Settlement agreement during a reorganisation: your rights

Short answer

In a reorganisation, an employer may propose a settlement agreement, but you are not obliged to sign. In a formal economic dismissal, the employer must, among other things, show why positions are being eliminated, apply the correct order of dismissal, and explore redeployment. With a VSO, you can negotiate a severance payment, end date, and other terms. Have your agreement checked before signing due to possible consequences for salary and unemployment benefits.

Which three points must the employer justify?

1. Economic necessity. What organisational or financial change makes the elimination of positions necessary?

2. Selection order for redundancy. In the case of interchangeable positions, the Dutch selection principle (afspiegelingsbeginsel) usually applies: within age groups, in principle, the employee who has been employed for the longest time is the first to be considered for dismissal. There are exceptions and special collective bargaining rules.

3. Redeployment. The employer must investigate whether a suitable position is available or will become available within the reasonable reassignment period, if necessary with training. In the case of a group, other group companies may also have to be considered.

Do you have to sign a VSO in the event of a reorganisation?

No. You may refuse the proposal, ask for time for advice or propose changes. Without your consent, the employer must follow another legally valid dismissal route. It is wise to remain available for work during the negotiations, unless you are exempted or unable to work due to illness.

For WW it is relevant that the initiative actually lies with the employer, that you do not become culpably unemployed and that the applicable notice period is taken into account. A legally correct VSO does not guarantee unemployment benefits: UWV also assesses your personal situation.

Calculation example: compensation and longer salary

An employee has 12 full years of service and a fixed salary of € 4,000 gross per month, excluding 8% holiday pay. With a monthly salary of € 4,320 relevant for the calculation, the indicative transition payment is € 17,280 gross (12 × 1/3 × € 4,320), without other wage components.

The employer offers € 15,000 gross in a VSO and termination as of 31 December. After assessment, it appears uncertain whether the redeployment obligation has been complied with. A possible negotiation commitment is € 22,000 gross, an end date two months later with continued payment of salary and release from work. This is a fictitious example, not a guaranteed outcome.

What does a social plan or collective dismissal mean?

In larger reorganizations, a social plan can exist with agreements on compensation, redeployment, guidance, and a departure scheme. Check whether the plan applies to you and whether the VSO correctly takes over all applicable entitlements. A social plan is not mandatory in every reorganisation.

In the case of the intended dismissal of 20 or more employees within three months in one WMCO area, the notification and consultation rules for collective dismissal may apply. VSO terminations can also be counted. This does not automatically entitle you to higher compensation, but it can be relevant for the procedure and the applicable arrangements.

Why not negotiate a reorganisation VSO yourself?

Negotiating on your own seems simple, but important rights can be lost unnoticed. Think of too low compensation, an too early end date, unclear bonus agreements, a non-expired non-compete clause, or an overly broad final settlement. An incorrect reason for dismissal or notice period can also affect your unemployment benefits position.

Our lawyers first investigate whether the dismissal is legally feasible. This allows us to determine what scope there is for a higher severance payment, release from work, extended salary, and better agreements. We always aim for the best achievable result and also advise when signing is not advisable.

Frequently asked questions about a VSO in a reorganisation

1. Do I have to sign if my position is eliminated?

No. Even in a reorganisation, consent to a VSO is voluntary. Without agreement, the employer usually has to demonstrate through UWV or a competent collective agreement dismissal committee that the dismissal meets the legal requirements.

2. Am I entitled to a transition payment in a reorganisation?

In a formal dismissal initiated by the employer, the statutory transition payment is generally due from the first day of employment, subject to statutory exceptions. In the event of termination by mutual consent, that compensation is not automatically due; therefore, explicitly agree on a severance payment.

3. Can my employer choose who is selected for redundancy?

Usually not just like that. In the case of interchangeable positions, the Dutch selection principle (afspiegelingsbeginsel) usually applies. Sometimes there are exceptions, a unique position or deviating collective labour agreement rules.

4. What if there are still vacancies within the company?

The employer must investigate appropriate redeployment options, if necessary with training. In the case of a group of companies, vacancies within other group companies may also be relevant.

5. Can I receive unemployment benefits after a VSO?

Yes, often yes, if the initiative lies with the employer, you do not become culpably unemployed, the notice period is respected and you meet the other unemployment benefit conditions. UWV makes the final decision.

6. Can I claim a higher severance payment?

You can propose and negotiate a higher severance payment. Whether improvement is feasible depends, for example, on the substantiation of the reorganisation, redeployment, a social plan and the risks of a dismissal procedure.

7. What if I am ill during the reorganisation?

Then special rules apply, including usually a prohibition on termination during the first 104 weeks. A VSO during illness can jeopardize entitlements to wages and the Sickness Benefits Act; ask for individual advice first.

Official sources

Further information: UWV – Dismissal for economic reasons: uwv.nl/nl/ontslag/ontslag-bedrijfseconomische-redenen

UWV – Dutch selection principle (afspiegelingsbeginsel): uwv.nl/nl/ontslag/afspiegelingsbeginsel

Dutch Government – Calculation of transition payment: rijksoverheid.nl/documenten/vraag-en-antwoord/ontslag/hoe-hoog-is-de-transitievergoeding-als-ik-word-ontslagen

Civil Code: including Articles 7:669, 7:670b, 7:671a, and 7:673 BW; Dismissal scheme; Law on notification of collective dismissals.