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Settlement agreement, transition allowance, dismissal

Wage claim omitted from a settlement agreement

Wage claim omitted from a settlement agreement

Full and final discharge may mean that salary arrears, overtime or allowances are lost permanently. Check every amount before signing.

A practical example: salary arrears lost through full and final discharge

A settlement agreement will usually contain full and final discharge: once the agreed terms have been performed, the employer and employee can in principle no longer bring further claims against each other. An omitted wage claim may therefore become irrecoverable.

What happened?

After his employment ended, an employee claimed outstanding salary. He argued that the agreement reached had settled only part of the dispute. The employer maintained that the parties had concluded a comprehensive settlement containing full and final discharge.

The judgment is published as ECLI:NL:RBNHO:2016:6927.

What did the court decide?

The wording and the circumstances in which the agreement had been concluded showed that the entire dispute had been settled. The wage claim was therefore covered by the full and final discharge. In this case, the risk that the employee may have assumed otherwise fell on the employee.

Practical lesson
Before signing, identify every pay component and expressly include each outstanding item, or clearly exclude it from the full and final discharge.
Free settlement agreement review

Do not sign until every pay item has been checked

An omitted amount may become permanently irrecoverable after full and final discharge.

Request a free review

Which amounts should you check before granting full and final discharge?

Open the items that may apply to your employment relationship.

Salary arrears

Check every pay period and record the amount, payment date and any statutory increase or interest.

Overtime and additional hours

Check time records, collective labour agreement provisions and any time-off-in-lieu balance.

Holiday allowance and unused holiday

Record accrued holiday allowance and unused holiday separately in the final settlement.

Bonus, commission and other variable pay

Determine what variable pay has already been earned and how an ongoing assessment period will be settled.

Allowances and expenses

Consider shift allowance, on-call allowance, travel expenses and expense claims that have not yet been reimbursed.

Sickness and salary corrections

Check deductions, waiting days and any dispute concerning continued payment of salary.

Pension contributions

Expressly address any arrears or corrections in pension contributions.

Legal costs

Record a separate employer contribution towards the costs of legal assistance.

Full and final discharge

Expressly list known exceptions and check whether unknown claims are being waived knowingly.

How to prevent a wage claim from disappearing

1. Gather your pay documents

Compare the employment contract, collective labour agreement, payslips, time records, bonus schemes and expense claims.

2. Prepare a complete final settlement

Record the amount, calculation, payment deadline and any dispute for each pay item.

3. Limit the full and final discharge

Include every item in the settlement agreement or expressly exclude a disputed or unknown claim.

Template settlement agreement

An editable template helps you record arrangements concerning salary, the final settlement, severance pay and full and final discharge carefully.
€ 24,50

Sample letter: employee’s initial response

This letter allows you to remain available for work, preserve your salary entitlement and request time to have the termination proposal reviewed.
€ 19,50
About the author

Mr. Edwin van Jaarsveld

Edwin van Jaarsveld has over 20 years of experience with dismissal cases and regularly publishes about them.

Edwin’s expertise can also be found on:

Does your settlement agreement include every pay item?

Have the final settlement and full and final discharge reviewed before signing.

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