the Netherlands rule on dismissal cases. Such procedures can be costly and stressful. Moreover: often a procedure has no ‘winners’.

It is therefore not surprising that most dismissal cases in the Netherlands are not resolved with a procedure. After all, the parties can also arrange the dismissal themselves in mutual consultation – whether or not supported by lawyers. The parties negotiate the terms of termination of the employment contract and record the achieved result in an agreement. That agreement is then called a settlement agreement or a termination agreement ( vaststellingsovereenkomst in Dutch ).  This method of dismissal is also known as dismissal by mutual consent.

The settlement agreement, a popular dismissal route

The settlement agreement has become increasingly popular in recent years because it has been possible for some years now to terminate the employment contract with a settlement agreement while retaining unemployment benefits (WW). The settlement agreement must then meet a number of conditions, which will be discussed in more detail below.

Conditions for a WW-safe settlement agreement

Not culpably unemployed

In order to qualify for unemployment benefits, the employee must not be culpably unemployed. In short, the employee must not have behaved in such a way that the employment contract is terminated for that reason. Think of urgent reasons for dismissal such as theft, assault and fraud.

The employee’s poor performance is generally not a culpable reason.

Due to the requirement of non-culpability, a so-called ‘neutral reason’ for termination of the employment contract must be included in the settlement agreement. Usually, a neutral reason is filled in with the words ‘difference of opinion about the manner of the work to be performed or, in the case of a business-economic dismissal, the business-economic situation of the employer is (briefly) described.

Observe notice period

In order to terminate an employment contract, the employee and the employer must – normally – observe a notice period. The length of the notice period can be contractually agreed between the parties in the employment contract. Therefore, the employment contract should first be looked at. If the parties have not made any agreements about the notice period, the length of the notice period is based on the law, so that it is referred to as the ‘statutory notice period’. The length of the statutory notice period varies from 1 to 4 months and depends on the duration of the employment contract.

With a view to the timely commencement of the unemployment benefit, it is preferable to include in the settlement agreement the rule that the notice period has been observed.

Please note: in the case of fixed-term employment contracts without an early termination clause, unemployment benefits do not take effect until the end of the term of the original employment contract.

The initiative for the settlement agreement must lie with the employer

It is essential that the settlement agreement shows that the initiative to terminate the employment contract comes from the employer. After all, it is not the intention that the employee, for whatever reason, no longer feels like working and is aiming for the end of his employment contract, after which he/she thinks he/she can claim unemployment benefits.

The fact that the initiative has been taken by the employer should preferably be written down verbatim in the settlement agreement. However, descriptions with the same meaning will also suffice.

Sickness settlement agreement

It is generally not advisable for a sick employee to enter into a settlement agreement. This is particularly the case if the employee expects to be ill even after the end of the employment contract. In that case, he should be entitled to a Sickness Benefit. However, if the employment contract has been terminated by way of a settlement agreement – with a few exceptions – no entitlement to Sickness Benefit will arise.

If the incapacity for work (illness) is related to a (conflict) situation at work and the employee does not expect to be ill after the end of the employment contract, a settlement agreement may be opted for. Contact our lawyers for advice.

Settlement agreement content

The content of the settlement agreement is of course important. After all, the content reflects the agreements that employer and employee have made about the end of the employment contract. The most important agreements are usually;

– Date of termination of employment contract;

– The amount of the severance payment

– Possible exemption from work

– Expiration of non-competition clause

Reflection period, revoked agreement

A cooling-off period applies to the employee. This means that an employee who signs a settlement agreement can return to his contract within fourteen days. To this end, the employee must notify the employer in writing that he is dissolving the settlement agreement.

Assistance with dismissal and advice on the settlement agreement

Because dismissal is a major event with many ‘pitfalls’, it is important to ask for help from a specialized dismissal lawyer.

Our lawyers at ‘Ontslagspecialist’ have over 20 years of experience in dismissal cases and in drawing up and negotiating the settlement agreement or termination agreement.

Higher severance pay possible?

If the employer offers you as an employee a severance scheme with severance pay, it is advisable to check whether the severance pay is high enough. Our experienced dismissal lawyers can help you with this. They can also negotiate a higher fee for you. We are often successful in this.

Direct action:

Call or email our Dismissal Specialists for advice and legal assistance.

Call 0900 – 123 73 24 or email us.

The first advice about your settlement agreement is FREE!