Almost 90% of all employment contracts in the Netherlands are terminated via a settlement agreement (in Dutch: Vaststellingsovereenkomst or VSO). Our lawyers have extensive experience in assisting expats in negotiations regarding a settlement agreement with Dutch employers.
What do you need to pay attention to?
Is your Dutch employer offering to terminate your employment relationship by means of a settlement agreement? If so, it may be advantageous for you as an employee to cooperate. There are various aspects that need to be considered and included in the negotiations, in order to make sure that you get the best deal possible.
a) Entitlement to unemployment benefits in the Netherlands
Even if you conclude a settlement agreement with your employer, you can generally retain your right to unemployment benefits in the Netherlands if the settlement agreement clearly states (usually in the preamble) the right reasons for termination and the correct notice period has been observed.
If you are currently unable to perform your work due to sickness or if you are currently pregnant by signing a settlement agreement you might also forfeit your entitlement to unemployment benefits in the Netherlands. Always seek legal advice in those cases.
Please note: If you plan to return to your home country directly after the end of your employment relationship, your entitlement to unemployment benefits in the respective country is not guaranteed after concluding a termination agreement under Dutch law. Consider contacting a lawyer in your home country before signing.
b) Severance pay in the Netherlands
If your employment contract is terminated by mutual agreement, you are not automatically entitled to a severance. However, depending on the circumstances, you might still be able to negotiate a
considerable severance payment in your settlement agreement. It is well worth seeking legal advice in this regard. Each case is different, and we can assist you in building the right negotiation strategy to achieve a fair severance.
c) Termination date
The termination date of the employment relationship is also an important aspect of the negotiations. In many cases it may make sense to negotiate to stay on the payroll a little longer so that you can apply for another job from a current position. There are possibilities to maintain flexibility while also enjoying the stability of staying on the payroll longer. We can support you in this.
d) Garden leave and 30% ruling in the Netherlands
In a settlement agreement, parties often agree that the employee is still officially employed for a certain period of time, but is released from work with continued payment of salary, also known as garden leave. As an expat in the Netherlands who benefits from the 30% tax ruling, caution is advised here. In principle, it is possible to change employer while retaining the 30% ruling. However, there is a three-month time limit to change employer after the activities for the former employer have ended. The actual performance of work for the employer is regarded as activity, which does not apply during the garden leave. In principle, the three month-period will therefore start at the beginning of the garden leave. We can advise you on possible solutions to this issue.
e) Vacation entitlements
Employers regularly want to stipulate in the settlement agreement that vacation days are deemed to have been taken, especially if a longer leave of absence is granted. This means that your vacation days will no longer be paid out. If you still have a lot of vacation days left, you should negotiate about this.
f) Non-competition and customer protection clause in the Netherlands
If you want to work somewhere else quickly after the end of your employment relationship, you should definitely check whether your employment contract contains a post-contractual non-competition clause or a customer protection clause, as is often the case in the Netherlands. Post-contractual non-competition clauses and customer protection clauses with a term of up to 12 months after the termination date are often included in Dutch employment contracts, which considerably limits your chances on the job market. If this is the case, it is essential that explicit agreements are made in this regard in the settlement agreement.
g) Reimbursement of legal fees
It is customary in the Netherlands for the employer to grant the employee the option in the settlement agreement to have the settlement agreement legally reviewed by a lawyer at the employer’s expense. This is particularly the case if the initiative for the termination comes from the employer. The amount of the legal fees reimbursed may also be a topic for negotiation.
h) Reimbursement of outplacement costs
If you would like to take advantage of professional support in finding a new job or becoming self-employed (e.g. coaching, attending training courses, etc.), it might be a good idea to negotiate the reimbursement of so called outplacement costs.
i) Positive reference letter
A settlement agreement should also always include the employee’s right to a positive reference.
j) Reflection period
Have you signed a settlement agreement with your employer? Then by law you still have two weeks to revoke the termination agreement. The revocation must be made in writing, but you do not have to give any reasons. Did you recently sign a settlement agreement but are you unsure whether you made a good deal? Feel free to contact us as soon as possible to determine the possibilities.
Questions?
Do you have any questions in connection with a settlement agreement? Would you like to have your settlement agreement reviewed or do you need legal advice when negotiating a settlement agreement under Dutch law? Then contact us without obligation on +31 (0)20 574 74 51 or send an e mail to [email protected]. Our lawyers will be happy to advise you in English, French or German.
