What You Need to Know About Employment Contracts in the Netherlands
In the Netherlands, fixed-term employment contracts provide varying levels of job security across three stages. In Phase A, the employer has the freedom to terminate without reason. In Phase B, termination requires a valid reason, and the employee is entitled to severance pay. Phase C offers even greater job security, requiring stronger grounds for dismissal.
Permanent (Vast) Contracts cannot be easily terminated by your employer; they must follow the rules regarding dismissal procedures and notice periods.
Guide to Employment Contracts in the Netherlands
In the Netherlands, fixed-term contracts are divided into three phases: “Phase A,” “Phase B,” and “Phase C,” each providing different levels of job security.
Phase A: This is the first stage of a fixed-term contract, lasting up to 52 weeks (one year). During this phase, the employer can terminate the contract at any time without giving a reason, and there is no obligation to provide severance pay. The employee, however, may resign at any time by giving notice.
Phase B: After completing Phase A, an employee can move to Phase B, which can last up to three years. In this phase, the employer must provide notice and severance pay upon termination, and a valid reason for termination is required, offering the employee greater job security.
Phase C: This is usually offered after the completion of Phases A and B, providing the highest level of job security. In Phase C, the employee is entitled to both notice and severance pay, and the employer must present substantial reasons to terminate the contract.
When Does a Temporary Contract Convert to a Permanent Contract?
In the Netherlands, a temporary contract automatically converts to a permanent one in the following circumstances:
- If the employee receives more than three consecutive temporary contracts with the same employer.
- If the employee has been under multiple temporary contracts for over three years with the same employer.
The rules may vary if a Collective Labor Agreement (CAO) sets out different terms.
Permanent Contract After Three Consecutive Temporary Contracts
An employee automatically receives a permanent contract after:
- More than three consecutive temporary contracts with the same employer.
- Temporary contracts for similar work from consecutive employers (e.g., starting through an employment agency and later being employed directly).
There must not be a gap of more than six months between contracts. Seasonal jobs with cyclical work of up to nine months per year may allow for a shorter break period of up to three months, provided this is specified in the CAO.
The rules may vary if a Collective Labor Agreement (CAO) sets out different terms.
Permanent Contract After Three Years of Temporary Contracts
An employee automatically transitions to a permanent contract if they have had temporary contracts for more than three years with the same employer or in similar roles under consecutive employers (e.g., from an agency to direct employment).
The six-month break between contracts also applies here, with specific seasonal work rules where the gap can be shorter.
The rules may vary if a Collective Labor Agreement (CAO) sets out different terms.
At DYC Legal Consultancy, we offer legal support in drafting and reviewing contracts under Dutch law, especially for expats, ensuring that any issues related to employment contracts are resolved.
Permanent (Vast) Contracts
A permanent contract does not have an end date. It typically continues until you retire or decide to end it. Your employer cannot simply terminate a permanent contract; they must follow the legal rules regarding the dismissal procedure and notice periods.
Temporary employees are entitled to the same working conditions as permanent employees, and employers must inform temporary workers of permanent vacancies. This does not apply to employment agencies, which must ensure that temporary workers are informed of open positions.
Differences Between Temporary (Tijdelijk) and Permanent (Vast) Contracts
A temporary contract is valid for a specific period, such as a few months or a year. It generally cannot be terminated midway unless agreed upon.
A permanent contract continues indefinitely until terminated by either the employee or employer. The employer must comply with dismissal regulations.
Consecutive Employment (Opvolgend Werkgeverschap)
Consecutive employment occurs when a company undergoes a takeover or when an employee initially works through an employment agency and later transitions to direct employment with the same employer. This means the employee moves to a different employer but continues to perform the same or similar tasks.
Whether consecutive employment applies depends on certain conditions.
Beroepsbegeleidende Leerweg (BBL) Contracts
Contracts under the Beroepsbegeleidende Leerweg (BBL) program are not counted under the “ketenbepaling” (chain regulation). The timing of the contract’s start or end is irrelevant in this context.
Employees Under 18
The chain regulation does not apply to employees under the age of 18 who work an average of no more than 12 hours per week.
Are There Different Rules for Temporary Contracts in Collective Labor Agreements (CAO)?
A Collective Labor Agreement (CAO) may establish different rules for temporary contracts. For example, a CAO might allow up to six consecutive temporary contracts and extend the maximum duration of temporary contracts to four years.
Deviations from Chain Regulation in CAO
The CAO can provide limited ways to deviate from the chain regulation. A CAO may allow for the following exceptions:
Temporary Employment Contracts
The CAO may increase the number of temporary contracts from three to a maximum of six, and the two-year limit can be extended to four years.
Business Operations
Due to the nature of some business operations, additional or longer temporary contracts may be necessary. In such cases, the CAO may allow for up to six temporary contracts and extend the maximum duration to four years
Exemptions from Chain Regulation
Some sectors, such as professional football, rely exclusively on temporary contracts. Different rules may apply to these sectors regarding the use of temporary and permanent contracts. The government determines which functions and sectors are eligible for such exemptions, and these rules are then incorporated into the relevant CAO.
Special Rules for Teachers (Effective August 1, 2018)
Since August 1, 2018, if a teacher is hired on a temporary contract to replace a sick teacher in a primary school, and the CAO for primary schools is applicable, no permanent contract will be created after multiple temporary contracts. You can find more information about this change in the chain regulation for special roles.
Special Rules for Teachers (Effective January 1, 2020)
As of January 1, 2020, the law was amended so that teachers hired temporarily to replace sick teachers in primary or special education will not automatically receive a permanent contract after multiple temporary contracts. This rule applies without needing to be specified in the CAO.
Management Positions
For management positions within a company or organization, deviations from the two-year rule may be allowed through a written agreement, including a CAO.
Training
If an employment contract is primarily for training purposes, the chain regulation may not apply, or may apply partially, depending on the CAO.
Seasonal Work
For jobs that can be performed cyclically for up to nine months a year, the CAO may shorten the gap between contracts to three months. This rule is not limited to seasonal work, and the CAO must explicitly state this agreement.
Clearly, employment contracts in the Netherlands are subject to various legal requirements and obligations. It is crucial to seek expert legal advice before signing any contract to ensure that you fully understand the potential consequences.
At DYC Legal Consultancy, we provide legal support in drafting and reviewing contracts under Dutch law, especially for expats, ensuring that employment contract issues are addressed and resolved efficiently.
