Dismissal via UWV vs. Settlement Agreement: The Differences Explained

If your employer wants to say goodbye to you, this can be done in different ways. You are often offered a settlement agreement (VSO), but sometimes the employer opts for a dismissal procedure via the UWV. Both routes have important consequences for you as an employee.

In this article we explain the differences between dismissal via the UWV and dismissal with a VSO, we discuss the advantages and disadvantages and provide practical tips.

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Dismissal via the UWV

The UWV is authorized to assess dismissal in the following cases:

• Long-term disability (sick for more than 2 years).

How does it work?

• The employer submits a request to the UWV.

• The UWV assesses whether the reason is valid.

• If the request is granted, the contract will be terminated.

Consequences for the employee

• You are entitled to the statutory transition payment.

How do you calculate the amount of the transition compensation?

Do you want to know how much transition compensation you can expect? Fortunately, you can easily calculate this yourself. There are various useful tools online, such as the transition compensation calculator from the UWV or other reliable calculation tools. What do you need?

• Your gross monthly salary, including fixed allowances (such as holiday pay or a thirteenth month).
• The number of years of service with your employer.

Enter this information and within a few seconds you will receive an indication of the amount you are entitled to. This way you will not be faced with any surprises during the dismissal process.

• You retain your right to WW (provided you meet the conditions).

• There is no room to negotiate extras, except through a separate settlement.

Calculate your unemployment benefit yourself

Wondering where you stand financially after dismissal? Fortunately, you can easily calculate how much unemployment benefit you are entitled to and how long this benefit lasts.

How do you approach that?

• Use the WW calculation tool from the UWV. This allows you to quickly see approximately what you will get.
• Have your last pay slip at hand for an accurate calculation.

Based on your salary and employment history, the tool immediately calculates an indication of:

• The amount of your unemployment benefit
• The duration of your benefit

This quickly gives you clarity about your situation, so that you know where you stand and can make additional arrangements in time if necessary.

What is a fictitious notice period and what does this mean for your unemployment benefit?

If dismissed via theUWV, the employer must officially take a notice period into account. Even if you apply for unemployment benefits, the UWV looks at this period — this is called the notional notice period. What does this actually mean? You will only be entitled to unemployment benefits after the (notional) notice period has expired. So suppose your employment contract is terminated with immediate effect, then UWV adds a period that corresponds to the usual notice period. Only then will your unemployment benefit commence. So keep in mind that you will usually not receive any benefits during this bridging period. In short:

• Without good agreements you can be temporarily without income.
• It is wise to pay close attention to this when terminating your contract, so that you are not faced with unpleasant surprises.

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Dismissal via a settlement agreement

A settlement agreement is a termination agreement in which the employer and employee make agreements together.

What are the most important provisions in a settlement agreement?

A settlement agreement contains various agreements, some of which are standard, and others depend on your situation. The most important things that usually come back:

• The reason for dismissal: Often referred to as “difference of opinion”, reorganization or long-term disability. This is important for your unemployment rights.
• Transition compensation: The agreed amount that you receive upon departure. This is often negotiable.
• Unemployment insurance: The agreement must clearly state that the initiative lies with the employer and that you are not to blame, so that you remain entitled to unemployment benefits.

In addition, it is usually clearly described:

• The end date of your employment.
• Or you will be released from work until the end of your contract.
• What happens with vacation days: take them or have them paid out.
• Returning company property such as laptop, telephone or lease car.
• Whether an exemption applies from the non-competition or non-solicitation clause.
• Possibly an (extra) compensation for, for example, outplacement or training.

Make sure you check all these points carefully and, where possible, negotiate the content. This way you get the most out of your settlement agreement.

How does it work?

• The employer makes a proposal for termination with a VSO.

• You can negotiate the terms.

• After agreement, both parties sign the agreement.

Consequences for the employee

• You retain your right to WW (provided the VSO has been drawn up correctly).

In practice, however, we see that employers do not always make every effort to negotiate the terms of the settlement agreement in the employee's favor. This means you run the risk of an income gap - your benefits will only start later than your dismissal date - or you may not even be eligible for unemployment benefits at all. Fortunately, these risks are quite easy to prevent by paying close attention when drawing up your VSO and seeking timely advice.

• You are often entitled to the transition compensation.

• You can negotiate for more: extra compensation, exemption from work, training budget or deletion of clauses.

What questions can you have about a settlement agreement?

A settlement agreement creates uncertainty for many employees. It is logical that you will have all kinds of questions as soon as you find such a proposal on your mat. The most common doubts are often about:

• Unemployment benefits – Do you really retain your right to unemployment benefits after signing the VSO?
• Transition compensation – Has the amount offered to you as a transition compensation been calculated correctly?
• Negotiation room – Can you negotiate a higher severance payment or additional arrangements, such as a training budget or longer notice period?
• Exemption from work – What does it mean if you are (partially) exempt from work? And what should you pay attention to?
• Competition or non-solicitation clauses – Do restrictive agreements from your employment contract remain in force after the end of the employment contract?
• Payment of outstanding vacation days – Are all outstanding vacation days paid out, and is this properly incorporated into the agreement?

These questions are completely normal. After all, you are about to make important appointments for the future. If you have any doubts, always have your VSO checked by an expert. This way you won't be faced with any surprises.

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Practical examples

• Example 1: An employee received a VSO during a reorganization. By negotiating, he received 3 extra monthly salaries on top of the transition payment. He would not have had this during a UWV procedure.

• Example 2: An employee who had been ill for more than 2 years was dismissed via the UWV. He only received the transition payment.

• Example 3: An employee initially received a UWV dismissal during a cost reduction. Through consultation, the employer still switched to a VSO, which gave the employee a better package.

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Checklist: UWV or VSO?

• 📄 Reason for dismissal: business economics or long-term illness → UWV.

• 💶 Do you want extra compensation or agreements? → VSO offers space.

• ⚖️ Do you want certainty and objective testing? → UWV.

• 📊 Do you want customization and better conditions? → VSO.

• 📝 Always seek legal advice, both routes have risks.

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Frequently asked questions (FAQ)

1. Will I receive unemployment benefits if I am dismissed through the UWV?
Yes, provided you have not been dismissed due to negligence.

If your income disappears due to dismissal, you can claim unemployment benefits in the Netherlands. But theUWVdoes impose strict conditions on this. You are not automatically eligible; you must meet a number of criteria that have been established to prevent abuse. These are the most important conditions:

• You are insured against unemployment (as an employee you almost always are).
• You are unemployed or will be soon.
• The initiative for dismissal lies with your employer.
• You were not dismissed for culpable reasons (so the dismissal is not your fault).
• There is no urgent reason for dismissal (it must be a neutral reason, such as reorganization).
• The employer must take into account the applicable notice period from your contract or collective labor agreement.
• You are immediately available for new work.
• You meet the so-called 'week requirement'.

Note the notice period The UWVwill not only look at the reason for dismissal in your application, but also at the notice period that your employer should have observed. We call that period the 'notional notice period'. Only once this period has expired can your unemployment benefit actually commence. If the notice period is not applied properly, there will be an income gap between your dismissal date and the moment your benefits start. In short: check carefully whether you meet all the conditions and whether the notice period has been processed correctly to avoid unpleasant surprises.

2. Is a VSO always better than a UWV procedure?
Not always, but a VSO offers more room for negotiation and extras.

3. Do I have to sign if my employer offers a VSO?
No, it is voluntary. Refusing means that your employer may go to the UWV.

4. Will I also receive compensation from UWV?
Yes, you will receive the transition compensation. Extras such as a training budget or outplacement are rarely awarded.

5. Can I avoid a UWV procedure?
Yes, often by concluding a VSO with your employer.

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Why Arslan Lawyers?

• Guiding employees with both UWV procedures and VSOs

• Negotiate for higher compensation and better conditions

• Check that your WW rights are secure

• Help make the right choice between UWV or VSO

Are you receiving a settlement agreement?

Have you received a termination agreement from your employer? Then it is smart to have this checked immediately. There is often room to negotiate better conditions, such as a higher severance payment, a longer notice period, or additional facilities (such as a training budget or exemption from work). Many employees don't know that such extras are possible—but a good negotiation can save you thousands of euros. Tip: Always have your VSO checked before signing. This way you can be sure that your unemployment rights are retained and that you do not leave money unnecessarily behind.

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Conclusion

A UWV dismissal provides certainty and is suitable for business economic reasons or long-term illness, but offers little room for negotiation. A VSO, on the other hand, provides flexibility and the opportunity for better conditions. Always seek legal advice to make the best choice.