Settlement agreement in education

For many years, it has been possible to terminate employment relationships by mutual agreement, whereby—if done properly—one can be entitled to unemployment benefits (WW). In a dismissal by mutual consent, the employer and employee negotiate the terms under which the employment contract is ended, after which the negotiated result is recorded in a settlement agreement.

In education, terminating an employment relationship via a settlement agreement was less common. Often, the employment relationship was ended through a (pro forma) procedure at the subdistrict court.

Since the introduction of the Work and Security Act (Wet Werk en Zekerheid) on July 1, 2015, terminating the employment relationship via a settlement agreement has become more common in education as well. However, the pro forma procedure at the subdistrict court is still regularly followed in primary education due to the requirements set by the Participation Fund (Participatiefonds). But prior to this procedure, the parties involved will negotiate the dismissal terms, making the court procedure more of a 'formality'.

Unemployment Benefit

In general, entitlement to an unemployment benefit exists upon termination of the employment relationship if:

• the initiative for termination lies with the employer;
• the employee cannot be seriously blamed for the dismissal;
• the notice period applicable to the employer is observed.

These conditions for entitlement to unemployment benefits also apply to employees in education.

Most employees who are dismissed are entitled to a transition compensation. The amount of the transition compensation is calculated using a formula that mainly takes into account the length of service and the salary.

Exceptions to the right to transition compensation

The main exceptions where there is no entitlement to transition compensation are:

• the employee has acted with serious culpability;
• the school employee resigns voluntarily;

Serious culpable behavior
If an employee has acted with serious culpability and is dismissed for that reason, it is understandable that they are not eligible for transition compensation. After all, that would be a ‘bonus’ for misconduct. Examples of serious culpable behavior include: theft or embezzlement, violent behavior, or sexual harassment.

Voluntary resignation
The employee who voluntarily terminates the employment relationship is not entitled to transition compensation, nor to unemployment benefits.

Transition Compensation alongside Extra-Statutory Benefits?

Employees who are dismissed without fault often have the right to unemployment benefits. Employees in education usually even have a claim to extra-statutory unemployment benefits upon dismissal. This is based on the collective labor agreements (CAOs) concluded in the education sector.

The question is: is there a right to transition compensation in addition to the extra-statutory benefit?
The answer to that question is: YES. The extra-statutory benefit is not intended to replace the transition compensation.

Transition Compensation and the Settlement Agreement

A transition compensation is not mandatory if employer and employee enter into a settlement agreement. The parties are completely free to agree on any severance payment. Often a higher compensation is agreed upon if the employer has no valid reason for dismissal, and a lower compensation if there is a valid dismissal ground. Of course, the severance pay is often also related to the length of service, the salary, and the age of the employee.