Employment Contracts in the Netherlands

Understanding Temporary Employment Contracts in the Netherlands: A Guide for Expats

In the Netherlands, an employment contract can be established for either a fixed term or an indefinite term. A fixed term contract exists when the end date of the employment contract is specified by a calendar date, or the end date of the employment contract is tied to the duration of a specific task or project.

Specific rules apply to a fixed-term employment contract. For example, with regard to the probationary period and the non-compete clause. This article discusses these special rules.

The probationary period

Employers and employees can agree on a probationary period in a temporary employment contract. During this period, either party can terminate the employment without reasonable grounds and without observing the notice period.

As for the length of these clauses, the following applies. The probationary period can last up to one month for employment contracts longer than six months but shorter than two years. For contracts of two years or longer, the probationary period can be up to two months. If a probationary period is included in the employment contract that exceeds the aforementioned length, the clause is null and void.

Non-competition and relationship clauses

Unlike a non-competition clause in an indefinite employment contract, a non-competition clause in a fixed-term contract must include a justification demonstrating that there are significant business or service interests at stake. Without this justification, the clause is considered null and void. This also applies to relationship clauses.

End of employment after the agreed end date

A fixed-term employment contract automatically ends on the agreed end date. For employment contracts longer than six months, employers must inform the employee at least one month before the end date whether the contract will be extended and under what conditions. Failure to do so obligates the employer to pay the employee a maximum of one month’s salary as compensation.

Employers do not need reasonable cause to justify non-renewal of an employment contract. They can also choose not to extend the contract if the employee is on sick leave. Please note, however, that sick leave cannot be the reason for not renewing an employment contract. Then there is non-renewal of a fixed-term contract due to discriminatory reasons. This is not permitted. This is also the case, for example, when an employment contract is not extended because an employee is pregnant.

Termination before the end date

The paragraph above is about not renewing an employment contract after the end date. Can an employment contract also be terminated before the agreed end date?

If the contract includes an early termination clause, either party can terminate the contract before the end date by observing the agreed notice period. Employers can only do so by entering into a termination agreement with the employee by seeking permission for dismissal from the UWV or by initiating court proceedings.

Please note that even if an early termination clause is not included in the employment contract, the parties can still enter into a termination agreement. The employee then agrees to the earlier termination of their employment. However, this may affect the employee’s Unemployment Benefits.

Multiple Temporary Employment Contracts

Finally, further rules apply when entering into multiple fixed-term contracts. If you enter into multiple temporary employment contracts with the same employer, the following rules apply: a maximum of three consecutive temporary contracts can be signed within a three-year period. Upon the fourth contract or the day after the three-year period ends, an indefinite employment contract automatically comes into effect. If there is a break of more than six months between two contracts, a new chain of temporary contracts can begin, allowing for another set of three contracts within three years.

Conclusion

Understanding the intricacies of temporary employment contracts in the Netherlands is crucial for expats to ensure their rights are protected and to make informed decisions about their employment. By being aware of the special conditions, end-of-contract procedures, and rules regarding multiple contracts, expats can navigate their employment journey with confidence.

Questions?

If you have a question about your employment contract, dismissal, or another related subject, please feel free to contact us on 070-3615048 or through our website GMW lawyers.

For information about Employment Contracts in the Netherlands click here.