Losing your job: The do's and don'ts of your termination agreement

The Legal Expat Desk (LED) is an information hub by GMW advocaten, advising the expat community in the Netherlands since 2006. LED regularly publishes articles covering a wide spectrum of legal topics.

When your employer wants to stop your employment contract, it is likely that he will ask you to come to an agreement on the terms and conditions of the termination.

What is your position in such a scenario, and what is of importance when considering agreeing to a termination agreement?

Dutch law on termination of employment

In short, normally an employer must have reasonable grounds in order to be able to terminate an employment contract. The sub-district court or the UWV will decide whether such a reason is indeed applicable.

If so, the employment contract will be terminated, taking into account the statutory, or agreed-upon, notice period. When the total duration of the employment has been 24 months or longer, you are entitled to a transitional allowance.

Reason for a termination agreement

The above rules do not apply when the employer and employee both agree on the termination of the employment contract.

This means that the employer does not need reasonable grounds to terminate the contract. The grounds for termination, or lack thereof, will not be checked by either the sub-district court or the UWV. This eliminates a risk for the employer as he can skip a procedure with an uncertain outcome.

A termination agreement can have advantages for you as an employee as well: no procedure is needed and in most circumstances there is room to negotiate better terms and conditions of the termination compared to the statutory legal entitlements.

The do’s and don’ts of termination agreements

So, your employer offers you a termination agreement, and you are willing to cooperate. Now what?

› DON’T agree to the termination agreement immediately

Make sure you are well aware of what you are signing before doing so. Parties can agree upon almost anything they want. Therefore, for example, the transitional allowance does not have to be offered - there can be a higher or lower severance package as well.

› DO check whether your legal entitlements have been considered

Check whether your entitlements from the "normal" legal procedure have at least been taken into account. Make sure the notice period also meets the legal requirements. Also make sure to calculate the transitional allowance you’re entitled to.

Be aware that these two elements are statutory: if your employer would have to go to court or the UWV, you would also be entitled to these (except in some cases of summary dismissal).

Since the employer won’t have the risk of the uncertain outcome of such a procedure in this scenario, this gives you room to negotiate better terms than the statutory ones.

As mentioned before, parties can agree to almost anything. For example, a non-competition clause can be waived, or a compensation for outplacement can be agreed upon.

› DO make sure you fully understand and are satisfied with the agreement

Only agree with the termination agreement when you fully understand the contents and are satisfied with its terms and conditions.

Regret that you signed in hindsight? You have two weeks to dissolve the termination agreement, or three weeks if this right is not taken up in the agreement.

It’s important to note that you can only dissolve a termination agreement regarding a specific work contract once in six months.

If your employment continues and there is a second termination agreement within six months of the first, your consent for the second agreement cannot be revoked. The second agreement to end the employment will most likely be a definite one.

Understand your situation

There are many more clauses which can, and sometimes should, be taken up in a termination agreement. Besides, your legal position largely depends on your specific circumstances.

Has your contract been terminated and are you unsure of your legal position or how to negotiate the best terms possible? Do seek professional advice to prevent any mistakes.

And a final note in this regard: in such situations it is sometimes also possible to negotiate financial compensation for the costs of professional advice!
 

Willemijn Lenders is specialised in employment law at GMW advocaten / Legal Expat Desk. She can help you to understand and negotiate your termination agreement. For more information, please contact her directly.