What is the cooling-off period in a settlement agreement?

The cooling-off period after signing your settlement agreement is stipulated by law in the right of withdrawal and is 14 days. During this period, you as an employee can reconsider your decision to sign the settlement agreement (VSO) without giving reasons. If this reflection period is not included in your VSO, a longer statutory reflection period applies, namely 21 days.

There is a statutory reflection period in the law after signing a settlement agreement because, as an employee, you should be given time to revisit this important decision.

We often notice in our legal practice that employees rush to sign their VSO, or even more annoyingly: they are pressured by their employer to sign. In cases like these, there is still plenty of time to think calmly about the terms of your VSO and you have the option to go back on it.

Now that we know you have two weeks after signing a VSO, it is of course important to also know when exactly the clock starts ticking then. And this is different from what many people think.

This is because it is not necessarily the moment of signing. The cooling-off period starts when the settlement agreement is "reached". Often this is the moment of signing itself, but previous court cases also show that sometimes having an earlier, written agreement on the main points of the dismissal is enough. 

This could, for example, be an e-mail from your employer with the main points that would come about in a settlement agreement, to which you have already agreed by e-mail (see court ruling 2021).

The Rotterdam District Court ruled in that case that the cooling-off period began at the time the employee's authorised representative agreed to the terms and conditions in writing and not only at the later signing

It is good to know that there are also exceptions to the cooling-off period after signing or agreeing to the terms of a settlement agreement. Here is a brief overview of the main exceptions:

1. You have resigned himself. In this case, there is no reflection period.
2. You cannot use the cooling-off period several times in a row. That is: have you received a settlement agreement and you agree. Then you have 14 days to go back on it. Is there then another proposal you agreed to? Then you cannot use your cooling-off period again. There is a statutory cooling-off period of 6 months in between.
3. There is an exception for statutory directors. No statutory reflection period applies to this group.

During the cooling-off period settlement agreement, you have the right as an employee to come back and rescind the settlement agreement. You do this by sending a written statement to your employer.

It is important to mention that you do not need to write down a reason for this. Simply stating that you want to dissolve the settlement agreement is sufficient. When doing so, always state that you are using the cooling-off period. 

However, the withdrawal must take place within the stipulated period. After the 14 (or 21) days have expired, the agreement is final and you cannot get out of it.

So make sure you know the correct start date of your cooling-off period. This is generally also stated in your settlement agreement.

Your employer is legally obliged to do a number of things during the reflection period. Most importantly, your employer is obliged to provide you with sufficient information, also known as the information obligation.

This information obligation must inform you in writing of your right to a cooling-off period, and is preferably in the settlement agreement itself. The cooling-off period can also be mentioned in, for example, an accompanying e-mail. Furthermore, the information about your settlement agreement and its content should be clear to you as the recipient. 

The cooling-off period settlement agreement must be explicitly included in the agreement itself. Generally, this is a standard clause in the last paragraph describing the right. This should also include the procedure for dissolving the settlement agreement. 

Want to see an example where this clause is included and what other clauses look like? Then you can read more about it in our article where we provide a example of a settlement agreement treat.

During your reflection period, it is a wise idea to keep your have settlement agreement reviewed by a dismissal lawyer. This will specifically look at components such as the amount of your transition allowance, you severance pay and how the dismissal was worded. This is because this affects your entitlement to unemployment benefits, among other things.

Is your case very complex? Then make sure you call on your assistance insurance or engage a specialised employment lawyer.

Have you received the legal advice and does the lawyer advise you to have further changes made to your settlement agreement? Then it is a smart idea to revoke your settlement agreement. In this case, you can ask for advice on the revocation from your dismissal lawyer.

In our legal practice, it often happens that people use the option to revoke the settlement agreement.

Indeed, using the cooling-off period settlement agreement can strengthen your negotiating position. By showing that you are willing to rescind the agreement, you demonstrate that you are not under pressure to agree. This may motivate your employer to come up with better terms for your resignation.

After revoking the agreement, you can start new negotiations. Use the information and insights gained during the reflection period to negotiate better terms.

Legal advice often reveals where the possibilities lie and what is considered normal in similar cases. Think higher severance payments, relief from work, a different use of your transitional allowance (e.g. for outplacement) or different conditions for your pension.

Besides the above case in which the Rotterdam Court ruled, there is another example of a client who used the statutory cooling-off period after signing a vso.

Another relevant case concerns an employee who worked at KLM Catering Services. After employee signed the VSO and then invoked the cooling-off period, a dispute arose about the starting point of the cooling-off period. 

The North Holland District Court ruled that the cooling-off period began at the time of written agreement via e-mail, not on the date the parties later included in the agreement. The employer was vindicated in this, because on the most important parts of the VSO, the employee had therefore already agreed earlier in the e-mail. 

This court ruling highlights the importance of properly documenting all communications and accurately identifying when the cooling-off period settlement agreement was agreed.