You have been offered a severance package

Your employer is offering a departure arrangement. But is the offer reasonable? And what is possible?

An offer is a starting point

When your employer proposes a departure arrangement during a reorganization, this is in many cases the beginning of a negotiation — not the final destination. The first offer does not have to be the definitive offer.

Many employees accept the first offer out of uncertainty, fear that it will worsen, or because the employer pressures them to sign quickly. In many situations, there is room to negotiate the terms.

A proper assessment starts with the question of whether the offered severance is proportionate to your situation. Years of service, age, salary, position in the labor market and the circumstances of the dismissal all play a role. It is also important to look beyond just the monetary amount and consider the total departure arrangement: notice period, garden leave, non-compete clause, bonus, holiday days and other conditions.

You are not obligated to accept an offer. If you do not agree, the employer must follow the formal dismissal route through UWV. That route generally takes longer and involves procedural risks, which can give you negotiating room.

The transition payment as the minimum

The statutory transition payment amounts to one-third of a gross monthly salary per year of service, calculated pro rata for incomplete years. The calculation includes not only your base salary but also holiday allowance (8%), any fixed year-end bonus and the average of variable compensation over the past three years. In practice, disputes regularly arise over which salary components should be included.

The transition payment is the statutory minimum. Whether there is room for more depends on the circumstances. The existence of a social plan, procedural risk for the employer, your age and labor market position and the employer's financial position are all relevant factors. We assess what is reasonable and achievable in your specific situation.

What we assess

  • Severance amount relative to the statutory minimum
  • Correct notice period and end date
  • Pro rata bonus and holiday allowance
  • Payment of accrued holiday days
  • Garden leave and conditions
  • Non-compete and non-solicitation clauses
  • Reference letter
  • Protection of WW rights
  • Final discharge and exceptions
  • Legal costs contribution

How do you assess whether the offer is fair?

There are several components of a departure arrangement that deserve attention. Below you will find the key points for evaluating your employer's offer.

The financial severance

The statutory transition payment — one-third of a gross monthly salary per year of service — is the minimum when dismissed on the employer's initiative. Depending on the circumstances, there may be room for a higher payment: procedural risk for the employer, the existence of a social plan, your age and years of service, and your position in the labor market are relevant factors. A legal professional can quickly assess whether the offer is in line with what is customary in comparable situations.

Notice period and end date

The end date determines when your salary stops and when your unemployment benefits (WW) can begin. The statutory notice period for employers ranges from one to four months. If the end date does not align with the notice period, this can lead to a gap without income. UWV applies a fictitious notice period that can have consequences for your benefits.

WW rights

An incorrectly drafted settlement agreement can jeopardize your unemployment benefit rights. The agreement must clearly state that the initiative for termination came from the employer and that there is no culpable unemployment. This is a legal-technical point that must be carefully assessed and that is essential for your income after the end of employment.

Final discharge

The settlement agreement typically includes a final discharge clause: you and the employer declare they have no further claims. It is essential to verify what exactly falls under the discharge. Entitlements you wish to preserve — such as outstanding bonuses, holiday days or equity arrangements — must be explicitly excluded.

Non-compete clause

If your employment contract contains a non-compete clause, the settlement agreement is the moment to have it waived or limited. If the clause is not addressed in the VSO, it remains unchanged and in force after the end of employment. Depending on your situation, limiting the non-compete clause can be more important than a higher payment.

Other conditions

Beyond the financial severance, there are more subjects that can be negotiated: outplacement, training budget, reference letter, legal costs contribution, retention of company property, continuation of certain group insurance policies and agreements about the communication regarding your departure. All these components together determine the total value of the arrangement.

How ReorgLegal helps

ReorgLegal assesses the offered departure package on all relevant components. We compare the offer with what is customary in comparable situations and advise you on the room for negotiation.

If desired, we conduct the negotiation on your behalf. This has the advantage that you do not unnecessarily burden the relationship with your employer, while we negotiate appropriate terms on your behalf. We communicate in a businesslike and focused manner, which often contributes to a constructive negotiation.

We respond within 1 hour on business days. In most cases, we can provide you with an initial assessment of the offer and the negotiating room on the same day.

What does legal advice cost?

In most settlement agreements, a contribution towards legal costs is included. This is a standard part of the negotiations. Always ask for it, which means the cost of professional guidance can often be kept to a minimum. If no legal costs contribution is included in the offer yet, we include this as one of the negotiation points.

Practical steps

  • Do not sign — ask for sufficient time to seek legal advice
  • Send the settlement agreement to a legal professional for review
  • Check that the transition payment is correctly calculated, including all salary components
  • Inventory all outstanding entitlements: bonus, holiday days, holiday allowance, pension
  • Assess whether the non-compete, non-solicitation and other clauses are addressed
  • Ask about the possibility of a legal costs contribution

Good to know

Cooling-off period: After signing a settlement agreement, you have a 14-day statutory cooling-off period. If the employer does not inform you in writing about the cooling-off period, it is extended to 21 days. However, it is wiser to seek legal advice before signing.

No rush: A reasonable employer gives you sufficient time to have the proposal reviewed. If your employer applies strong time pressure, this may be reason to have the proposal carefully reviewed by a legal professional.

It is about the total picture: A higher severance with a broad non-compete clause can be worth less than a slightly lower severance where the non-compete clause is waived. Always assess the offer as a whole.

Tax aspects: Depending on your personal and tax situation, a longer notice period can be financially beneficial. We flag relevant tax considerations and can refer you to a tax advisor where needed.

Steps after receiving the offer: Do not sign. Ask for a reasonable response period. Send the offer to ReorgLegal for review. We respond within 1 hour on business days.

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