Severance pay in a settlement agreement: is the offer sufficient?

Short answer: how high is the severance payment in a VSO?

In a settlement agreement, the employer and employee agree on the severance payment themselves. The statutory transition payment (1/3 of monthly salary per year of service) is not automatically due in the case of mutual consent dismissal, but often serves as a useful point of comparison. A higher payment is often possible if the reason for dismissal is weak or the employer wants to avoid a procedure. A later end date, continued payment of salary, and retention of a bonus can also be financially advantageous.

Note: You are not obliged to accept the first offer.

A VSO payment is negotiable; a higher payment is often possible!

But also keep in mind that you should preferably not give up your holiday entitlement or bonus.

And also consider the correct end date and notice period. This is important for unemployment benefits.

Have the full financial package assessed before you sign! Our dismissal specialists can often negotiate a better arrangement, including a higher payment for employees!

When can you negotiate a higher severance pay?

In case of reorganisation or economically driven dismissal

The employer must be able to substantiate the economic necessity, the correct dismissal order, and reassignment possibilities. Uncertainties in these areas may lead to negotiations for higher compensation, a later termination date, or additional guidance towards new work.

In case of insufficient performance

In case of underperformance, an employer usually must be able to demonstrate a careful file and a realistic chance for improvement. If a proper improvement trajectory is missing, this can strengthen your position at the negotiation table.

In case of a disturbed employment relationship

A conflict is not automatically sufficient for dismissal. The seriousness and duration of the disturbance and any attempts at remediation may be relevant. Parties can agree on higher compensation to terminate the employment relationship amicably.

In case of illness or burnout

During the first two years of illness, there are generally special rights to continued salary payment and protection against dismissal. A VSO can also lead to problems with Sickness Benefits or other benefits. Do not negotiate here based solely on the offered compensation: sometimes it is legally wiser not to sign at all.

How is the severance pay properly recorded in the VSO?

A higher compensation has little value if the agreement is unclear or if other claims are inadvertently offset. Therefore, preferably explicitly record:

The exact gross amount and a clear, unconditional payment obligation (unless special conditions are consciously agreed upon).

The payment date and how to handle a late payment.

That the compensation is separate from salary, holiday allowance, holiday entitlement, bonus, and other accrued entitlements.

The agreed end date, the applicable notice period, and the arrangements regarding release from work.

What happens with non-compete and non-solicitation clauses, study costs, and legal fees.

That full and final discharge is appropriate only after all relevant claims have been inventoried and correctly arranged.

A VSO compensation is in principle taxable. The payroll tax withheld by the employer is a prepayment; the final tax depends on your total income. The amount may also affect allowances and, depending on your situation and reference dates, wealth-dependent schemes. Seek tax advice if necessary.

Client experiences

The experiences below are brief summaries of existing reviews published on Vaststellingsovereenkomst.org. They are not guarantees for future cases.

Client experience: Ms Nathalie Geradts and the negotiation Carla ten Bulte describes that the firm initial counterproposal of Ms Nathalie Geradts was important in achieving a settlement agreement much more favourable to her. In addition to the financial result, she also emphasizes the importance of a dignified conclusion of the employment relationship.

Client experience: higher compensation and holiday entitlement In another published review, a client states that the legal guidance led to higher severance pay and the payment of outstanding holiday entitlement. This shows why reviewing the entire arrangement is more important than negotiating just one amount.

View the original reviews via the review page on the website.

This is how our lawyers review and negotiate your proposal

1. Legal and financial analysis We review your employment contract, the offered settlement agreement, salary details, and the actual reason for dismissal. We then investigate the amounts due and negotiable and the possible consequences for your unemployment benefits position.

2. Advice and negotiation strategy We discuss what is reasonable, legally defensible, and practically feasible, including possible counterproposals regarding compensation, end date, and other conditions.

3. Negotiating and legally formalizing If you authorize us to do so, we conduct the negotiations with your employer and review the final text. In advance, we make clear agreements about the costs of follow-up work.

Frequently asked questions about termination compensation in a settlement agreement

1. Do I automatically have the right to a transition payment in a settlement agreement?

No. In a termination by mutual consent, the statutory transition payment is not automatically owed. However, you can agree on a severance payment, in which the transition payment often serves as a reference point.

2. Can I receive more than the transition payment?

Yes. The compensation in a settlement agreement is negotiable and can be higher than the statutory transition payment. The reason for dismissal, the file, and the conditions you provide are important in this regard.

3. How do I know if my severance payment is too low?

Compare the offer with your length of service, salary and the statutory transition payment, but above all look at the chance that your employer can legally proceed with the dismissal. Also have the end date, bonus and other entitlements assessed.

4. Is the severance pay gross or net?

A VSO usually calls the severance pay gross. The employer withholds payroll tax; how much you ultimately have left net depends on your total income and personal tax situation.

5. Do holiday entitlement and bonus have to be paid on top of the compensation?

In principle, accrued entitlements belong separately in the final settlement, depending on the contract and applicable rules. Check that the VSO does not inadvertently add all your rights to one total amount.

6. Can a later end date be more advantageous than a higher compensation?

Yes. Extra months of salary can also provide pension accrual, holiday pay and other employment conditions. Moreover, a correct end date can be important for the moment when unemployment benefits take effect.

7. Can I negotiate if the employer says that the offer is final?

Yes, you do not need to sign a VSO. Your employer may decide not to provide any more compensation; A legal specialist can assess your position and advise whether a counter-proposal is useful.

8. What does help with negotiating my severance pay cost?

With us, the first advice is free. For further guidance, we will discuss the costs in advance; we often manage to get the employer to reimburse the costs of legal assistance, so that the employee does not have any costs himself.

Official sources

UWV – Transition allowance after dismissal or end of contract: uwv.nl/nl/ontslag/transitievergoeding

UWV – Dismissing an employee / termination by mutual consent: uwv.nl/nl/ontslag/werknemer-ontslaan