Cooling-Off Period for a Settlement Agreement

You have signed a settlement agreement (vaststellingsovereenkomst or VSO), or you are about to do so. It is essential to know that Dutch law grants you a cooling-off period of 14 days. Within that period you can dissolve the agreement, without giving any reasons. This statutory protection was introduced to safeguard employees against hasty decisions when terminating their employment contract. In this article you will find everything about the cooling-off period: when it starts, how to exercise it, which exceptions exist and how you can use it strategically.

What is the cooling-off period?

The cooling-off period for a settlement agreement is a statutory right laid down in Article 7:670b paragraph 2 of the Dutch Civil Code (Burgerlijk Wetboek, BW). This article provides that an employee has the right to dissolve a settlement agreement that is aimed at terminating the employment contract, within fourteen days after the date on which the agreement was concluded, by means of a written statement to the employer.

The cooling-off period was introduced with the Work and Security Act (Wet werk en zekerheid, Wwz) on 1 July 2015. When introducing this provision, the legislator expressly acknowledged the vulnerable position of employees who sign a settlement agreement under pressure. After all, dismissal directly affects a person's livelihood. The cooling-off period therefore functions as a statutory reflection period: after signing, you are given time to reconsider your decision, seek legal advice and potentially revoke your consent.

It is important to emphasise that the cooling-off period is a mandatory provision of Dutch law. This means that no derogation to the detriment of the employee is permitted. A clause in the settlement agreement stating that you waive the cooling-off period is legally invalid. Even if you sign such a clause, you retain the right to dissolve the agreement within fourteen days. Your employer cannot successfully invoke such a provision.

When does the cooling-off period start?

The cooling-off period starts running from the moment the settlement agreement has been concluded. In most cases, this is the moment at which both parties — you and your employer — have signed the agreement. After all, the conclusion requires a meeting of minds, and in practice this is usually embodied by the signatures of both parties.

The nuance of the moment of conclusion

Determining the exact moment of conclusion is not always straightforward and may differ depending on the circumstances. In Dutch employment law, the conclusion of an agreement is assessed on the basis of the general rules of the law of obligations: offer and acceptance (Article 6:217 BW). In practice, various situations arise:

• Simultaneous signing: if you and your employer sign the settlement agreement at the same time, the starting point is clear. The cooling-off period begins on the date of signing.
• Signing at different times: if you sign the agreement before your employer (or vice versa), the agreement is in principle only concluded at the moment the last party has signed. The cooling-off period then generally starts running from that moment.
• Verbal agreement followed by written confirmation: if you agreed verbally and this is later confirmed in writing, a dispute may arise about the exact moment of conclusion. The legislator indicated in the parliamentary history that the written form requirement of Article 7:670b paragraph 1 BW is a constitutive requirement: the settlement agreement must be entered into in writing. This means that the cooling-off period generally only starts running after the written confirmation.
• Agreement by email: if the agreement is concluded via email correspondence (for example, because you unambiguously accept the final text by email), the moment of sending or receipt of the acceptance may be decisive. Case law on this point has not yet fully crystallised, so caution is advisable.

Example of how the period is calculated

Suppose you sign the settlement agreement on Monday 2 March. Your employer signs on the same day. The cooling-off period then begins on Tuesday 3 March and ends on Monday 16 March. You can dissolve the agreement up to and including that date. If 16 March were to fall on a Sunday, the period would be extended to Monday 17 March.

If you are uncertain about the exact end date of your cooling-off period, it is sensible to act well before the presumed end. The earlier you dissolve, the smaller the risk of a dispute about the timeliness of your statement.

Extension to 21 days

The legislator has built in an additional protective measure for situations in which the employer does not properly inform the employee about the cooling-off period. Article 7:670b paragraph 3 BW provides that if the cooling-off period is not included in the settlement agreement, the period is extended from fourteen to twenty-one days (three weeks).

The rationale behind this extension is clear: the legislator wants to prevent employers from deliberately concealing the cooling-off period in the hope that employees are unaware of their right to dissolve the agreement. By extending the period by one week when the reference is absent, the employer is incentivised to explicitly include the cooling-off period in the settlement agreement.

In practice, professional employers and their legal advisors include the cooling-off period as standard in the settlement agreement. However, should you receive a settlement agreement in which the cooling-off period is not mentioned, you have three weeks instead of two weeks to reconsider your decision. This gives you extra time to seek legal advice and have the agreement carefully assessed.

How do you dissolve the settlement agreement?

If you decide within the cooling-off period that you do not want the settlement agreement to go ahead, you must send a written statement to your employer. The law does not impose strict requirements on the form or content of this statement. A single notification in which you indicate that you are dissolving the agreement is legally sufficient.

Minimum requirements

The law only requires that the dissolution is made in writing and is submitted within the period. You do not need to:

• Give a reason for the dissolution
• Provide an extensive legal justification
• Request permission from your employer
• Draw up a formal document — a letter or email is sufficient

A simple statement such as "I hereby dissolve the settlement agreement dated [date] on the basis of Article 7:670b paragraph 2 of the Dutch Civil Code" is legally sufficient. Your employer does not need to consent to the dissolution: it is a unilateral legal act that takes effect as soon as the statement reaches the employer.

Proof: diligence is advisable

Although the law does not impose specific dispatch or receipt requirements, from an evidentiary perspective it is strongly recommended to send the dissolution in a verifiable manner. In the event of a dispute, you must be able to demonstrate that you sent the statement and that this was done within the period. The following approach is the most common in practice:

1. Send a registered letter to the address of your employer. Registered dispatch provides you with proof of sending with a date. Keep the proof of dispatch carefully.
2. Also send an email to your manager and/or the HR department. The email provides additional proof with a timestamp. Request a confirmation of receipt in the email.
3. Keep copies of all correspondence, including the proof of dispatch of the registered letter and any confirmations of receipt.

Example dissolution statement

Below you will find an example of a concise but legally sufficient dissolution statement:

Consequences of dissolution

When you lawfully dissolve the settlement agreement within the cooling-off period, this has a clear legal consequence: the agreement is deemed to have never been concluded. In other words, the dissolution has retroactive effect. This means the situation reverts to the starting point as if the settlement agreement had never been signed.

In concrete terms, this means the following:

• Your employment contract is revived: the employment relationship simply continues as if nothing had happened. You are still employed by your employer, with all the rights and obligations that entails.
• Your terms and conditions of employment remain unchanged: your salary, position, secondary employment conditions and other arrangements remain in force.
• Any compensation received must be repaid: if your employer has already paid (part of) the agreed severance, you must in principle repay this amount. After all, the legal basis for the payment has ceased to exist.
• Other arrangements from the settlement agreement lapse: all arrangements made in the settlement agreement — such as release from duties, a certificate of employment or lifting of a non-compete clause — are nullified.

Rights that are revived

If you dissolve the settlement agreement, all your rights as an employee are also revived. If, for example, you are ill at the time of dissolution, the dismissal prohibition during illness applies again in full. Your employer is then obliged to continue paying your wages and to support your reintegration. Any dismissal protection on other grounds (pregnancy, membership of the works council) is also fully revived.

No second cooling-off period within six months

The legislator has built in a limitation to prevent abuse of the cooling-off period. Article 7:670b paragraph 4 BW provides that if you have exercised your 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.

The background of this limitation

The legislator wanted to prevent employees from repeatedly signing and dissolving settlement agreements in order to delay the dismissal process or to force progressively better terms. The cooling-off period is intended as a one-time safety net, not as a strategic tool for repeated use with the same employer. The six-month period is considered a reasonable timeframe within which this limitation applies.

What this means for you

If you have previously dissolved a settlement agreement with your employer and your employer offers you a new settlement agreement within six months, you should be aware that in this situation you generally no longer have a cooling-off period. This means that signing the second settlement agreement is in principle immediately final. It is then all the more important to have the agreement assessed by a lawyer before signing.

Strategic use of the cooling-off period

The cooling-off period is not only a safety net — it can also be a strategic tool when dealing with a settlement agreement. Below we discuss a number of ways in which you can use the cooling-off period wisely.

1. Buying time for legal advice

The cooling-off period offers you the opportunity to seek professional legal advice after signing. If your employer puts pressure on you to sign quickly and you feel insufficiently informed, you can sign in the knowledge that you still have 14 days to have the settlement agreement assessed. If it turns out that the terms are unfavourable, you can still dissolve it. You can have your settlement agreement checked for free by our lawyers, who respond on business days within 1 hour.

2. Creating room for negotiation

After signing the settlement agreement, you can use the cooling-off period to negotiate better terms after all. If a legal assessment reveals that the agreement is unfavourable on certain points, you can approach your employer with a request to adjust the terms. The employer knows that you have the option to dissolve and will in most cases be willing to cooperate, because dissolution can also be undesirable for the employer.

3. Preventing hasty decisions

In practice, settlement agreements are regularly offered in emotionally charged situations: after a conflict, during illness or in a reorganisation. The cooling-off period protects you against decisions you make in the heat of the moment. Use this period to calm down, assess the settlement agreement objectively and make a well-considered decision.

4. Checking your benefit rights

Within the cooling-off period you can verify whether the settlement agreement meets the conditions for retaining your unemployment benefit rights. The most important conditions are: the initiative for dismissal came from the employer, there is no urgent reason for dismissal, and the fictitious notice period has been correctly processed. If the agreement does not meet these conditions, you can dissolve it and ask your employer to amend the agreement.

5. Assessing the full financial impact

The cooling-off period gives you the opportunity to map out the full financial consequences of the settlement agreement. This includes not only the offered compensation, but also the consequences for your pension accrual, the duration and amount of any unemployment benefit, the settlement of holiday days and holiday allowance, and the potential financial consequences of a non-compete clause. A thorough financial analysis may reveal that the initial offer can be significantly improved.

Frequently asked questions about the cooling-off period

Can my employer exclude the cooling-off period in the settlement agreement?

No, this is not legally possible. The cooling-off period under Article 7:670b paragraph 2 BW is a mandatory right. A provision in the settlement agreement that excludes, limits or attaches conditions to the cooling-off period is void. Even if you agree to such a provision, you retain your statutory right to dissolve the agreement within 14 days. Your employer cannot successfully rely on a clause in which you would waive the cooling-off period.

Does the day of signing count towards the 14 days?

In most cases, the day of signing itself does not count. The period generally starts running on the day after the conclusion of the agreement. If, for example, you sign on a Wednesday, the period starts on Thursday. The exact calculation may depend on the specific circumstances, such as the time of signing and the applicable time-limit rules. If in doubt, it is advisable to act well before the presumed end of the period.

What happens if I invoke the cooling-off period just one day too late?

If you send the dissolution statement after the cooling-off period has expired, the dissolution is in principle not legally valid. The settlement agreement then remains in force. In exceptional cases, an appeal may be made to other legal grounds, such as error (Article 6:228 BW) or abuse of circumstances (Article 3:44 paragraph 4 BW), but the threshold for this is considerably higher than for the cooling-off period. It is therefore of great importance to act in time and not to wait until the last moment.

Does the cooling-off period also apply if I myself requested a settlement agreement?

Yes, the cooling-off period applies to every settlement agreement aimed at terminating the employment contract, regardless of who took the initiative. Even if you yourself pushed for a settlement agreement or the negotiations started at your request, you have the statutory right to dissolve the agreement within 14 days. The law makes no distinction on this point as to which party took the initiative.

Can my employer penalise me for using the cooling-off period?

Your employer may not attach negative consequences to the exercise of your statutory cooling-off period. Dissolving the settlement agreement within the cooling-off period is a lawful act. Your employer may not punish, discriminate against or otherwise disadvantage you for exercising this right. If your employer threatens consequences, that is a signal to seek legal advice immediately. After dissolution, your employment contract is fully revived and your employer must treat you like any other employee.

Do I have to repay a received severance if I dissolve the agreement?

In principle, yes. If your employer has already paid (part of) the severance or other payments under the settlement agreement, the legal basis for those payments ceases to exist upon dissolution. Your employer can reclaim the amount paid. This qualifies as undue payment within the meaning of Article 6:203 BW. Bear this in mind if you are considering invoking the cooling-off period: ensure that you still have the amount available or make arrangements regarding the repayment.