Received a settlement agreement, but already found a new job?

If you are an expat working in the Netherlands and your employment is ending by mutual agreement, there is a good chance you have already started looking for a new job; or you may even have one lined up already. This happens often, and it raises an important legal question: do you have to tell your employer? Here is what expats in the Netherlands need to know about settlement agreements.

What is a settlement agreement?

In the Netherlands, an agreement to end your employment by mutual consent is called a vaststellingsovereenkomst , usually translated as a settlement agreement. It regulates how and when your employment ends, and it often includes a severance payment.

The settlement agreement frequently contains a clause in which you, as the employee, declare that you do not have a concrete prospect of another job. This matters because of what the severance payment is meant to do.

Why does a new job matter for your severance payment?

A severance payment is generally intended to bridge the gap financially while you are between jobs. Once your employment ends, you no longer receive salary, and you may have to rely on a lower unemployment benefit in the meantime.

If your employer knows you already have another job lined up, there is usually no income gap to bridge, and in that case, your employer may not be willing to pay severance at all.

What counts as a “concrete prospect” of another job?

Dutch case law has developed a fairly specific test. According to a ruling of the Utrecht district court, a concrete prospect of another job exists when:

• it is not just a general chance of getting a position somewhere, but
• negotiations with a new employer have progressed so far that a detailed, concrete offer will almost certainly be accepted (or has already been accepted) by the employee.

Importantly, this moment can occur earlier than the date you actually sign a new employment contract. In other words, you are not automatically “safe” just because you sign your new contract the day after signing the settlement agreement: if the deal with the new employer was already effectively settled beforehand, it may still count.

Do you have to tell your employer?

Three scenarios:

1. Your employer includes a declaration in the settlement agreement

If you are explicitly asked to declare that you have no prospect of another job, and you lie, your employer can generally invalidate the settlement agreement on the grounds of fraud or mistake. If that happens, it is as if the settlement agreement never existed: your original employment contract revives, and you must repay everything you received under it — the severance payment, but also things like salary paid during garden leave, or training costs.

2. Your employer does not include a declaration, but asks about it

The same duty to tell the truth applies. If you lie, your employer can still seek to have the settlement agreement invalidated for fraud or mistake, with the same consequence: repayment of the severance payment and any other related costs.

3. Your employer does not ask at all – do you have to volunteer the information?

This is where it gets more nuanced. According to most Dutch case law, employees have a duty to disclose relevant developments even without being asked. The specific facts matter, but as a general rule: if you have already found a new job and your employer wants to enter into a settlement agreement with you, you should not simply stay silent about it.

What about starting your own business?

The same disclosure duty applies if you have concrete plans to start your own business. In a 2023 ruling (ECLI:NL:RBMNE:2023:3330), the Utrecht subdistrict court found that an employee who, after signing the settlement agreement, had already discussed the name and location of a new company had a concrete prospect of other work at the time the settlement agreement was signed. The severance payment had to be repaid.

Practical tips for expats

• Timing matters. If you want to avoid any risk of having to repay your severance payment, it may be wise to wait with actively applying for other jobs until your settlement agreement is finalised. That said, make a conscious choice here, if the severance payment on offer is modest, it may simply be more sensible to keep applying right away.
• When in doubt, disclose. If you already have a concrete prospect of another job, tell your employer. This does not automatically mean your employer will refuse to pay severance, a new job often comes with its own risks, such as a probationary period, a fixed-term contract, or a lower salary. It is entirely reasonable to still want compensation for those risks.
• Get advice before you sign. Because the legal test for a “concrete prospect” is fact-specific, it is worth having your situation reviewed before you sign anything.

Questions about your settlement agreement?

Every situation is different, and the outcome often depends on the specific facts and timing. Are you an expat in the Netherlands negotiating a settlement agreement, or already have one on the table? Please feel free to contact us, we are happy to review your situation and advise you on your rights and obligations.