A settlement agreement is a termination of employment by mutual consent. Many employees believe that the terms are set in stone once the agreement is on the table and that there is no room for negotiation. In reality, a settlement agreement actually offers considerable room for negotiation. Employers often choose this route to avoid legal proceedings and are then willing to make concessions—provided you know what to look out for.

Severance Pay: A Matter of Justification

The most talked-about bargaining issue is severance pay. Since 2015, a statutory minimum has been in effect in the form of the transition allowance. This amounts to one-third of a month’s salary per year of service and is based on the gross monthly salary, including fixed pay components.

Nevertheless, employers are often willing to pay more than this statutory minimum. The amount of the severance pay is closely linked to the grounds for termination and the strength of the case. If an employer has little or no legal basis for the termination, the risk of an unfavorable outcome in proceedings before the UWV or a subdistrict court increases. In such cases, it is usually possible to negotiate a more generous severance package. Even in cases involving a so-called “reasonable ground for termination”—that is, a strong case—it is possible in the vast majority of cases to reach a settlement that exceeds the statutory requirements. After all, employers have a strong interest in reaching a negotiated settlement.

Exemption from work: continued pay while at home

Another important negotiating option is exemption from work. Many settlement agreements stipulate that the employee is exempt from work while continuing to receive their salary until the official termination date. This not only provides financial security but also allows time to calmly apply for a new job. Furthermore, it is more tax-efficient to remain employed for several more months than to receive a lump-sum severance payment. The duration of the exemption is generally negotiable and can be extended, depending on the situation.

Notice Period and Termination of Employment

The formal termination date is also negotiable. However, this date must be carefully coordinated with the notice period to ensure eligibility for unemployment benefits. In some situations, it may be advantageous to move the date forward or backward, for example, for tax or practical reasons.

Other Agreements

In addition to severance pay and termination of employment, the parties may agree on additional terms. These may include the settlement of outstanding vacation days, the waiver of a non-compete clause, an education expense reimbursement plan, or the provision of a positive reference. The reimbursement of legal fees is also often a topic of discussion, and in the vast majority of cases, employers are willing to pay these fees.

Why Negotiating Makes Sense

For employers, a settlement agreement is often a practical solution. It prevents lengthy legal proceedings and uncertainty about the outcome. That is precisely why there is room for negotiation. Strong legal guidance ensures that you don’t miss any opportunities and secure the best possible terms.

Always have your VSO inspected by a specialist

A settlement agreement is legally binding. If you sign it without seeking advice, you could lose your right to unemployment benefits or end up accepting a settlement that is too low. It is therefore very important to seek legal advice from an attorney or legal professional who specializes in employment law. At Arbeidsadvocaat.nl, we review your settlement agreement for legal accuracy across 35 points for €500, and we can help you negotiate a better settlement. Our attorneys are skilled at assessing the terms under which an employer is willing to “settle” and will ensure that you receive the best possible severance package.

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This blog was written by Stijn Blom, Esq., an employment law attorney at Arbeidsadvocaat.nl B.V. Stijn has extensive experience in employment law and assists employers and employees on a daily basis with a wide range of employment law issues. From dismissal cases to drafting watertight agreements and policies—with his practical and personalized approach, he helps employers and employees move forward. Want to learn more? Visit Stijn’s page.

Arbeidsadvocaat.nl is happy to assist you if you have any questions about severance pay. Please feel free to contact us .

August 2026