Severance Payments Under Settlement Agreements for Tilburg Workers
A settlement agreement severance payment provides Tilburg employees with a financial safety net at the end of their employment through a mutual agreement with their employer. This arrangement between employer and employee sets out the terms of termination—such as the compensation amount—and offers greater predictability than a unilateral dismissal. It is a popular approach in the region to avoid conflicts and facilitate a smooth transition to new employment, particularly in dynamic sectors like Tilburg’s manufacturing industry.
What Does a Settlement Agreement Involve?
A settlement agreement (SA) is a legally binding contract in which the employer and employee in Tilburg agree on how the employment relationship will end, based on Article 7:900 of the Dutch Civil Code (BW). Unlike termination through the Zeeland-West-Brabant District Court in Breda or the UWV (Employee Insurance Agency), the employee consents to the termination, meaning notice periods or mandatory transition payments may not always apply. However, an SA typically includes a severance payment to support the employee, especially if the termination is not their fault.
The agreement must be in writing and often includes the end date, a non-disparagement clause for benefits, and the payment of compensation. Since the Wet Werk en Zekerheid (Employment and Security Act) came into effect in 2015, SAs have become more common, as they allow termination without formal intervention if both parties agree. In Tilburg, legal experts from the Juridisch Loket (Legal Helpdesk) advise always seeking professional advice before signing.
The Legal Basis of Severance Payments
While a severance payment in an SA is not mandatory, it often aligns with the transition payment under Article 7:673 BW, capped at one month’s salary per year of service, with a maximum of €89,000 (2023, subject to indexing). For Tilburg employees with more than two years of service, this builds up to 1/3 of a month’s salary per year for the first ten years, and 1/2 of a month’s salary thereafter.
Article 7:681 BW outlines transition payments upon termination, but in an SA, negotiations can secure a higher ‘above-legal’ amount, such as a bonus or multiple months’ salary. Crucially, the SA must not affect your WW (Unemployment Insurance) rights, in compliance with WW regulations. If the SA fails to meet legal standards, the subdistrict court in Breda (Rechtbank Zeeland-West-Brabant) may declare it invalid (Article 7:900(2) BW). In cases of restructuring or illness in Tilburg companies, additional rules from the Wet verbetering poortwachter (Gatekeeper Improvement Act) or local collective labor agreements (CAOs) may apply, potentially increasing the compensation.
Practical Examples of Severance Payments
Consider a Tilburg-based IT professional with five years of experience who becomes redundant due to restructuring. The employer proposes an SA with a transition payment of 5/3 months’ salary (approximately 1.67 months) plus a goodwill month, totaling around 2.67 months’ salary, excluding vacation pay. After agreement, payment occurs within a month, and the employee retains WW rights.
Or take a retailer in a Tilburg department store dismissed due to performance issues after warnings. The SA provides one month’s salary, below the transition standard, but includes outstanding bonuses. This saves time and costs compared to a case before the Rechtbank Zeeland-West-Brabant, where the outcome is uncertain.
In Tilburg’s healthcare sector, with favorable CAOs, an SA may include 1.5 months’ salary per year of service, plus compensation for missed pension contributions, tailored to the local labor market.
Rights and Obligations Regarding Severance Payments
Employee Rights:
- Right to fair compensation, at least the transition payment for employer-initiated termination.
- Right to legal advice from a union or lawyer via the Juridisch Loket Tilburg (Article 7:670b BW); without this, the SA may be invalid.
- Protection against unreasonable terms: the amount cannot fall below the legal minimum in cases of forced termination.
Employer Obligations:
- Pay the compensation within the agreed term, typically within a month of termination.
- Provide a neutral statement for WW applications to the UWV.
- Not impose a non-compete clause without additional compensation (Article 7:653 BW).
Employee Obligations:
- Voluntarily sign the SA after seeking advice, e.g., from the Juridisch Loket Tilburg.
- Waive further claims after signing, except in cases of material errors.
- Collaborate in the transfer of duties.
If the employer fails to pay, you can pursue enforcement through the subdistrict court in Breda, with support from the Municipality of Tilburg for legal aid.
Comparison: Settlement Agreement vs. Other Termination Methods
| Aspect | SA with Compensation | Termination via Subdistrict Court (Breda) | Termination via UWV |
|---|---|---|---|
| Compensation | Negotiated, often transition + bonus | Transition + possible fair compensation | Transition only, no extras |
| Procedure Duration | Quick resolution if agreed | Months with hearings | Weeks, with appeal options |
| WW Rights | Retained via neutrality clause | Retained if termination is valid | Retained for urgent causes |
| Costs | Low, no court fees | Court fees €85–€500 | None, lawyer optional |
Frequently Asked Questions
Do I Always Have to Accept a Severance Payment in an SA?
No, you are not required to sign an SA. You have a 14-day cooling-off period after signing (Article 7:670b(3) BW) and should seek advice, e.g., from the Juridisch Loket Tilburg. Resist if the terms are unfair and consider alternatives via the Rechtbank Zeeland-West-Brabant.