Signing a settlement agreement (VSO) is a big decision. As soon as you sign, your employment contract is terminated and the agreements stated in black and white apply. Employers often present the agreement as a standard document, but in reality there are many points to pay attention to and that are negotiable.
In this article we explain what you should pay attention to before signing a VSO, which mistakes are often made, and how you can avoid missing out on rights or money.
What is a settlement agreement?
A settlement agreement is a written agreement between employer and employee to terminate the employment relationship. This is also called dismissal by mutual consent. Instead of a long and often complicated legal procedure, you discuss the terms of departure with your employer and record them in the agreement. This provides clarity for both parties and prevents unnecessary conflicts.
Such an agreement is often used if you decide to part ways. Moreover, a settlement agreement usually increases the chance that you will be eligible for unemployment benefits. The agreements you make together ensure that the dismissal is handled officially and properly.The agreement includes:
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The end date of your employment
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The reason for termination
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The amount of the severance payment
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Any agreements on clauses (such as a non-competition clause)
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Arrangements regarding holidays, certificate and company property
What is the difference between a settlement agreement and a termination agreement?
The terms settlement agreement and termination agreement are similar and are often used as synonyms, but there is a difference between the two.- Settlement agreement: This is an agreement that is specifically regulated by law. This means that clearer rules apply and you have more certainty that the agreements made will hold up, even if discussions arise later.
- Termination agreement: This term is more general and not legally defined. It gives a little more freedom in the agreements, but these are legally less solid. In the event of a conflict, agreements in a termination agreement can be more easily brought into question.
7 important points to check before signing
1. Severance pay
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Is there a transition compensation?
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Has the compensation been calculated correctly (including holiday pay and fixed allowances)?
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Can you negotiate for extra months of salary?
👉 Example: An employee was offered €6,000. After legal review, it turned out that his transition payment was actually €8,500. After negotiations, he also received an extra monthly salary.
2. End date and notice period
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Does the end date correspond with the legal notice period?
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An incorrect date can jeopardize your Unemployment Benefit.
👉 Example: An employee was given an end date that was one month early. The UWV therefore refused his unemployment benefit. Thanks to correction by a lawyer, the correct notice period was applied and he still received benefits.
3. Non-competition and non-solicitation clause
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Is there a non-competition clause that prevents you from taking on new work?
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Ask to have this canceled or limited.
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If it persists, you can claim compensation.
4. Holidays and holiday pay
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Do you have any vacation days left?
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Agree that these will be paid or fully withdrawn.
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Also check whether the holiday pay has been included in the final bill.
5. Credential and reputation
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Make sure that the reason for dismissal is described neutrally (e.g. “reorganization” or “in good consultation”).
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Ask for a positive testimonial or reference.
6. Exemption from work
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Ask for exemption from work with pay during the notice period.
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This gives you time to apply for jobs while your income continues.
7. Reimbursement of legal costs
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The employer often reimburses (part of) the costs of a lawyer.
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This is common and prevents you from having to pay yourself.
Checklist: what should you do before you sign?
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📄 Check whether the compensation has been calculated correctly
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📅 Check whether the end date matches the legal notice period
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📝 Check all clauses (competition, relationship, confidentiality)
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🏖️ Check whether vacation days and holiday pay have been processed
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🕑 Remember that you always have 14 days to change your mind
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⚖️ Have the agreement checked by an employment lawyer
Common mistakes when drawing a VSO
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Sign too quickly under pressure from the employer
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Forgot that a non-competition clause applies
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Accept incorrect end date with loss of unemployment benefit
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Do not include reimbursement for legal costs
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No neutrality regarding reasons for dismissal, which may cause future employers to think negatively
Practical examples
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Example 1: An employee signed too quickly. It later turned out that he could no longer claim unemployment benefits because the notice period had been applied incorrectly.
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Example 2: An employee forgot to claim his vacation days. This earned him €1,200 less.
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Example 3: An employee only received a neutral reason for dismissal in his VSO after legal assistance, which allowed him to find a new job without any problems.
Frequently asked questions (FAQ)
1. Do I have to sign a settlement agreement immediately?
No, always take time to think about it and have the agreement checked. You never have to simply accept a settlement agreement—your employer cannot force you to do so. Both parties must fully agree with the agreements contained therein. Take the time to read everything carefully and have it checked before you sign anything.
2. Am I entitled to unemployment benefits if I sign?
Yes, provided the VSO has been drawn up correctly with a neutral reason for dismissal and the correct notice period.
3. What if my employer does not offer compensation?
Then you can negotiate. Often more is feasible than the transition compensation alone.
4. Can my employer refuse to reimburse legal costs?
It is customary to reimburse this. If not, this can be part of the negotiation.
5. What happens if I don't sign?
Then your contract will continue to exist and the employer will have to go to UWV or the subdistrict court judge to request dismissal.
Why Arslan Lawyers?
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Expertise in settlement agreements and dismissal
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Often receive higher compensation and better conditions
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Check that your WW rights are secure
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Costs are often recovered from the employer