If an employer and an employee want to reach a settlement agreement regarding the mutual termination of a fixed-term employment contract without an early termination clause, this often results in the employee receiving a negative response from the UWV, in the sense that unemployment benefit is refused.

On 11 August 2021, the Administrative Court of the District Court of Amsterdam gave a remarkable judgment.

The parties had entered into a fixed-term employment contract without an interim notice clause. The parties had terminated the employment contract prematurely by mutual consent.

Until this judgement, the idea was that in the absence of an early termination clause, the employee would not be entitled to unemployment benefit until the originally agreed duration of the contract had elapsed.

In this case, however, the parties had agreed an interim notice clause in the termination agreement. The employee applied for unemployment benefit from the end date agreed by the parties in the settlement agreement.

Due to the absence of an early termination clause in the employment contract, the UWV decided that the employee was not entitled to unemployment benefit until the original end date of the fixed-term employment contract.

The employee appealed against this decision.

The Amsterdam court ruled that it does not follow from the relevant legal text that the parties' agreement at the start of the employment contract must be taken into account when applying for benefits.

The freedom of contract means that the parties are free to agree an interim termination clause at a later date, for example in the settlement agreement. The employee's appeal was therefore upheld.

You can read the full decision of the Amsterdam court here.

Would you like to know more about this judgment, or do you have any other questions about the termination of an employment contract by means of a settlement agreement? The lawyers at SPEE advocaten & mediation will be happy to assist you.