Employment contracts (arbeidscontract)
Remember that Dutch law does not require a written employment contract. If there is a verbal agreement, an employment contract has come into being. However, it is strongly advised to get a written one. In the Netherlands there are two common employment contracts:
- Temporary contract: a fixed term contract ends at the end of the period specified in the contract (shorter than six months) without notice. As of July 1, 2015, employees who have worked for the same employer for two years on temporary contracts are entitled to a permanent contract if the work agreement continues. The previous period was three years.
- Permanent contract: if the employer and the employee have not agreed on a specific duration, an employment contract is considered to be for an indefinite period of time.
There are also contracts with an employment agency which are different from the aforementioned employment contracts. In this case, the employment agency is your legal employer while you work in a company that hires you through the employment agency.
An employment contract should include the names of both parties, the place where the work is carried out, the employee’s position and nature of work, the time of commencement and the term of employment if it’s a fixed contract. It should also include holiday entitlements, leave entitlement, salary and payment arrangements, working hours, pension rights (if applicable), notice period of termination and whether a collective labour agreement (CAO) is applicable.
As of 2015 it is forbidden to include a non-compete clause in a fixed-term contract except in the case of exceptional circumstances which must be stated in the employment contract. In the case of probationary periods, these are no longer permitted for temporary contracts for 6 months or less. Under Dutch law, a probationary period can never be longer than two months.
As of July 1, 2015, employers can no longer choose whether to terminate a contract via permission from the Dutch Employment Insurance Agency (UWV) or via the cantonal court. To which competent authority a dismissal has to be submitted depends on the grounds for dismissal, the cantonal court or Employment Insurance Agency. If you want to know more about this please go to the government website.
Of course, employment contracts may be terminated by mutual consent. Such a settlement agreement should be concluded in writing, stating that both parties agree upon the termination and settling all outstanding issues. However, in order to receive unemployment benefits, the employee must be 'involuntarily' unemployed, which means that the termination agreement should state that it was the employer’s initiative to terminate the employment contract and no reason for summary (instant) dismissal existed.
Moreover, employees with contracts set for longer than six months should receive notice if the employer does not intend to extend the contract. If the employer does wish to extend the contract, then the employer should also notify the employee of the terms and conditions for extension. The notice must be given at least one month in advance of the end of the contract. If the employer fails to give notice or is too late, the employer is liable for a penalty of a maximum of an one month’s salary. The employment contract will still end automatically at the end of the agreed period, even if no notice is given.