Settlement Agreement Checklist: What to Check Before You Sign

You have received a settlement agreement (vaststellingsovereenkomst or VSO) from your employer. Before you sign, it is essential to review the document carefully. A settlement agreement is a legally binding contract with potentially significant financial consequences. This comprehensive checklist covers every important point you need to verify — from your severance payment and unemployment benefit rights to hidden clauses that could limit your career. Take the time to go through each point, because your future income, benefit entitlements and career prospects depend on it.

Table of contents

Quick checklist: all items at a glance

  1. Employer initiative — does the agreement clearly state that termination was initiated by your employer?
  2. Severance payment — is the compensation at least equal to the statutory transitievergoeding, or higher?
  3. End date — has the fictitious notice period been correctly calculated?
  4. Unemployment benefits — does the agreement protect your right to a WW-uitkering?
  5. Cooling-off period — is the statutory 14-day reflection period mentioned?
  6. Non-compete clause — is the clause waived or at least limited?
  7. Final discharge — are outstanding payments excluded from the discharge clause?
  8. Release from duties — are you released from work with full pay until the end date?
  9. Holiday days & allowance — are remaining days and accrued holiday pay paid out?
  10. Certificate of employment — has a positive or neutral reference been agreed?
  11. Legal costs — does the employer contribute to your legal fees?
  12. Pension — does pension accrual continue until the end date?
  13. Illness / pregnancy — are special protections addressed if applicable?
  14. Confidentiality — is the confidentiality clause reasonable and limited in scope?

Unsure about one or more items? Have your settlement agreement checked for free by our lawyers. On working days you will receive a response within 1 hour.

1. Reason for termination — the agreement must show employer initiative

The single most important element in your settlement agreement is the reason for termination. The agreement must clearly and unambiguously state that the initiative to end the employment came from the employer. This is one of the core requirements that the UWV (the Dutch Employee Insurance Agency) evaluates when you apply for unemployment benefits (WW-uitkering).

The UWV assesses the full picture. The mere fact that the settlement agreement states the employer took the initiative is not always sufficient on its own. However, if this statement is missing or ambiguously worded, there is a serious risk that the UWV will reject your unemployment benefit application on the grounds that your unemployment was culpable (verwijtbare werkloosheid). Look for phrases such as "the employer has taken the initiative to terminate the employment" or "at the employer's initiative". Avoid phrases such as "the parties have mutually agreed" without further clarification, as such wording may be insufficient for the UWV.

The stated reason must also be neutral. This means no urgent cause (dringende reden) may be mentioned — such as theft, insubordination or serious misconduct — and illness must not be listed as the ground for termination. Common neutral grounds include reorganisation, difference of opinion regarding the role, or an irreparably disrupted working relationship (provided it is worded neutrally without assigning blame to you).

Warning

If you resigned yourself or took the initiative to leave, this cannot simply be "repaired" by changing the wording in the settlement agreement. The UWV does not only look at the text of the agreement but also at the actual course of events. However, if your employer told you they wished to end the employment, it is crucial that this is correctly reflected in the agreement.

2. Severance payment & transitievergoeding calculation

When you sign a settlement agreement, there is technically no automatic right to the statutory transitievergoeding (severance pay). The compensation in a settlement agreement is the result of a negotiation. In practice, however, the transitievergoeding (one-third of a monthly salary per year of service, Article 7:673 of the Dutch Civil Code) is commonly used as a reference point and minimum benchmark.

Whether the offered compensation is adequate depends on several factors:

  • Initiative: if the employer initiated the termination and does not have a strong legal basis, your negotiating position is stronger and the compensation should reflect this.
  • Strength of the employer's case: does the employer have a well-documented file (for instance in the case of alleged underperformance) or is the file weak or non-existent? The weaker the file, the more room there is for a higher payment.
  • Length of service and age: the longer you have been employed and the older you are, the harder it typically is to find a comparable position. This can justify a higher payment.
  • Your position on the job market: if your skills are in high demand, this is a different situation from being in a sector with heavy competition.
  • Illness: if you are ill, a higher payment may be justified, partly to compensate for the risk of losing continued salary payments during sick leave. However, there is no automatic legal right to a higher amount — the final compensation is always the result of negotiation.

Good to know

Although the transitievergoeding serves as a reference, the compensation in a settlement agreement can be both lower and higher. If you were to refuse to sign, your employer would need to pursue a different dismissal route in which you would, in most cases, be entitled to the statutory transitievergoeding. This fact strengthens your position. Unsure whether the offered amount is fair? Have your agreement checked for free and receive a personal assessment on working days within 1 hour.

3. End date and fictitious notice period

The end date of your employment in the settlement agreement must take into account the so-called fictitious notice period (fictieve opzegtermijn). This is the notice period your employer would have been required to observe had they terminated your employment through the regular route. The UWV applies this period when calculating your unemployment benefits: during the fictitious notice period, you will not receive any benefits, regardless of when your employment actually ends.

The calculation of the fictitious notice period depends on several factors:

  • Statutory notice period: for a permanent contract, the statutory notice period for the employer depends on the length of employment: 1 month (less than 5 years), 2 months (5–10 years), 3 months (10–15 years) or 4 months (15 years or more).
  • Contractual notice period: your employment contract or collective labour agreement (CAO) may contain a different notice period. Check this carefully.
  • Notice against the end of the month: in principle, an employment contract can be terminated at the end of a calendar month, unless the employment contract or applicable collective labour agreement (CAO) provides for a different notice date (Article 7:672(1) of the Dutch Civil Code). The fictitious notice period starts running from the point at which valid notice could have been given.

If the end date in your settlement agreement is set too early, you may face a gap during which you receive neither salary nor unemployment benefits. The severance payment is supposed to bridge this gap, but that is not always the intention or the result.

Calculation example

Suppose you have worked for your employer for 12 years and the settlement agreement is signed on 15 March. The statutory notice period is 3 months. If notice must be given against the end of the month, the fictitious notice period runs from 1 April and employment ends on 1 July. If the end date in your agreement is set at 1 May, you would receive no unemployment benefits for two months. Please note: this example assumes the statutory notice period applies. Your employment contract or CAO may contain a different notice period, which would lead to a different calculation. Always have the calculation verified by a legal professional.

4. Unemployment benefit conditions (WW-uitkering)

Protecting your right to unemployment benefits (WW-uitkering) is one of the primary reasons to have your settlement agreement reviewed. Several elements in the agreement directly affect your entitlement. The UWV assesses the following key conditions:

  • Employer initiative: as discussed above, the agreement must clearly state that the termination was initiated by the employer.
  • No urgent cause: the stated reason for termination must not be an urgent cause (dringende reden). If it is, the UWV may conclude you are culpably unemployed and deny your benefits.
  • No illness as the ground: if illness is stated as the termination ground, the UWV may establish a detrimental act (benadelingshandeling) and refuse or reduce your Sickness Benefits Act (Ziektewet) entitlement.
  • Correct fictitious notice period: if the end date is set too early, you will face a gap without income or benefits.
  • Work history requirement: to qualify for a WW-uitkering, you must have worked at least 26 of the last 36 weeks before you become unemployed. Verify that this condition is met given your end date.

Tip

The UWV does not simply accept the text of a settlement agreement at face value. They examine the overall circumstances. That said, a well-drafted agreement that addresses all the above points significantly reduces the risk of your benefits being denied. Having your agreement reviewed by a lawyer is the best way to safeguard your unemployment benefit rights.

5. Cooling-off period (14 or 21 days)

After signing a settlement agreement, you have a statutory cooling-off period of 14 days under Article 7:670b(2) of the Dutch Civil Code. During this period, you can dissolve the agreement in writing, without giving any reason. This right cannot be contractually excluded or limited.

Check the following points:

  • Mention of the cooling-off period: is the 14-day reflection period explicitly stated in the agreement? If not, the period is automatically extended to 21 days under Article 7:670b(3).
  • No restrictions: does the agreement contain clauses that limit the cooling-off period or attach conditions to it? Such clauses are void (nietig).
  • Start date: the cooling-off period begins on the date the agreement was formed, which is typically the date both parties signed it.

The cooling-off period is your statutory safety net. If you choose to use it, send a written statement to your employer. An email is legally sufficient, but for safety also send a registered letter so that you have proof of timely receipt.

Please note: the law stipulates that if you invoke the cooling-off period and sign a new settlement agreement with the same employer within six months, you generally do not have a second cooling-off period (Article 7:670b(4)).

6. Non-compete and non-solicitation clauses

A non-compete clause (concurrentiebeding) restricts your ability to join a competitor or start a business in the same field after leaving your employer. A non-solicitation clause (relatiebeding) prohibits you from contacting clients or relations of your former employer. Both clauses can seriously limit your career options after dismissal.

Check the following:

  • Is the clause waived? Always request that the settlement agreement includes a provision stating that the non-compete and/or non-solicitation clause lapses upon termination of the employment.
  • Is the clause valid in the first place? For a temporary contract, a non-compete clause is only valid if the employer has provided a written justification explaining why the clause is necessary due to substantial business interests (Article 7:653(2)). If this justification is missing, the clause is already invalid. For a permanent contract, a clause may be unreasonably burdensome if it disproportionately restricts you.
  • Partial waiver: if a full waiver is not achievable, you can negotiate a reduction of the duration, a limitation of the geographical scope, or a conversion of the non-compete clause into a less restrictive non-solicitation clause.

Important

If the employer took the initiative to terminate your employment, it is unreasonable for them to then restrict you with a non-compete clause. Dutch courts take this into account in their rulings. This strengthens your negotiating position to have the clause waived entirely.

7. Final discharge clause (finale kwijting)

Nearly every settlement agreement contains a final discharge clause (finale kwijting), also known as "full and final settlement". This clause means that after execution of the agreement, neither party has any remaining claims against the other. While this sounds straightforward, a broadly worded final discharge clause can be detrimental to you.

Key points to check:

  • Unknown claims: a broadly worded discharge clause may also cover claims you are not yet aware of at the time of signing, such as an unpaid bonus, outstanding overtime pay, or a damage claim.
  • Explicitly exclude outstanding items: ensure that outstanding financial items (holiday pay, holiday days, bonuses, overtime, expense claims) are either incorporated into the severance payment or explicitly excluded from the final discharge.
  • Pension rights: verify that your accrued pension rights are excluded from the final discharge. Your pension rights belong to you and must not be affected by a discharge clause.
  • Future claims: if there is any possibility of future claims (for example in connection with an occupational disease that may manifest later), it is advisable to explicitly exclude these from the final discharge.

Be careful

The wording of the final discharge clause is often standard and broad. Many employees read over it without giving it much thought. Yet this clause can cost you thousands of euros if there are outstanding claims that have not been addressed. Have a lawyer assess the scope of the final discharge clause in your agreement.

8. Release from duties (vrijstelling van werk)

Release from duties means that you do not have to work until the end date of your employment, but continue to receive your salary. This is common in settlement agreements. However, it is not a legal right — it is a negotiable point.

Points to check:

  • Full pay: verify that the release is with full retention of salary, including any benefits such as a company car, phone or laptop.
  • Job searching: a release from duties gives you the opportunity to start looking for a new position. Check whether the agreement permits this or whether there are restrictions.
  • Returning company property: check when you need to return company property (laptop, phone, company car, access pass). Ideally, this is only on the actual end date of employment, not at the start of the release period.
  • Holiday days: as discussed below, check whether outstanding holiday days are deemed to have been taken during the release period or whether they are paid out separately. The latter is more favourable to you.

9. Holiday days and holiday allowance

At the end of your employment, you are entitled to payment of outstanding holiday days and accrued holiday allowance (vakantiegeld). This right is established by law (Articles 7:640 and 7:641 of the Dutch Civil Code) and cannot be excluded by the settlement agreement.

Check the following:

  • Statutory holiday days: how many holiday days do you still have outstanding? The statutory holiday days (four times the weekly working hours) must be paid out at the end of employment if they have not been taken.
  • Extra-statutory holiday days: many employees have accrued extra-statutory (bovenwettelijke) holiday days in addition to the statutory minimum. Check whether these are also paid out.
  • Holiday allowance: you accrue holiday allowance throughout your employment (typically 8% of your gross annual salary). The accrued allowance up to the end date must be paid out.
  • Set-off: check whether the employer pays out the holiday allowance and holiday days separately or has incorporated them into the severance payment. If they are included in the severance, this must be clearly stated in the agreement.

Watch out if you are released from duties

Some employers include a provision in the settlement agreement stating that outstanding holiday days are deemed to have been taken during the release period. This can be disadvantageous: you lose the payout for those days. If you are released from duties, it is more favourable if the release is explicitly on a different basis than holiday, so that your holiday days are paid out separately.

Halfway through the checklist — already have doubts?

If you are unsure about one or more items, have your agreement reviewed by a professional. At OntslagLegal, you can have your settlement agreement checked for free. Our lawyers will go through all the items in this checklist and give you a personal assessment on working days within 1 hour.

10. Certificate of employment (getuigschrift)

You have a legal right to a certificate of employment at the end of the employment relationship (Article 7:656 of the Dutch Civil Code). In a settlement agreement, it is advisable to make specific arrangements regarding the content and tone of this certificate.

What to look for:

  • Positive or neutral: agree that the certificate will be positive or at least neutral in tone. An employer is not permitted to include inaccuracies, but is entitled to include factually accurate information, even if it is less favourable to you. The tone can also vary considerably. It is therefore advisable to agree on the general tenor of the certificate in advance.
  • Content: the certificate must at minimum describe the nature of the work performed and the duration of employment. At your request, the employer is obliged to include a statement of how the employment ended and an assessment of your performance.
  • Draft approval: it is customary to agree that you can review and approve a draft of the certificate before it is finalised.
  • References: additionally, agree on what your former employer will communicate as a reference when asked. A negative reference can seriously harm your chances with future employers.

11. Legal costs contribution

It is standard practice for the employer to include a contribution towards your legal advisory costs in the settlement agreement. Most employers offer an amount between EUR 750 and EUR 2,500 excluding VAT. This amount may be higher in more complex situations, such as cases involving illness or a high salary.

Points to check:

  • Excluding or including VAT: check whether the amount is excluding or including VAT. As a private individual, you generally cannot deduct VAT, so the net amount is what matters.
  • Direct payment to lawyer: in some cases, the contribution is paid directly to your lawyer. This can be fiscally more advantageous than payment to you, because the amount is then not added to your taxable income.
  • Sufficient coverage: check whether the offered amount is sufficient to actually obtain professional legal advice. An amount of EUR 250, for example, is inadequate for a thorough legal review and negotiation.

Tip

There is no legal obligation for the employer to reimburse your legal costs in a settlement agreement. However, it is very common and most employers agree to include a contribution. If no contribution is mentioned in your agreement, ask for one — employers almost always agree, because they know that legal guidance makes the process smoother for both sides.

12. Pension implications

When your employment ends, your pension accrual through the employer typically stops as well. This is an often-overlooked point that can have significant long-term financial consequences. Check the following:

  • Accrual until end date: the starting point is that your pension accrual continues until the actual end date of the employment. Whether this is the case depends on the pension regulations of your pension fund and the terms in your employment contract or CAO. If you are released from duties, it is important to verify that pension accrual also continues during the release period.
  • Employer and employee contributions: during the employment, both you and your employer pay pension contributions. Verify that the employer continues to pay contributions until the end date.
  • Value transfer: after the end of your employment, you can transfer your accrued pension to the pension fund of your new employer. Ensure that the settlement agreement does not create any barriers to this.
  • Voluntary continuation: after your employment ends, it may be possible to voluntarily continue pension accrual. The maximum duration (often up to ten years, depending on the pension regulations) and conditions vary per pension fund. Check with your pension fund in good time about the possibilities and costs.
  • Final discharge: make sure that your accrued pension rights are explicitly excluded from the final discharge clause.

13. Special situations: illness and pregnancy

If you are ill, pregnant, or on maternity leave at the time you receive the settlement agreement, extra caution is required. Dutch employment law provides special protections in these situations, and signing a settlement agreement can have far-reaching consequences.

Illness (ziekte)

If you are currently on sick leave, signing a settlement agreement is particularly risky. By signing, you may lose your right to continued salary payment during illness (loondoorbetaling bij ziekte, up to 104 weeks) and you risk having your Sickness Benefits Act (Ziektewet) application denied by the UWV on the grounds of a detrimental act. If your employer offers a settlement agreement during illness, the agreement must state a reason other than illness for the termination (for example, a disrupted working relationship or reorganisation). The compensation should also be considerably higher to account for the loss of sick pay protection. Read more on our page about settlement agreements during sick leave.

Pregnancy and maternity leave

During pregnancy and maternity leave, you benefit from a dismissal ban (opzegverbod). Your employer cannot terminate your employment through the regular route during this period. This strengthens your position significantly: if you are being offered a settlement agreement during pregnancy, you have substantial leverage. You are under no obligation to accept. If you do choose to negotiate, ensure the compensation reflects the strong protections you would otherwise have.

Warning

If you are ill or pregnant, do not sign a settlement agreement without professional legal advice. The financial risks are considerable: you may lose access to extended sick pay, Sickness Benefits Act payments, or maternity benefits. The consequences can amount to tens of thousands of euros. Have your agreement reviewed by a specialist first.

14. Confidentiality clause (geheimhoudingsbeding)

Many settlement agreements contain a confidentiality clause. This can relate to two aspects: the confidentiality of company information and the confidentiality of the content and terms of the settlement agreement itself.

Check the following:

  • Scope: is the clause reasonably limited? A clause that prohibits you from sharing "any information about the company" is unreasonably broad. It should concern genuinely confidential business information, such as trade secrets, client lists or internal strategies.
  • Penalty clause: is there a penalty attached to breach of the confidentiality clause? Check the amount. Excessively high penalties can be moderated by the court, but it is better to limit them upfront.
  • Confidentiality about the agreement itself: some employers want the content of the settlement agreement to remain confidential. This may mean you cannot discuss the terms (including the compensation) with anyone. Consider whether this is acceptable to you. At a minimum, negotiate an exception for sharing information with your lawyer, partner, accountant and tax adviser.

When you should absolutely not sign

In certain situations, it is strongly inadvisable to sign a settlement agreement, even if the terms appear reasonable at first glance. Do not sign if:

  • You are ill and no proper arrangement has been made for your benefit entitlements. During illness, signing a settlement agreement may result in losing your right to continued salary payment. Additionally, the UWV will assess whether signing constitutes a detrimental act (benadelingshandeling), which can lead to a reduction or denial of your Sickness Benefits Act (Ziektewet) claim.
  • The initiative lies with you (or could be interpreted that way). If the UWV concludes that you initiated your own departure, you may lose your right to unemployment benefits.
  • An urgent cause is mentioned. A reference to theft, fraud or other culpable conduct as the reason for termination jeopardises your benefit rights.
  • You do not understand the content. A settlement agreement is a legal document. If you do not fully understand what it says, do not sign. Ask for clarification first or have the document reviewed.
  • You are being pressured to sign immediately. An employer who places extreme time pressure on you or threatens summary dismissal if you do not sign may be acting improperly. Whether such pressure is legally wrongful depends on the circumstances — not every form of pressure automatically constitutes a defect of will (wilsgebrek) under Dutch law. Regardless, you are never obliged to sign on the spot. Always take the time to have the agreement reviewed.
  • The compensation is unreasonably low and your employer does not have a strong case. If the employer has no good grounds for dismissal, you have a strong position. Do not accept a payment that does not reflect your rights and your situation.
  • The fictitious notice period has not been correctly applied. An incorrect end date leads to a period without income. This must be corrected first.

In doubt? Do not sign.

If you have doubts about one or more items after going through this checklist, the advice is simple: do not sign until you have obtained professional advice. You are never obliged to sign, and you always have the right to have the agreement reviewed. Upload your settlement agreement and receive a free, personal assessment from our lawyers on working days within 1 hour.

Frequently asked questions about the settlement agreement checklist

How much time do I have to review a settlement agreement?

Dutch law does not prescribe a fixed period in which you must respond to a settlement agreement proposal. In practice, employers usually give one to several weeks to review the proposal. Your employer cannot force you to sign within an unreasonably short period. If the employer is pressuring you, that is actually a reason to be extra cautious and have the agreement reviewed first. After signing, you always have the statutory cooling-off period of 14 days (or 21 days if the cooling-off period was not mentioned in the agreement).

Should I negotiate the settlement agreement myself or use a lawyer?

You can negotiate yourself, but it is advisable to have a lawyer assist you. A settlement agreement contains legal provisions whose consequences are not always immediately apparent. A lawyer can assess your position, identify the risks, and negotiate on your behalf. Moreover, employers typically take a counter-proposal from a lawyer more seriously. In most cases, the employer contributes to your legal costs, so the assistance may cost you little or nothing.

What is the difference between the transitievergoeding and the severance in a settlement agreement?

The transitievergoeding is the statutory severance payment you may be entitled to upon dismissal (one-third of a monthly salary per year of service, Article 7:673 of the Dutch Civil Code). In a settlement agreement, there is technically no automatic entitlement to the transitievergoeding — the compensation is the result of negotiation. In practice, the transitievergoeding is used as a reference point, and it is often possible to negotiate a higher amount depending on your circumstances.

Can I use this checklist if I have already signed?

Yes. If you have already signed and are still within the cooling-off period of 14 days (or 21 days if the cooling-off period was not mentioned), you can still dissolve the agreement. Go through the checklist, and if you find that important items are missing or incorrect, you can dissolve the agreement in writing within the cooling-off period. After the cooling-off period has expired, the options are more limited, but in exceptional cases (error, abuse of circumstances) annulment may be possible.

Does this checklist also apply to a temporary contract?

Yes, this checklist also applies to settlement agreements for the termination of a temporary contract. With a temporary contract, a few specific points are extra relevant: the non-compete clause is only valid if accompanied by a written justification, and the calculation of the fictitious notice period and the transitievergoeding may differ from a permanent contract.

Where can I have my settlement agreement checked for free?

At OntslagLegal, you can have your settlement agreement checked for free. Upload your agreement and you will receive a personal assessment from one of our experienced lawyers on working days within 1 hour. We review all the items from this checklist and advise you on any risks and points for improvement.

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