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Settlement Agreement

If the parties have mutually agreed to terminate an agreement, the agreements made between the employee and the employer are often laid down in a settlement agreement.

A settlement agreement can be concluded both in case of individual grounds for dismissal (such as unsatisfactory performance and a damaged working relationship) and in case of collective grounds for dismissal (such as reorganisation and business closure).

Agreeing to a settlement agreement does in principle not constitute a ground for the UWV to refuse unemployment benefits.
The settlement agreement must, however, be worded carefully.

Various matters can be arranged in the settlement agreement. These include as to whether the employee is entitled to compensation, the end date of the employment agreement, whether the employee will be released to perform activities, whether an employee will be bound by post-contractual clauses (like a non-solicitation or a non-competition clause and a penalty clause) and any contribution towards the costs of outplacement and legal fees.

Often, the agreements in the settlement agreement are worded in such a way that the parties also grant each other full and final discharge.

An employee may annul the agreement without giving reasons during a period of two weeks from the time that the agreement has been concluded.
An employer may annul the agreement in case of a vitiated consent. In that event, the agreement was formed under a misrepresentation.

For many employers, entering into a settlement agreement is not an everyday job. It can, therefore, be advisable to seek advice so that you know what, in the circumstances, will be a reasonable proposal to your employee.
It is not recommended for employees to agree to the termination of the employment agreement without seeking prior legal advice.

All-Right Advocatuur can represent both employers and employees in negotiations about the termination of an employment agreement.

Check settlement agreement  pijl


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