Dismissal by mutual agreement: everything you need to know

With mutual agreement dismissal, you and your employer indicate that you agree together to terminate the employment contract. No official procedure at the UWV or the subdistrict court is required to make your dismissal official. So it is a mutual agreement where both parties agree to terminate the employment contract.

It is very important in cases of dismissal by mutual consent to put the agreements in writing. The document used for this is often called a settlement agreement or called a termination agreement.

Just like when you get your employment contract went to, this also contains all kinds of agreements on the termination of your employment contract, such as the end date, a severance pay and other conditions. 

The main feature of mutual agreement dismissal is that both parties voluntarily agree and consent to the resign. This is especially important with regard to your right to a WW benefit.

Although the initiative for this form of dismissal often lies with the employer, it is incredibly important that the agreement clearly states that your employer has made the proposal to terminate the employment contract and that you, the employee, agree to it.

In fact, this is important for your entitlement to unemployment benefits. We have for formulation purposes a  example of a settlement agreement Made. 

Dismissal by mutual agreement differs from other forms of dismissal in several ways:

• No approval from the UWV Whether the cantonal court

• The process is often faster and a lot less formal

• There is more room to negotiate terms

• There is no legal obligation to pay a transitional allowance, unless agreed

Dismissal by mutual consent is often proposed by employers because it is a simple way to say goodbye to an employee.

For example, consider a situation of a reorganisation, a disrupted working relationship or other circumstances where your employer no longer sees the continuation of the employment contract.

Of course, as an employee, you can also push for dismissal by mutual consent.

Terminating your employment contract by mutual agreement has advantages and disadvantages. It is important that you understand these well before agreeing with your employer.

As an employee, dismissal by mutual agreement can offer several advantages:

• Speed: a dismissal by mutual agreement does not go through an official procedure, such as at the cantonal court or the UWV. This has the advantage that you can settle the employment relationship with your employer a lot faster. You have clarity about your situation sooner.
• Negotiate: because a dismissal by mutual agreement does not go through the UWV or the subdistrict court, you have room to negotiate with your employer on the terms of termination of your employment contract. For example, you can negotiate the amount of the severance pay, when you leave employment, which secondary conditions you will continue to keep until the end of your employment and other aspects, such as, for example, the relation or competition clause.
• Relationship to your employer: despite the resignation following, it is nice to say goodbye to each other in a businesslike and professional manner. Although you can also include in the negotiation that a positive reference follows, it can also be beneficial for any future contacts in your field of work.
• Preserving your right to unemployment benefits: as mentioned, it is important to include this properly in the settlement agreement as well. In doing so, you need to meet a number of conditions, for example, it is important to include in the settlement agreement that the initiative for the dismissal lies with your employer.
• Customisation is possible: customisation is possible, e.g. for your outstanding holidays, an exemption from work or the transfer of your work.

It is good to keep in mind that your employer also has a big advantage when dismissing you by mutual agreement. Employers are often not keen on formal procedures that take a long time and cost money.

It also gives them certainty about the termination of the employment relationship, better control over costs and prevention of possible conflicts in the workplace.

The termination agreement, also known as settlement agreement referred to as the dismissal agreement, is the legal document that sets out all the agreements concerning your dismissal. This document forms the basis of the mutual agreement dismissal and it is therefore very important that it is carefully drafted and reviewed before you agree to its terms.

Because one of the biggest concerns in cases of dismissal by mutual consent is whether you are entitled to unemployment benefits, we still treat this separately.

It is good to know that the UWV looks very critically at applications following dismissal by mutual agreement. They do this to prevent employees who have actually resigned voluntarily from applying for and receiving unemployment benefits anyway. 

To qualify for WW benefits after dismissal by mutual agreement, the following conditions must be met:

1. Dismissal is at the initiative of the employer: it must be clear that the initiative for the dismissal lay with the employer. For example, consider the following text in the settlement agreement: "employer proposes to terminate the employment contract", "employee agrees to the proposed dismissal".
2. There is no culpable action: when there is culpable conduct, then dismissal may be justified accordingly. In short, the settlement agreement should state that "the dismissal has nothing to do with behaviour of employee".
3. Notice has been given and completed: there is always a legal notice period within employment contracts. The length of the notice period depends on the total duration of your employment. Do you agree a shorter notice period with your employer than the statutory one? In that case, the UWV will not start your unemployment benefit until the statutory notice period has expired. In short, you will receive no benefit for a while.
4. Condition of loss of working hours: you must meet the requirement of loss of working hours. Do you subsequently have a new job? Then you won't get WW benefits either.
5. You are available for new work: you are available for other work after dismissal and you have to actively apply for it.

Preventing problems with your unemployment benefit? Then make sure you consider the following things:

1. Ensure correct wording in your VSO: as just indicated also, it is important to have correct wording in your VSO.
2. Reason for dismissal: make sure the reason for dismissal included in the settlement agreement is neutral, i.e. for economic reasons or a disturbed working relationship. So very explicitly, it has nothing to do with your performance.
3. Respect the notice: respect the notice period. Otherwise, your unemployment benefit will start later.
4. Get the timing right in the application of your WW benefit: the UWV is a government agency and here, too, they have to deal with application processing times. In any case, make sure your application is submitted to the UWV no later than four weeks before your employment contract with your employer ends.
5. Keep all documentation: it is very important to keep all documentation with your employer. For example, any communication you have had with your employer. Tip: forward all correspondence you have had via email to your private email address. You also have the right to record conversations that deal with your dismissal with a voice recorder so that this can be used as evidence later. 
6. Start applying already: ideally, of course, you don't need the unemployment benefit at all. So start by updating your CV, looking at positions at other organisations and writing cover letters. 

In short, it is very important to bear in mind that the UWV strictly controls whether you are entitled to WW. What you and your employer agree in the termination agreement is not automatically binding on the UWV. 

Legally, the following applies:

1. Termination ban: During illness, your employer may not simply dismiss you. This ban on dismissal applies during the first two years of illness. Do you leave sick after two years? Then other rules apply (see UWV rules).

2. Mutual agreement exception: The prohibition on giving notice does not apply in the case of dismissal by mutual consent, as you then agree to the dismissal yourself.

3. Wage payment obligation: During illness, your employer has an obligation to continue paying wages (at least 70% of your salary) for up to two years.

4. Additional legal advice strongly recommended: If you are ill, it is extra wise to seek legal advice before agreeing to mutual agreement dismissal.

Agreeing to dismiss during illness can carry great risks:

1. Loss of income: You lose the right to continued sick pay (70%), which means you may only be able to claim unemployment or sick pay. So your income may well go down drastically, and in case of illness, you may not always have the opportunity to find something new quickly either.

2. Problems with unemployment benefit: If you are too sick to work, you may not be available for work. However, this is a requirement set by the UWV for entitlement to WW benefits, and so this may mean you are no longer entitled to WW benefits.

3. Loss of employer reintegration obligations: Your employer is no longer obliged to help you after your employment is terminated for reintegration. This may well be very important in your personal recovery.

There are limits to what your employer is legally allowed to do when you are sick:

1. No pressure: It may seem like a nobrainer, but it is illegal for your employer to pressure you into agreeing to the dismissal. 

2. Duty to inform: It is important that your employer informs you about what the personal and business consequences are for terminating your employment contract while you are ill. 

3. Reintegration obligations: As long as you are employed and have not yet agreed to the dismissal by mutual consent, your employer must comply with the reintegration obligations.

4. Employer's duty of care: The employer has a duty of care, including during dismissal negotiations.

In specific situations, however, the employer can apply to the UWV for permission to dismiss, namely if you have been unfit for work for more than 2 years or for economic reasons. We'll tell you more about that in this article.

If you are ill and your employer proposes dismissal by mutual consent, it is highly recommended to seek free legal advice from us.