Settlement Agreement Review – 35-Point Check

Frequently Asked Questions

What is a settlement agreement?

A settlement agreement is a termination agreement if it refers to the mutual consent termination of employment. Both terms are often used interchangeably in normal language and usually refer to the same type of agreement. However, a settlement agreement can also be used to make arrangements in other situations. For example, if there is a discussion about a non-competition clause. The 35-point check of a settlement agreement is intended for settlement agreements that deal with the termination of an employment contract.

What is the 35-point review, and why is it important?

The 35-point check is a legal check by an employment law attorney on the contents of the settlement agreement. This check is important to make sure that the agreement is legally correct, and to avoid putting employees at risk, such as losing their unemployment benefits.

What if my employer doesn’t cover the review costs?

If your employer has not already included a cost reimbursement, you can request to have it added to the settlement agreement. In our experience, employers cover the costs of reviewing the settlement agreement or legal assistance in over 90% of cases.

Can Arbeidsadvocaat.nl assist with negotiations?

Yes, we can support you in negotiating a better settlement agreement with your employer. We also specialize in legally protecting your interests. Feel free to contact us to discuss your case. 

Am I obligated to accept a settlement agreement?

You are not required to sign the agreement if you don’t want to. It is entirely voluntary without your approval, the employer cannot terminate the employment contract by mutual agreement. If you decline the offer, the employer may need to initiate formal dismissal proceedings via the UWV or the court. You are within your rights to refuse the offer, which gives you a strong negotiating position. Only sign if the terms are fair and in your interest. When in doubt, seek legal advice.

Am I entitled to a transition or severance payment?

In case of mutual agreement through a settlement agreement, you are not automatically entitled to the transition compensation under the law. This is because the dismissal occurs by mutual consent; the transition payment is only legally required in case of dismissal initiated by the employer. However, in practice, a severance payment is almost always agreed upon in the settlement agreement. Employers typically offer at least the statutory transition compensation to encourage you to accept the terms. In many cases, you can negotiate a higher amount, depending on the circumstances. So, while not a formal right, it is common to receive at least the transition compensation or a comparable severance payment when signing a settlement agreement.

Do I retain the right to unemployment benefits after a settlement agreement?

You remain entitled to unemployment benefits (WW) if the settlement agreement is properly drafted. It is essential that the termination is not your fault and that this is clearly stated in the agreement (for example, that the termination is due to a neutral reason or initiated by the employer). The statutory or contractual notice period must also be observed when determining the end date in the agreement. Note: if the settlement agreement is not correctly worded, the UWV may deny or delay your benefits. Always have the agreement reviewed.

How long is the reflection period after signing a settlement agreement?

After signing a settlement agreement, you as an employee have a statutory reflection period of 14 days. Within these 14 days, you may inform your employer in writing that you want to withdraw your decision (this is called the right of withdrawal). You do not have to provide a reason; a simple statement declaring that you are terminating the agreement is sufficient, as long as the employer receives it within 14 days. Note: if your employer did not inform you in writing about the reflection period when signing, the period is extended to 21 days. If you withdraw from the settlement agreement within the reflection period, the agreement is voided and your employment contract remains in effect as if you never signed.

What should be included in a settlement agreement?

A solid settlement agreement should include the following key elements:

• End date and notice period: The date on which your employment officially ends. This should match the legal or contractual notice period to ensure your eligibility for unemployment benefits (WW).
• Reason for termination: The reason for ending the contract, preferably worded in neutral terms (such as a disrupted working relationship or economic reasons). This shows that the dismissal was not your fault.
• Severance pay/transition compensation: This is the compensation you receive when your employment ends. Usually, at least the statutory transition payment is included, or a higher severance package if agreed.
• Vacation days and vacation pay: Agreements for payment of outstanding vacation days and any vacation pay (and other outstanding wage components such as a bonus or overtime).
• Competition clause (and other clauses): Indication of whether any non-compete clause remains in effect or expires (in part), and agreements on other special clauses in your contract (such as a non-solicitation or confidentiality clause).
• Legal fees: Whether and up to what amount the employer contributes to your legal fees for having the agreement reviewed.
• Final discharge: A provision that after execution of the settlement agreement, neither party can demand anything more from the other. With this, you permanently close the employment relationship.

What does final discharge mean in the termination agreement?

Final discharge means that employer and employee cannot claim anything more from each other after execution of the settlement agreement. Virtually every termination agreement contains such a final discharge clause at the end. With this, both parties agree that all outstanding rights and obligations have been settled mutually. After payment of the agreed upon severance pay and payment of other items (such as vacation pay or bonuses), you can no longer hold each other liable. Final discharge thus ensures a (in principle) final and clear settlement of the employment relationship, without the possibility of later claims.

Can I sign a settlement agreement if I am sick?

Although it is possible to enter into a settlement agreement while you are ill, it is usually not advisable. After all, during the first two years of illness, a ban on termination applies in many cases: your employer cannot dismiss you during illness unless you yourself agree to it by means of a settlement agreement. If you leave your job on sick leave, you are not entitled to benefit under the Sickness Benefits Act (Ziektewet) because you voluntarily agreed to the dismissal. Nor are you entitled to unemployment benefits because you are not available for work. You therefore run the risk of being without income while you are still sick. It is often wiser to sign a termination agreement only when you have (nearly) recovered, or to make special arrangements that protect your income. Consider, for example, a pro forma dissolution procedure that allows you to claim sickness benefits. In any case, be well informed if you are considering a VSO during illness, so that you know exactly what the consequences are.

Can I negotiate the content of the settlement agreement?

Yes, virtually all settlement agreements are negotiable. Think of your employer's initial proposal as a starting point: you can try to improve the terms for you. Common negotiating points include higher severance pay, a more favorable termination date (e.g., continued salary for a longer period of time), relief from work during the notice period, a positive attestation, or the removal/loosening of a non-competition clause. You are in a pretty strong position, because the employer needs your consent for a mutual agreement dismissal. So it definitely pays to negotiate - often the employer is willing to accommodate to reach an agreement.

What happens to outstanding vacation days and vacation pay upon mutual agreement dismissal?

In principle, unused vacation days and accrued vacation pay must be paid out at the end of your employment. Therefore, the settlement agreement usually states how many vacation days you have left and that they will be paid out at the final settlement. If you have a long period of time off from work, the employer may not want to pay out any leave balance. You will also receive your vacation pay (usually 8% of your salary) that you have accrued up to the end date as usual. The same goes for other possibly outstanding entitlements, such as a bonus or overtime: these should also be settled. It is important that the agreement clearly states that all such outstanding credit will be paid to you, so you don't miss out on anything.

What happens to my non-compete clause when signing a settlement agreement?

If your employment contract includes a non-compete clause, it will generally remain in effect even if you leave under a settlement agreement — unless different terms are agreed. That’s why it’s important to explicitly state in the settlement agreement what will happen to the non-compete clause. You may agree, for example, to waive the clause entirely or to limit its duration or scope, making it easier for you to accept a new job. Many employers are willing to waive or relax the clause in the case of mutual termination, especially if you’re not joining a direct competitor. If the settlement agreement does not mention the non-compete clause, you should assume that the original terms in your employment contract will continue to apply.

Will my legal fees be covered if I have the settlement agreement reviewed?

Yes, in 90% of the cases, they do. Most settlement agreements include a clause stating that the employer will cover (part of) the legal fees for your advice. Employers typically offer an amount—usually between €500 and €1,000 excluding VAT—that allows you to hire a lawyer or legal expert. This means you can usually have the settlement agreement reviewed at little or no personal cost. If this reimbursement isn't included in the offer, you can request it during negotiations. Employers often agree, as it’s in their interest for you to sign the agreement after receiving professional advice—this ensures the deal is final and avoids future disputes.

Why is it wise to have a lawyer or attorney look at the settlement agreement?

A settlement agreement is an important legal document, so it's wise to have an employment lawyer or arbeidsadvocaat look over it before you sign. Such an expert knows exactly what to look out for - from your entitlement to unemployment benefits to the wording of final discharge - and can check that everything has been drafted fairly and correctly. This will prevent you from accidentally agreeing to unfavorable terms or getting into trouble later (for example, with your unemployment benefit). In addition, a lawyer/lawyer can advise whether there is room to negotiate better terms and, if necessary, negotiate with the employer on your behalf. Because the costs of legal advice are often reimbursed by the employer, it costs you little or nothing to get that extra security. So with a professional check, you can be sure that you are signing a good and valid severance agreement. Contact us without obligation.

What happens if I don't agree to the settlement agreement?

If you do not agree to the settlement agreement, your employment will continue. The employer cannot dismiss you by mutual agreement and will have to take another route if he still wants to get rid of you. Usually this means that the employer starts a dismissal procedure with the UWV (e.g. for business economic reasons) or submits a request for dissolution to the subdistrict court (for other, personal grounds for dismissal). Such a procedure costs time and money and the outcome is uncertain; the UWV or the court will assess whether there are reasonable grounds for dismissal. If dismissal is eventually granted, you will in any case be entitled to the statutory transitional compensation (and sometimes additional compensation, depending on the situation). Refusing to sign may also result in the employer coming up with a better proposal to still reach a settlement agreement. In short, you do not immediately lose your job if you do not sign - you keep your salary for now, and in the meantime you may be able to renegotiate improved terms while the employer explores its alternatives.