The end of the affair – time to say goodbye

Nothing lasts forever, and that wisdom also applies to the employment contract. Dutch dismissal law is, however, sometimes quite opaque, and complex. No wonder that many employers and employees resort to a settlement agreement, in Dutch: vaststellingsovereenkomst (conveniently abbreviated to VSO).

Although every VSO is different, depending on various circumstances (I already apologize for this typical lawyer lingo), there are some recurring themes. Make sure you address these – or have your legal advisor do that for you – before parting way. Let us have a look at them.

1.     Know when (not) to sign a VSO. In some cases, signing a VSO is detrimental to your legal position, for example, in case you are ill, pregnant or if there is a so-called transfer of undertaking. In other cases, it may be the best way to go, for example when you already have a new job and would like to leave your current job at very short notice. Never decide without any legal advice!

2.     The reason. What is recorded about the reason for termination of the employment contract? To secure unemployment benefits, in any case record that the employer takes the initiative to terminate the employment contract and that you are not to blame for the termination of the employment contract.

3.     The date. Has the correct notice period been taken into account at the termination date? Make sure that this notice period is observed, otherwise you run the risk that the UWV will not grant you unemployment benefits for the first period after the end of the employment contract. In that case, you may miss several months of unemployment benefits, and you may be without income. You can of course also agree that a loss of unemployment benefits will be compensated with a higher severance payment.

4.     Severance payment. Is a reasonable severance pay included? For example, is this in accordance with the statutory transition payment? Or do you agree on any other compensatory arrangement? Be aware that there is no right to any severance payment in case of a VSO. However, since the employer does not have to go to the UWV or the cantonal judge to review the dismissal in case both parties have agreed on a VSO, he is usually willing to include a severance payment.

5.     Activities until end date. Will you continue to work, or will you be released from doing any work (“garden leave”) so that you can apply for a job? Do you have to take (holiday) leave during this period or does your employer pay for this? What happens if you find a job before the end date?

6.     Non-competition clause / non-solicitation clause. Is there a non-competition or non-solicitation clause in your contract? You can try to include in the VSO that this will be canceled or at least limited. Please note that many clauses of non-competition are actually invalid, and that they have only been drafted to keep you from leaving the company. In case of doubt: call your lawyer.

7.     (Cost of) legal advice. It is wise to have your VSO checked by a legal adviser or to ask for legal advice. Unless you are insured, you can agree that the costs of legal assistance will be paid by your employer (usually: up to a maximum). Take into account that the costs will be around € 750 – € 1250 in standard cases.

8.     Final settlement. Make sure you address the ‘loose ends’, such as unused holidays, holiday allowance and other financial compensation such as a 13th month, rights from a stock option plan or a bonus. Since the parties to a VSO usually grant each other final discharge, it is important to have arranged these matters.

9.     Testimonial. Your employer is obliged to issue you with a certificate on request upon termination of your employment contract. Of course, it would be preferable that he will give you a positively formulated testimonial.

10.  Reflection period. Your employer must state in the VSO that you have the right to change your mind (without having to give any reason!) within 14 days after agreeing to the VSO. If your employer does not do this, the cooling-off period is not 14, but 21 days.

With these tips in mind, you know what to be aware of ­for at least for a good part of the VSO!