Has your employer offered you a settlement agreement, or will soon? If so, it is wise to review these 15 important tips. What should and should not you do when entering into a settlement agreement?
1. Ask your employer for a written agreement
Employers often verbally announce a settlement agreement and sometimes already provide information about its contents. Always ask for a written version of the terms and conditions so you can review them at home at your leisure and have them reviewed if necessary.
2. Don't sign the agreement right away
Do not put your signature immediately when you are offered the settlement agreement.
3. Make sure your right to WW is guaranteed
When employment is terminated, your wage payment also stops. If you do not have a new job, it is important that you qualify for unemployment benefits. Make sure the settlement agreement is worded "WW-proof.
4. Check the end date
Check the end date in relation to the notice period that the employer must use, depending on your years of service:
- Shorter than 5 years: one month
- Between 5 and 10 years: two months
- Between the ages of 10 and 15: three months
- Longer than 15 years: four months
Note any different notice periods in your employment contract or in the applicable collective bargaining agreement.
5. Check whether severance pay is reasonable
Usually, the employer offers a transitional compensation. If there is no good reason for dismissal, you can ask for higher compensation. Be realistic in your expectations, though. While it is good to stand up for yourself, making unreasonable demands can complicate the process and ultimately have a negative effect on the outcome.
6. Drop the non-compete and/or non-solicitation clause
If there is a non-compete or non-solicitation clause in your employment contract, try to agree with your employer that these will lapse so that you are not restricted in your search for a new job.
7. Ask for positive testimonials and positive references
This can help you find a new job.
8. Negotiate the first proposal
The initial proposal for a settlement agreement is usually negotiable. You can negotiate such things as the compensation offered, relief from work, the termination date, payment for leave and/or an outplacement or training budget.
9. Sick - don't just agree to the settlement agreement
If you are sick, agreeing to a settlement agreement could jeopardize your right to unemployment or sick pay.
10. Avoid problems later with a legal audit
Employers sometimes give employees only a short period of time to decide whether to agree to the settlement agreement. Usually the rush is unnecessary and meant to put pressure on you. Seek timely legal advice to discuss the terms of the settlement agreement. This can help you avoid problems afterwards.
11. Realize you have a cooling-off period
The settlement agreement should include a reflection period of at least 14 days. This gives you time to consider the agreement and, if necessary, seek legal advice. Within this period, you can still decide to dissolve the agreement without giving reasons. If no cooling-off period is included, you may think about it for 3 weeks.
12. Allow for vacation days
When terminating an employment contract, it is important to account for unused vacation days. Make sure that these days are paid or that you still take them before the employment contract ends.
13. Don't forget to negotiate any study fees
If during your employment you took a training or course for which your employer reimbursed the costs, you may have to repay some of these costs upon termination of employment. Negotiate about this and try to come to an arrangement where you do not have to repay any or a lower amount.
14. If necessary, ask for support in finding a new job
You can negotiate with your employer to offer support in finding a new job, such as outplacement assistance or a training budget. This can increase your job prospects and help you find a new job faster.
15. Consider the tax implications
When receiving severance pay or other financial compensation under the settlement agreement, it is important to be aware of the tax implications. Make sure that you are aware of the tax rules and any deductions so that you do not have any unpleasant surprises on your tax return.
In conclusion
Receiving a settlement agreement can be drastic, but by heeding these 15 tips, you will be better prepared for the situation. Be sure to review the agreement thoroughly, with legal help if necessary, and negotiate where necessary to achieve the best possible outcome. Remember to consider your rights and interests when entering into a settlement agreement. This will ensure that you get the best possible terms and protect yourself from unwanted consequences in the future.
This blog was written by Mr. Stijn Blom, employment lawyer at Arbeidsadvocaat.nl B.V. Stijn has extensive experience in employment law and assists entrepreneurs daily with a wide range of employment-related matters. From dismissal cases to drafting watertight contracts and policies – with his practical and personal approach, he helps employers and employees move forward. Want to know more?Visit Stijn's page.
If you have questions about this topic, contact Arbeidsadvocaat.nl.
May 2023
