Example of a VSO - Everything you need to know
A VSO is an agreement that an employer offers you when there is mutual agreement on dismissal.
It is important to be well-informed about the clauses in a settlement agreement. This way, you will not be faced with any surprises later on.
We recommend having your settlement agreement checked for free by one of our dismissal lawyers. This way, you'll have clarity within 24 hours as to whether all elements have been correctly included.
You have a legal right to a 14-day cooling-off period after signing your settlement agreement.
Last updated: 21/07/2025
What is a settlement agreement?
A settlement agreement (VSO) is an agreement between you and your employer that sets out the terms for ending your employment with the organisation where you worked.
Just as you record written agreements at the start of your contract, in a settlement agreement you record written agreements about the end of your contract.
The purpose of a settlement agreement is to terminate the employment contract without the involvement of a court or the UWV (Employee Insurance Agency). This allows both you and your employer to avoid a formal dismissal procedure.
What is the legal basis for a settlement agreement (VSO)? Can an employer just offer me a VSO?
The settlement agreement has a legal basis and is anchored in Article 7:900 of the Civil Code.
This law states, in short, that two parties may jointly resolve an existing or future uncertainty or dispute through an agreement.
Yes, an employer can offer you a VSO (Veroevereenkomst tot Beëindiging van de Dienstbetrekking - an agreement to terminate employment) at any time.
When you look at the relationship you have with your employer, you may therefore agree yourselves how you will part company, based on the above article of law.
A key aspect of the VSO is that both parties must voluntarily agree to the termination of the employment contract and accept the terms of termination.
Please note: this is therefore not about unilateral termination, where the employer or employee terminates the employment contract without the other party agreeing.
A VSO is used when
There are various situations where a settlement agreement can be proposed by both the employer and the employee.
We've listed a number of situations for you:
- Business reasonsIt may occur that the company you work for needs to reorganise or downsize to remain in existence. The organisation's results sometimes simply demand it. In such cases, an employer can use a settlement agreement to part ways with employees.
- Disturbed employment relationshipWhen the working relationship between an employee and an employer is beyond repair and this has serious consequences for the work to be carried out. The first steps have already been taken to improve the relationship (for example, to resolve an employment dispute), but this has not led to improvements. In this case, a settlement agreement is a good idea for both parties.
- Dysfunctionin cases where an employee is underperforming and both parties agree that continuing the employment is no longer beneficial. Please note: in practice, we often observe a difference of opinion between the employer and employee in this regard.
- Occupational disability: in case of long-term illness or disability, where the company doctor has determined that a return to the workplace is no longer possible. In this case, you can part ways by means of a settlement agreement. When this is the case, we definitely recommend that you contact us for free, no-obligation advice on your situation.
- Retirement or voluntary departureAre you retiring (early) as an employee, or do you want to leave voluntarily for other reasons? In that case, a settlement agreement is also a common way to part ways.
In short, there are many situations in which a settlement agreement between employer and employee can be useful. It is, however, very important to know exactly what you are entitled to.
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What should be in your settlement agreement?
A settlement agreement contains all the agreements that are important for parting ways amicably. After the settlement agreement has been signed by both parties, there can be no more ambiguity about various matters.
A good settlement agreement therefore includes all the agreements that are important. But which issues are these precisely?
Parts of a VSO
A complete settlement agreement must contain at least the following components:
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Employer and employee personal data
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Reason and grounds for termination
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End of employment date
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Financial arrangements: compensation such as transition payments and redundancy payments
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Arrangement regarding notice period and completion of work
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Agreements on exemption from work
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Holiday days and final settlement
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Company property
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Confidentiality and non-competition clause
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Final discharge
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Cooling-off period for settlement agreement (legally stipulated: 14 days)
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Signatures of both parties
Each of these points is important for the lawfulness of the agreement and for the preservation of your rights after the termination of your employment. Therefore, ensure that all points are included in your settlement agreement.
Below we have fully set out all the parts for you.
Save yourself the trouble. Let your VSO for free Check!
Personal data and contract details
We'll start at the beginning: the personal details. This is an important part, as it tells you who the parties entering into the agreement are.
- Employer: the full company name, address, Chamber of Commerce number and names of any representatives
- Employee: the employee's full name, address, date of birth, and national insurance number
- Contract details: the start date of the employment contract, the employee's position, the number of hours per week, and the gross monthly salary
Reason and grounds for termination
The reason for and cause of the termination are incredibly important within the settlement agreement. Often, there is a difference of opinion between employer and employee on this matter, and employees often think it's an unimportant part. They mainly think, "as long as the compensation is correct.".
The reason why the cause is véry important is because it gives you the right to a WW benefit could endanger.
It UWV assesses namely, whether you became unemployed through your own fault. Is this the case? Then you are not entitled to a WW benefit. Therefore, always state the reason free check by one of our lawyers, so you can be sure that your right to unemployment benefits is not lost.
What is then a good, neutral reason in a VSO?
An example of neutral wording for the reason for termination of the employment contract is, for example:
- The employer has initiated the termination of the employment contract.
- There is no urgent reason for dismissal
- There is nothing to blame you for as an employee.
- As an employee, you have always indicated that you wish to remain employed.
- Following discussions between yourself and the employer, it has unfortunately become apparent that the continuation of the employment relationship is no longer possible.
Full wording to maintain your entitlement to unemployment benefit
An example of a complete formulation is, for instance:
"The employer initiated the termination of employment due to a difference of opinion regarding the content of the role and what the employee was required to do in that role on a daily basis, which ultimately led to a breakdown in the working relationship. The employee initially indicated a desire to remain employed, but the parties had to jointly conclude that a proper continuation of the employment contract was no longer possible. There is no culpability on the part of the employee."
Financial arrangements - compensation such as severance pay and redundancy pay
Another very important part of the settlement agreement is the financial arrangements. This concerns the following reimbursements:
Severance Pay
The transition allowance is a legal compensation that almost every employee is entitled to upon dismissal. Since 1 January 2020, every employee has been entitled to a transition allowance from their first day of employment.
Severance Payment
In addition to the statutory transition payment, a settlement agreement can also include an additional severance pay afgesproken. Dit is een extra bedrag dat bovenop de transitievergoeding komt. Veel werknemers weten dit niet, maar je hebt in de praktijk bijna altijd recht op ontslagvergoeding.
You can easily calculate the amount of the transition payment and an indication for the redundancy payment with our calculation tool.
Calculate immediately which allowances you are entitled to!
Notice period and end date
In the VSO, the end date of the employment is recorded. Please note: the statutory notice period must always be taken into account. This depends on the duration of the employment. Naturally, both employee and employer may agree on a period longer than the statutory notice:
- Employment duration up to 5 years: notice period of 1 month
- Duration of employment of 5 to 10 years: notice period of 2 months
- 10 to 15 years of service: notice period of 3 months
- Tenure of employment from 15 years: notice period of 4 months
The notice period commences from the moment both parties have signed the settlement agreement.
Ensure you really adhere to the correct notice period, as this is something that will be checked by the UWV when applying for unemployment benefits.
Is the notice period too short? The UWV will then apply a fictitious notice period, meaning you will only be entitled to unemployment benefits later. This creates an unemployment benefit gap (also known as a period where you do not receive benefits from the UWV). And of course, you want to prevent that.
Exemption from duties with a settlement agreement
A common aspect of settlement agreements that leaves a lot of room for negotiation is the waiver of duties. In short, this means you no longer have to work but will continue to receive pay.
In the agreement, you should make specific and targeted arrangements about this, such as:
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From which date are you exempt from work
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Whether you still need to be available for handover or questions, from clients or colleagues
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How to deal with holiday days during this period
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When company property needs to be returned, such as your company car
Full wording entitling you to exemption from work after signing your VSO
An example of wording that grants you exemption from work after signing a VSO is, for instance:
"The employee shall be released from performing duties from the date of signing this agreement. During the period until the end date of employment, the employee will receive their regular salary, and all other employment terms and conditions, such as the right to a company car and the company laptop, shall remain in effect."
This wording also ensures that you retain your secondary employment conditions during the period of exemption.
Outstanding holiday days in a settlement agreement
When concluding a settlement agreement (VSO), it is important to know what happens to your outstanding holiday days. As an employee, you are always entitled to your accrued holiday days. Below, I will explain the options available and what you should pay attention to.
The legal premise is that untaken holiday days must be paid out in the final settlement. This applies to both statutory and above-statutory holiday days. You earned these days during your employment and they cannot simply expire.
With a settlement agreement, there are three main options for your outstanding holiday days:
- Holiday payThis is the choice most people go for. Your outstanding holiday days are simply paid out when your employment ends. The amount is calculated based on your last earned salary. Please note: the tax rate differs from your normal salary, so you may end up with less than you initially expected.
- Holiday entitlementYou can also choose to take your holiday days. In many cases, this is not chosen, because usually the settlement agreement also looks at exemption from work.
- Withdrawal and deposit combinationYou can also take some of your holiday days and have some of your holiday days paid out.
Please note: many employers will offer to "write off" holiday days or pay them no attention, but will instead emphasise other benefits you, as an employee, will receive upon signing the settlement agreement.
Don't just agree with this. Our legal professionals experience on a weekly basis that an employee has accrued two months of holiday days. It is then unreasonable for these to be completely "written off" during a period of suspension.
Company properties in a settlement agreement
In this section, the employer and employee will review which company properties are currently in the employee's possession, which may be retained until the end of the employment, and the date on which they are to be returned.
In some cases, for example, it is common to retain your entitlement to and use of a company car until the end of your employment.
Confidentiality and non-competition clause
Many employment contracts include non-compete and non-solicitation clauses. When entering into a settlement agreement, it is important to make agreements about these clauses:
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Competition clauseThis can limit you in finding new employment. Try to negotiate for this clause to be waived or "softened".
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Relationship clauseThis prohibits you from approaching clients of your former employer. Here too: negotiate the scope and duration of this clause.
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Confidentiality clauseEnsure this is reasonably worded and not too general. Otherwise, you'll have to remain silent on a great many matters soon.
Final release in a settlement agreement
The clause regarding final discharge essentially translates to expensive legal jargon meaning that both you and your employer wish to have no further dealings with each other after the terms of the settlement agreement have been fulfilled. In short: "The matter is settled!"
An example of wording like this can be included is:
"The parties hereby declare that after the execution of the agreements laid down in this contract, they shall have no further claims against each other, neither legal nor financial, by virtue of the employment contract or its termination. This includes all known and unknown claims up to the date of signing this contract."
Cooling-off period for a settlement agreement
A key legal right in a settlement agreement is the cooling-off period. Since the Work and Social Security Act Every employee who signs a settlement agreement has the right to withdraw from their decision within 14 days without giving a reason. The reason this is a very important part is that the termination of your employment sometimes doesn't go as smoothly. In many cases, an employer will be insistent regarding the signing of a settlement agreement.
Have you signed the settlement agreement yet? Then that's no problem and you can simply go back on your word.
The cooling-off period of 14 days starts on the day after you receive the signed settlement agreement. The employer must explicitly inform you of this right, otherwise the cooling-off period is extended to 21 days.
Revoking the Settlement Agreement means the entire agreement becomes void. Your employment will then continue as if no Settlement Agreement had ever been signed. This gives you the opportunity to reconsider the terms and possibly seek legal advice. Have you already signed your Settlement Agreement and would you like one of our lawyers to check it for free and without obligation? Upload your settlement agreement immediately. We will contact you within 24 hours.
Example of a settlement agreement
Now that we have covered all the parts of a settlement agreement, you can look at an example of what a settlement agreement looks like.
In this example, all the key components we discussed are included. Review the example and compare it to your own settlement agreement to see if and which components differ.
"Thank you for your help!"
Ahmet shouted at us because he had been informed by his employer that he was being dismissed. He had a permanent contract with his employer and stated that a conflict had arisen in the workplace.
His employer had not yet offered Ahmet a settlement agreement, but he himself also thought this was the best option. He wanted to know from us exactly what the settlement agreement had to comply with.
We explained to Ahmet over the phone which components a settlement agreement must have and showed him the example found on this page. Based on this, we also gave him more explanation about the different components and what applies to him in his situation. He indicated that he will now first have the conversation himself to see if they can reach an agreement with a settlement agreement.
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About the author: This article was written by Mickey Heimans, dismissal lawyer at redundancy-lawyers.co.uk. With years of experience in both HR and dismissal law, he has extensive experience in assisting employees with their dismissal cases.