Dismissal by Mutual Consent (Ontslag met Wederzijds Goedvinden)

Dismissal by mutual consent is the most common way for employment contracts to end in the Netherlands. Instead of going through the UWV or the subdistrict court, you and your employer agree to terminate the employment together through a settlement agreement (vaststellingsovereenkomst). While this approach can offer advantages such as speed and flexibility, it also carries risks. In this comprehensive guide you will learn exactly what mutual consent dismissal entails, how the process works, what you should negotiate, and how to protect your unemployment benefit rights.

What is dismissal by mutual consent?

Dismissal by mutual consent (ontslag met wederzijds goedvinden) occurs when the employer and the employee jointly agree to end the employment contract. This agreement is formalised in a settlement agreement (vaststellingsovereenkomst or VSO), which is a legally binding document that sets out all the terms and conditions of the termination.

Under Dutch law, a settlement agreement that terminates an employment contract must be in writing to be valid (Article 7:670b lid 1 BW). A verbal agreement to end the employment is not legally sufficient. The written requirement serves to protect the employee: it ensures that the employee has clearly and deliberately agreed to the termination and is aware of the consequences.

The term "mutual consent" (wederzijds goedvinden) is somewhat misleading. In most cases, the initiative comes from the employer. The employer wants to end the employment and offers a settlement agreement as an alternative to going through a formal dismissal procedure via the UWV or the subdistrict court. As an employee, you are never obliged to accept this offer. You can refuse to sign, in which case the employer must pursue one of the formal dismissal routes.

Mutual consent dismissal is not regulated by a single specific article of law. The settlement agreement itself falls under the general provisions of Article 7:900 BW (settlement agreements in general), while the specific employment law protections (such as the written requirement and the cooling-off period) are laid down in Article 7:670b BW.

Difference from unilateral dismissal

Understanding the difference between mutual consent dismissal and unilateral dismissal is essential for protecting your rights. The key distinctions are:

Unilateral dismissal (eenzijdig ontslag)

With unilateral dismissal, the employer terminates the employment without your agreement. Depending on the ground for dismissal, the employer must follow one of two routes:

• UWV route: for economic reasons (bedrijfseconomische redenen) or long-term illness (langdurige arbeidsongeschiktheid), the employer must request permission from the UWV (Employee Insurance Agency). The UWV assesses whether there is a valid ground and whether the employer has met all requirements.
• Court route: for personal grounds such as underperformance, disrupted working relationship, culpable conduct, or other personal reasons, the employer must request the subdistrict court to dissolve the employment contract.

With unilateral dismissal, dismissal bans (opzegverboden) apply. Your employer may not dismiss you during illness, pregnancy, membership of the works council, or in other protected situations.

Mutual consent (wederzijds goedvinden)

With mutual consent, neither the UWV nor the court is involved. The employer and employee negotiate the terms directly and record them in a settlement agreement. There is no formal legal procedure. The dismissal bans do not technically apply, because mutual consent is not considered a unilateral dismissal. However, signing a settlement agreement during illness or pregnancy can have serious consequences for your benefit rights.

The following table summarises the key differences:

• Permission required: Unilateral dismissal requires UWV or court approval; mutual consent requires only your signature.
• Dismissal bans: Apply to unilateral dismissal; do not technically apply to mutual consent (but practical consequences remain).
• Severance pay: With unilateral dismissal, the statutory severance pay is automatic; with mutual consent, it is negotiable.
• Compensation: With court dissolution, the court determines compensation; with mutual consent, it is negotiable.
• Speed: Unilateral dismissal can take weeks to months; mutual consent can be arranged within days.
• Certainty: Court outcomes are uncertain; mutual consent offers certainty for both parties.

The settlement agreement process

The process of terminating employment by mutual consent typically follows these steps:

1. The conversation: your employer invites you for a meeting (ontslaggesprek) and informs you that they wish to end the employment. The employer may explain the reasons and present a draft settlement agreement, or may first discuss the situation verbally and send the written proposal later.
2. The proposal: you receive a written settlement agreement from your employer. This is an initial proposal — you are not obliged to accept the first offer. Take the time to read it carefully.
3. Legal review: you have the right to have the agreement reviewed by a lawyer. Many settlement agreements include a contribution for legal advice costs. Have your agreement checked for free by our lawyers.
4. Negotiation: based on legal advice, you may negotiate adjustments to the terms. This can involve the severance payment, the end date, the lifting of restrictive covenants, and other provisions.
5. Final agreement: once both parties agree on the terms, the final version of the settlement agreement is prepared and signed by both parties.
6. Cooling-off period: after signing, you have 14 days to dissolve the agreement without giving reasons (or 21 days if the cooling-off period is not mentioned in the agreement).
7. Execution: the employment ends on the agreed date. The employer pays the severance, outstanding holiday pay, and any other agreed amounts.

Key provisions in the settlement agreement

A well-drafted settlement agreement covers all aspects of the employment termination. The key provisions you should pay attention to are:

Reason for termination

The stated reason is crucial for your unemployment benefit rights. The agreement should clearly indicate that the initiative for termination lies with the employer and that there is no urgent reason (dringende reden). If the agreement suggests that you resigned or that the termination was caused by your misconduct, this can jeopardise your WW-uitkering.

End date

The end date determines when your employment officially terminates. This date must account for the fictitious notice period (fictieve opzegtermijn), which is the period the employer would have had to observe if they had formally given notice. If the end date is too early, the UWV may impose a waiting period during which you receive no unemployment benefits.

Severance payment

The severance payment (ontslagvergoeding) is typically the most important financial component. The statutory severance pay (transitievergoeding) is often used as a reference, but with a settlement agreement the amount is freely negotiable. Your bargaining position depends on the strength of the employer's case and the circumstances of the dismissal.

Release from duties

Being released from work (vrijstelling van werkzaamheden) with continued pay during the remaining period. This is not a legal right but a negotiable benefit. If granted, you can use this time to look for a new job while still receiving your salary.

Final discharge

The final discharge clause (finale kwijting) means that both parties waive any further claims against each other after execution of the agreement. Be careful: this can include claims you are not yet aware of. Make sure outstanding items such as holiday pay, bonuses, and expense reimbursements are explicitly settled before agreeing to final discharge.

Non-compete and non-solicitation clauses

If your employment contract contains restrictive covenants, the settlement agreement should address these. You can negotiate to have these clauses lifted or limited in scope. Leaving these clauses in place can significantly restrict your career opportunities after departure.

Legal costs contribution

Most settlement agreements include a contribution from the employer towards the employee's legal advice costs. This is standard practice and should be explicitly mentioned in the agreement.

Negotiation: what to ask for

A settlement agreement is an initial proposal, not a final offer. You have the right to negotiate. The following components are commonly negotiated:

• Higher severance payment: if the employer's case for dismissal is weak, you have strong grounds to negotiate a higher payment. Consider the statutory severance pay as the absolute minimum starting point, not the target.
• Later end date: a later end date means more salary, continued pension accrual, and proper accounting for the notice period. This also protects your unemployment benefit rights.
• Release from duties: being released from work allows you to focus on finding a new position while your salary continues.
• Lifting of non-compete clause: if you have a non-compete clause, negotiate its removal. This is especially important if you work in a specialised field where the clause would limit your options.
• Positive reference: agree on the content of the certificate of employment and the reference your employer will provide to future employers.
• Outplacement budget: a budget for coaching or training to help you find new employment. This is not a right but can be negotiated.
• Communication: how the departure will be announced to colleagues and external parties. A dignified departure protects your professional reputation.
• Return of company property: clear arrangements about returning equipment and the timing thereof.

Your negotiating position is strongest when the employer has a weak case for dismissal. If the employer would struggle to obtain permission from the UWV or the court, they need your cooperation more. Conversely, if the employer has a strong case, the room for negotiation is more limited.

Unemployment benefits and conditions

One of the most important concerns when signing a settlement agreement is protecting your right to unemployment benefits (WW-uitkering). The UWV assesses your application for unemployment benefits based on the totality of circumstances. To maximise your chances, the settlement agreement should meet the following conditions:

• Employer's initiative: the agreement must make clear that the initiative for termination lies with the employer, not with you. Formulations that suggest you requested the termination or mutually agreed to leave can be problematic.
• No urgent reason: the ground for termination must not be an urgent reason (dringende reden) such as theft, fraud, or deliberate refusal to work. The UWV will refuse benefits if it determines that you were dismissed for an urgent reason.
• Correct notice period: the end date must respect the applicable notice period. If the employer has a contractual or statutory notice period of, for example, two months, the end date should be at least two months after the agreement is signed (calculated from the first possible notice date, typically the end of the month). If the notice period is not correctly accounted for, the UWV may impose a waiting period.
• No culpable unemployment: the UWV assesses whether you became unemployed through your own fault. This goes beyond the text of the agreement: the UWV can investigate the actual circumstances. If the UWV finds that you provoked the dismissal or acted in a way that made termination inevitable, benefits may be refused.

In addition to these conditions in the agreement itself, you must meet the general unemployment benefit requirements: sufficient employment history (the weeks requirement and the years requirement), availability for the labour market, and timely registration as a jobseeker with the UWV.

The cooling-off period

After signing a settlement agreement that terminates the employment, you have a statutory cooling-off period (bedenktijd) under Article 7:670b lid 2 BW. This period gives you the right to dissolve the agreement unilaterally, without giving any reason.

Duration

The standard cooling-off period is 14 days from the date the agreement is concluded (typically the date of signing by both parties). If the settlement agreement does not mention the cooling-off period, the period is automatically extended to 21 days (Article 7:670b lid 3 BW). This provision incentivises employers to include the cooling-off period in the agreement.

How to invoke

To dissolve the agreement, you must send a written statement to your employer within the cooling-off period. An email is legally sufficient, but it is advisable to send confirmation by registered mail or to ensure you have proof of timely delivery. You do not need to give any reason for the dissolution.

Consequences of invoking

If you invoke the cooling-off period, the settlement agreement is dissolved and the employment continues as if the agreement was never concluded. Your employer cannot retaliate against you for using this statutory right. However, be aware that the employer may subsequently initiate a formal dismissal procedure.

Limitation

If you invoke the cooling-off period and subsequently enter into a new settlement agreement with the same employer within six months, you generally do not have a second cooling-off period (Article 7:670b lid 4 BW). This prevents abuse of the cooling-off right.

Advantages of mutual consent dismissal

Terminating employment by mutual consent via a settlement agreement can offer several advantages compared to a unilateral dismissal procedure:

• Speed: a settlement agreement can be concluded within days or weeks, while a dismissal procedure via the UWV or court can take months.
• Flexibility: all terms are negotiable, giving you more control over the outcome than in a court procedure where the judge decides.
• Certainty: both parties know the outcome. In a court procedure, the result is uncertain and may not be favourable for either party.
• Privacy: a settlement agreement is confidential. Court proceedings are in principle public and can include information you would prefer to keep private.
• Less conflict: negotiation is generally less adversarial than litigation, which can be important for your professional reputation and emotional wellbeing.
• Preservation of unemployment benefits: a properly drafted settlement agreement preserves your right to WW-uitkering.
• Agreed references: you can negotiate positive references and the content of your certificate of employment.

Disadvantages and risks

Despite the advantages, mutual consent dismissal also carries risks that you should carefully consider:

• Voluntary waiver of rights: by signing a settlement agreement, you voluntarily give up the protections that apply to unilateral dismissal, including dismissal bans and the right to have a court assess the validity of the dismissal.
• Potentially lower compensation: without expert advice, you may accept a severance payment that is lower than what you would receive through a court procedure or what is reasonable given the circumstances.
• Risk to unemployment benefits: if the agreement is not properly drafted, your right to WW-uitkering may be jeopardised. The UWV assesses the totality of circumstances and may refuse benefits.
• Final discharge consequences: the final discharge clause means you cannot make further claims after signing. This includes claims you may not have been aware of at the time.
• Pressure from employer: employers sometimes use pressure tactics, such as threats of formal dismissal or short deadlines, to push you into signing quickly. This can lead to disadvantageous decisions.
• Illness risks: if you are ill when you sign, you lose your right to continued salary payment (which can last up to two years) and the UWV may refuse your Sickness Benefits Act claim.

When to refuse a settlement agreement

While a settlement agreement can be a good outcome in many situations, there are circumstances where refusing may be in your best interest:

• You are ill: if you are currently sick or unfit for work, signing a settlement agreement can have severe consequences. You lose your right to continued salary payment (up to two years) and may not qualify for Sickness Benefits. Consider refusing the agreement and invoking your illness-related protections.
• The offer is too low: if the compensation offered is significantly below what you would be entitled to in a formal dismissal procedure, it may be better to refuse and let the employer go through the UWV or court route.
• The employer has no valid dismissal ground: if your employer cannot substantiate a valid reason for dismissal, they will struggle in a formal procedure. This gives you significant leverage. Refusing the agreement can lead to a much better offer, or the employer may abandon the dismissal entirely.
• You are pregnant or on parental leave: dismissal bans apply during pregnancy and parental leave. A settlement agreement bypasses these protections. Refusing keeps your protections in place.
• You are close to retirement: if you are approaching retirement age, the financial consequences of early termination (lost salary, reduced pension accrual) may outweigh any severance payment offered.
• You want to stay: remember, you have no obligation to leave. If you genuinely want to continue working, you have the right to refuse the agreement and remain in employment.

The decision to sign or refuse a settlement agreement is personal and depends on your specific circumstances. Professional legal advice is essential to make an informed decision. A lawyer can assess the strength of the employer's case, the fairness of the offer, and the risks of both accepting and refusing.

Frequently asked questions

Am I obliged to accept a settlement agreement?

No, you are never obliged to sign a settlement agreement. It requires your voluntary consent. If you refuse, your employer must pursue a formal dismissal route via the UWV or the subdistrict court. However, it is wise to seriously consider the offer and have it reviewed by a lawyer, as the settlement agreement may offer better terms than a formal procedure would yield.

Can I negotiate the settlement agreement?

Yes, a settlement agreement is an initial proposal that is fully negotiable. The employer's first offer is rarely their best offer. Common negotiation points include the severance payment, the end date, release from duties, lifting of restrictive covenants, and the certificate of employment. A lawyer can advise you on what is realistically achievable given your specific circumstances.

Will I receive unemployment benefits after signing?

In most cases, yes, provided the settlement agreement meets certain conditions: the initiative must lie with the employer, no urgent reason may be stated, and the notice period must be correctly accounted for. The UWV assesses the totality of circumstances, not just the text of the agreement. Our lawyers always verify these conditions as part of every free agreement review.

What is the cooling-off period?

After signing a settlement agreement, you have a statutory cooling-off period of 14 days during which you can dissolve the agreement without giving reasons. If the agreement does not mention the cooling-off period, it is automatically extended to 21 days. You invoke it by sending a written statement to your employer within the period.

What happens if my employer pressures me to sign immediately?

You are never obliged to sign on the spot. Take the time to read the agreement carefully and seek legal advice. An employer who refuses to give you reasonable time for consideration and legal review is not acting as a good employer. If you feel pressured, this may in exceptional cases constitute abuse of circumstances, which could render the agreement voidable.

Can I sign a settlement agreement while I am ill?

You can, but it is generally not advisable. If you are ill, you have strong legal protections: your employer must continue paying your salary for up to two years and must facilitate your reintegration. By signing a settlement agreement, you give up these protections. The UWV may also refuse your Sickness Benefits Act claim. Always seek specialist legal advice if you receive a settlement agreement while you are ill.