Employment law in the Netherlands – part 2 employment contracts

For HR professionals, a solid understanding of employment contracts under Dutch law is essential for effectively navigating the complexities of such contracts. As second part of the series Employment law in the Netherlands, below we will provide an overview of key aspects of Dutch employment contracts.

Types of Employment contracts

Under Dutch law, there are several types of employment contracts. The most common are:

Indefinite period contracts: These contracts do not have an end date and offer employees greater job security. Unilateral termination by the employer can in principle only happen after a dismissal permit is granted by the UWV or the court decides upon such termination. Advantages for employers to agree upon such contracts are for example the ability to agree upon a longer notice period and (for now at least) to agree upon stringent non-competition and non-solicitation clauses.
Fixed-Term contracts: These contracts have a specific end date and are typically used for temporary projects or tasks. However, such contract can as well be useful if the employer first wishes to review the abilities of the employee before offering an indefinite period contracts. Intermediary termination can in principle only occur in the event of termination during probationary period, a settlement agreement, permission from the UVW or court termination. There are limits on the number of consecutive fixed-term contracts an employer can offer (maximum of three contracts for a total duration of no more than three years). In principle no non-competition and non-solicitation clauses can be agreed upon, unless there is a substantial business interest for doing so, which is included into the employment contract.
On-Call contracts: These contracts vary from zero-hour contracts to min-max contracts (a minimum and maximum agreed number of working hours per week). Employees are called in to work when needed. These contracts offer less job security for employees. As a result, these contracts have been under scrutiny of the Dutch legislator for some years now. Protective rules have been established such as a minimum period for which the employees should be called into work (three hours each time), the minimum days in advance the employee must be called upon (four days in advance) and after a year that the employer needs to offer the employee a fixed number of working hours based on the average hours worked over the last twelve months.

In addition to the above, there are a number of other employment contracts to consider as well. Such as a payroll contract, temporary workers contract or even a contract for services. Considering the scope of this comprehensive blog, we will not go into detail on these.

2. Mandatory elements in employment contracts

An employment contract must meet certain requirements under Dutch law. Key elements include:

Duration an place of work: It should be detailed if the contract is for fixed term or indefinite period. As well the place of work should be defined.
Identification details: The name and contact information of both the employer and the employee must be provided.
Job description: A clear description of the employee’s position, tasks and responsibilities.
Salary and employment conditions: The salary, holiday allowance payment frequency, and any other employment conditions such as benefits and vacation days should be specified.
Working hours: The working hours and days must be stated.
Probation period: If applicable, the probation period and its duration must be included.
Notice period: The notice period for both the employee and employer should be specified.
Collective labour agreement and pension scheme: If there is a collective labour agreement and/or pension scheme applicable, it should be outlined.

3. Probation period and notice period

An employment contract may include a probation period, but there are restrictions on its duration. For employment contracts of six months or less, a probation period is not allowed. For employment contracts between six months and two years, the probation period can last up to one month. Fixed term contracts for longer than two years, a two-month probationary period is allowed. Indefinite period employment contracts allow a probation period of up to two months.

Notice periods for the employer vary depending on the length of service. Per five years, the notice period increases with a month, with a maximum of four months. Employees in principle only have a notice period of one month. Parties can deviate from these statutory rules in writing. When the employer wishes to hold the employee to a longer notice period (for example two months), then the employer’s notice period should be double (in the same example four months). Collective labour agreements may deviate from this.

Conclusion

Choosing the right employment form can be challenging as all of them have benefits and downsides. As well, certain markets have a labour shortage, which results in high benefits and job security through indefinite period contracts. As such, not only the legal perspective counts when choosing which contract to offer to a candidate. When having chosen the specific contract to offer, the employer’s information obligation comes into play. It is key to include the statutory necessary into the employment contracts to prevent liability afterwards. Therefore HR professionals be aware of the consequences of any offering as this dictates the collaboration for the future.

Vragen?