Settlement agreement: mistakes that could cost you unemployment benefits

The biggest pitfalls of settlement agreements revolve around your unemployment benefit: one incorrect wording and the UWV refuses or delays the payment. The classic mistakes are a non-neutral ground for termination, an agreement “at one’s own request,” an end date that ignores the notice period, and signing while you are sick. Additionally, signing too quickly, missing the cooling-off period, and an overly broad final discharge cost money. Below are the mistakes that can cost you your unemployment benefits, and how to avoid them.

The short answer

• Non-neutral grounds: a reproach or urgent reason in the text results in the loss of unemployment benefits.
• At own request: initiative by the employee means culpable unemployment.
• Notice period ignored: an early end date delays unemployment benefits.
• Signing while ill: loss of entitlement to both Sickness Benefits and Unemployment Insurance (WW) benefits.
• Signing too quickly: always use the 14-day cooling-off period.

Pitfall 1 — a non-neutral ground for termination

The UWV assesses whether the employee has become “culpably unemployed.” If the agreement contains a charge—poor performance, a conflict attributed to the employee, or even the phrase “urgent cause”—the UWV may conclude that the employee is at fault and refuse unemployment benefits. The wording must be neutral: termination at the employer’s initiative, without urgent cause and without culpable conduct on the part of the employee.

Pitfall 2 — “at their own request”

This is the most expensive mistake. If it states that the employee is leaving “at their own request” or taking the initiative themselves, the UWV views this as voluntary resignation — no unemployment benefits. The agreement must explicitly state that the employer wishes to terminate the employment. Also, be wary of more subtle wording, such as “decided by mutual agreement to let the employee leave,” which can give the impression that the initiative lay with the employee.

Pitfall 3 — ignoring the notice period

The end date must take into account the applicable notice period — the so-called fictitious notice period. If an end date that is too early is agreed upon, unemployment benefits will start later: the UWV calculates as if the notice period had been observed. During that interim period, you will receive neither a salary nor benefits. Calculate the notice period based on your years of service and collective labour agreement, and ensure that the end date aligns with this.

Pitfall 4 — drawing during illness

A sick employee who signs a settlement agreement runs a significant risk. The UWV (Dutch Social Security Agency) can refuse both sickness and unemployment benefits because the employee is cooperating in terminating an employment relationship in which they would still receive sick pay. If you are sick, do not sign without advice. Different rules apply, and sometimes a completely different route is required.

Pitfall 5 — signing too quickly and missing the cooling-off period

Employees sometimes sign under pressure, for fear of forfeiting the offer. This is unnecessary: ​​there is a statutory cooling-off period of 14 days (Article 7:670b of the Dutch Civil Code), and even after signing, you can revoke the agreement within that period without giving a reason. If the agreement does not mention this right, the term becomes three weeks. Always use the cooling-off period to have the text checked. An employer who insists on signing immediately is precisely a reason for extra caution.

Pitfall 6 — an overly broad final discharge

The final discharge concludes the agreement: the parties hold no further claims against each other. Anyone who signs without first settling all outstanding items cannot claim anything afterwards — unpaid vacation days, a bonus, a pension issue, or an ongoing personal injury claim evaporate. Ensure that everything is settled before the discharge, and explicitly exclude any points you wish to retain.

Pitfall 7 — overlooking special clauses

An existing non-compete or non-solicitation clause remains in effect after termination, unless the agreement waives it. Anyone who fails to arrange this may be blocked from starting a new job. Since the employer wants your cooperation, waiving it is a logical point for negotiation — but only if you remember to do so. Also arrange for a letter of recommendation and keep confidentiality reasonably limited.

An example from the SME sector

An employee of a construction company is presented with a contract stating that he is leaving “due to unsatisfactory performance” and with an end date in just three weeks. Two pitfalls at once: the accusation threatens unemployment benefits, and the two-month notice period is being ignored. He has the text reviewed within the reflection period. The grounds are adjusted to a neutral wording and the end date is shifted. Result: he retains his unemployment benefits and receives two months' extra salary, simply because he did not sign immediately.

Honest recommendation

If you know the pitfalls and your situation is straightforward — permanent job, position being eliminated, no illness, neutral grounds, standard compensation, no non-compete clause — then you can make a sound assessment yourself using this knowledge and the cooling-off period. Not every agreement requires a lawyer.

Do have the text checked as soon as you have doubts about the unemployment benefit points, or in cases of illness, a non-compete clause, high compensation, or pressure from the employer. It is precisely with these pitfalls that a mistake can cost you months of income, whereas a check costs a fraction and is often reimbursed by the employer. Never sign under time pressure: that is exactly what the cooling-off period is for.

Want to read more? View the settlement agreement, read what a settlement agreement is , and go through the checklist .

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