Settlement agreement for economic reasons and outplacement

In the Netherlands, a settlement agreement (vaststellingsovereenkomst, VSO) for economic reasons means that employer and employee mutually agree to end the employment due to business or financial circumstances. Typical examples include reorganisation, cost-cutting or the discontinuation of certain positions. The arrangements are laid down in a written agreement, which is also important for unemployment benefit (WW) rights with the Dutch Employee Insurance Agency (UWV). This article explains how such a VSO works, what your rights are and how outplacement can support your next career step.

What are business-economic reasons under Dutch labour law?

Business-economic reasons are company-related causes that lead an employer to abolish positions or change the organisation. According to Dutch labour law, an employer may then apply for dismissal at the UWV or agree on a mutual termination through a settlement agreement. It is not about performance or behaviour, but about the financial and organisational situation of the company. This changes the tone of the conversation and the kind of solutions that are appropriate.

Examples include declining turnover, structural losses, automation, outsourcing or a merger that creates overlapping roles. Employees can then be declared redundant, meaning their job disappears even though they may perform well. This is emotionally challenging, because the reason for dismissal is not linked to personal failure. In such situations, the combination of a fair VSO and professional outplacement support is often the most constructive route.

• Economic reasons relate to the employer’s financial and organisational situation.
• Individual performance is in principle not the cause of dismissal.
• Redundancy means that the role disappears, not that the employee is inadequate.
• The UWV checks economic grounds in a formal procedure or indirectly via the WW application.

What does a VSO for economic reasons contain?

A settlement agreement is a written contract in which employer and employee agree to terminate the employment relationship by mutual consent. When the reason is economic, the VSO is usually an alternative to a formal UWV dismissal procedure. The document sets out the end date, notice period, any severance payment and arrangements concerning outplacement or training.

Dutch law requires that the employee signs voluntarily and is given enough time to consider the proposal. There is a statutory reflection period of at least 14 days after signing, during which the employee may revoke consent without giving a reason. This period can be used to obtain legal advice, but also to discuss the impact of the VSO with a career or outplacement specialist.

• The VSO records all termination arrangements in writing.
• The employee has a legal reflection period of 14 days after signing.
• The reason for termination must be clearly defined as business-economic.
• A balanced VSO combines legal security with realistic career prospects.

WW entitlement and a settlement agreement for economic reasons

For employees, the most important question is often whether a VSO affects their right to unemployment benefits (WW). The UWV mainly looks at the reason for termination and whether the unemployment is considered to be the employee’s fault. If the agreement clearly states that the dismissal is due to economic reasons and if the fictitious notice period is respected, WW entitlement is usually preserved.

The wording of the clause describing the reason for termination is therefore crucial. It should not suggest conflict, serious misconduct or poor performance. In addition, the agreed end date must take into account the notice period that would have applied if the contract had been terminated through the UWV or the court. If this fictitious notice period is too short, the UWV may postpone the start of WW payments.

• WW rights depend on the reason for dismissal and the question of fault.
• The VSO must clearly refer to business-economic grounds.
• The fictitious notice period should be respected in the end date.
• Legal or specialist advice helps to safeguard WW entitlement.

The role of outplacement in a VSO based on economic grounds

When positions disappear for economic reasons, the issue is not who is to blame, but what the next step will be. Outplacement is a form of professional guidance towards new work, usually funded by the employer and agreed in the settlement. It helps employees deal with the emotional impact of job loss while also taking concrete steps towards a new role.

Care4Careers specialises in outplacement programmes for employees affected by reorganisation and economic dismissal. A typical programme includes personal assessment, labour market orientation, CV and LinkedIn optimisation, networking strategies and interview coaching. For some, support in starting as a self-employed professional is relevant; for others, the focus is on finding a comparable role in another organisation.

• Outplacement provides structured support from dismissal to new work.
• Programmes combine emotional support with practical job search tools.
• Employers often include outplacement funding in the VSO.
• Professional guidance increases the chance of finding sustainable, suitable work.

Key elements of a sound economic VSO

Although each case is unique, there are several core components that should be addressed in a settlement agreement based on economic reasons. These include a clear description of the business-economic grounds, the agreed end date, the applicable notice period and the handling of outstanding holidays, pension contributions and other employment conditions. The agreement should also specify the amount of severance pay, at least equal to the statutory transition payment as a reference point.

In addition, it is advisable to include explicit arrangements on outplacement or other career support. The agreement can define the budget, the type of programme and the period during which the employee can start the trajectory. Further clauses often cover confidentiality, the return of company property and the treatment of non-competition or non-solicitation clauses, which may be relaxed to improve the employee’s labour market opportunities.

• Clear description of the economic grounds for dismissal.
• End date and notice period aligned with legal requirements.
• Transparent treatment of severance, transition payment and final settlement.
• Explicit arrangements on outplacement and any restrictive covenants.

Outplacement as an integral part of the agreement

Rather than treating outplacement as a separate extra, it is wise to consider it an integral part of the settlement package. Including a clearly defined outplacement budget and referring to a specialised provider creates clarity and avoids later disputes. It also sends a signal that the employer takes responsibility for supporting the employee’s transition to new work.

By combining a carefully drafted VSO with a well-structured outplacement programme, both parties can move forward more constructively. The employee gains perspective and professional support, while the employer reduces the risk of long-term conflict and reputational damage. In economic dismissals, this combination often proves to be the most balanced and humane solution.

• Integrate outplacement explicitly into the VSO text.
• Define budget, duration and the general scope of support.
• Use specialist guidance to match legal and career aspects.
• Ensure that the agreement offers both security and perspective.

Conclusion: economic VSO and outplacement as a bridge to a new role

A settlement agreement for economic reasons is a widely used instrument in Dutch practice when jobs disappear due to reorganisation or structural financial issues. If drafted carefully, it protects WW rights, offers a fair financial arrangement and creates space for a respectful ending of the employment relationship. The real added value arises when outplacement is explicitly included, turning the VSO into a bridge towards a new professional future.

By combining legal safeguards, clear financial arrangements and targeted career support, both employer and employee can navigate a difficult situation in a more constructive way. This approach acknowledges the impact of job loss while actively working towards new opportunities on the labour market.