Things to Know About the Netherlands Labor Contract
In the Netherlands, fixed-term employment contracts provide different levels of job security in three distinct phases; in Phase A the employer has the freedom to terminate, in Phase B a reason for termination is required and there is a right to severance pay, while in Phase C a higher level of job security is provided.
In the case of Permanent Vast Contracts, your employer cannot simply cancel them; they must follow the rules on the dismissal period and the dismissal procedure.
Netherlands Employment Contract Guide
In the Netherlands, fixed-term contracts are divided into three as “Phase A”, “Phase B” and “Phase C”. These contracts provide employees with different levels of job security.
“Phase A” is the first phase of a fixed-term contract and lasts for a maximum of 52 weeks (one year). In this phase, the employer can terminate the contract at any time without giving any reason and is not obliged to pay severance pay. The employee, however, can terminate the contract at any time with notice.
After the completion of “Phase A”, the employee may proceed to “Phase B”, which lasts for a maximum of three (3) years. In this phase, the employee is entitled to notice of termination and severance pay in case the employer terminates the contract. With “Phase B”, the employee has a higher level of job security and the employer must show a valid reason to terminate the contract.
“Phase C” is the final phase and is usually offered after the completion of ‘Phase A’ and ‘Phase B’. This contract provides the employee with a higher level of job security. In “Phase C”, the employee is entitled to notice of termination and severance pay, and the employer has to show a strong reason to terminate the contract.
When Will My Temporary Contract Become a Permanent Contract?
In the Netherlands, when an employee receives more than three (3) consecutive temporary contracts or more than one temporary contract from the same employer for more than three years, the temporary contract is automatically converted into a permanent contract. However, this may vary if different rules are laid down in the collective agreement (CAO).
Permanent Contract After Three Successive Temporary Contracts
An employee automatically earns a permanent contract after Three Consecutive Temporary Contracts if
- Received more than three temporary contracts from the same employer,
- If more than three temporary contracts are for the same type of work from successive employers (e.g. if an employee first worked through an employment agency and then was employed directly by the employer. To find out if this applies to your situation, you can get free support from us)
- The break between contracts is a maximum of six months. For temporary return work, not limited to seasonal work, which can be carried out for a maximum of nine months of the year, the break between contracts can be a maximum of three months (This clause must be specified in the collective agreement (CAO))
- Unless other conditions are specified in the collective bargaining agreement (CBA) (agreements in the CBA take precedence).
Permanent Contract after Three-Year Temporary Contracts
An employee automatically gains a permanent contract after Three Years of Temporary Contracts if
- Has received more than one temporary contract from the same employer for more than three years or has received temporary contracts for the same type of work from successive employers (e.g. if an employee first worked through an employment agency and then as a “uitzendkracht” directly employed by the employer.
- The break between contracts is a maximum of six months. For temporary return work, not limited to seasonal work, which can be carried out for a maximum of nine months of the year, the break between contracts can be a maximum of three months. (This clause must be specified in the collective agreement (CAO))
- The collective bargaining agreement (CBA) does not specify other conditions (agreements in the CBA take precedence).
As DYC Legal Consultancy, we provide legal support to our expat clients who have problems with the preparation and review of their contracts within the scope of Netherlands Law and to resolve these problems.
Vast Contract
A permanent contract (Vast Contract) does not include a deadline for the end of the job. It only ends when you reach retirement age or when you terminate the employment contract. Your employer cannot simply cancel a permanent contract; it must follow the rules on the termination period and the procedure for dismissal.
Employees on a temporary contract have the same working conditions as permanent employees. Employers must inform employees with a temporary contract about vacancies for a permanent position. This obligation does not apply to employers of temporary labor hire companies. Hirers are obliged to inform temporary workers of vacancies in the company in a timely and clear manner.
What are the Differences Between a Temporary Contract (Tijdelijk Contract) and a Permanent Contract (Vast Contract)?
A temporary contract is valid for a certain period of time. For example, a few months or a year. Employees or employers usually cannot cancel a temporary contract in the interim period. A permanent contract, on the other hand, continues until it is terminated by the employee or employer. A permanent contract is also known as an indefinite contract.
A permanent contract ends when the employee resigns or when the employer terminates the contract. (The employer must comply with the rules on dismissal.)
Successive Employer (Opvolgend Werkgeverschap) Status
Successive employers can happen in the case of a company takeover or when an employee starts working first through an employment agency and then directly for an employer. This means that the employee moves to a different employer but continues to do the same or similar work.
Whether successive employer status exists depends on a number of conditions.
Beroepsbegeleidende Leerweg (BBL) Contracts
Contracts for the Beroepsbegeleidende Leerweg (BBL) do not count for ketenbepaling (chain arrangement). It does not matter when the contract was concluded or terminated.
Employees Under 18 Years of Age
Ketenbepaling does not apply to employees under 18 years of age who work on average no more than 12 hours per week.
Are There Different Rules for Temporary Contracts in the Collective Agreement on Collective Bargaining (CAO)?
The CBA may set different rules for temporary contracts. For example, it could state that an employee can receive a maximum of six consecutive temporary contracts and that temporary contracts can last for a maximum of four years.
Deviation from Ketenbepaling in the Collective Labor Agreement (CAO)
There are limited ways to deviate from ketenbepaling in a collective bargaining agreement (CBA). A CBA can deviate from ketenbepaling in the following cases:
Temporary Employment Contract
In the collective bargaining agreement (CAO), the number of three contracts can be increased to a maximum of six and the two-year term can be extended to a maximum of four years.
Operation of the Business
Sometimes, due to the nature of the operation of the business, additional temporary contracts or temporary contracts of longer duration may be needed. In this case, the CBA may provide for a maximum of six (instead of three) temporary contracts, and the maximum period for temporary contracts may be increased to four (instead of two) years.
Failure to Implement Ketenbepaling
Some sectors, for example professional soccer, only work on temporary contracts. For these sectors, different rules apply to being able to work on temporary and permanent contracts. The state decides which functions and sectors are eligible. These different rules are then included in the relevant CBAs.
From August 1, 2018, for teachers working on a temporary contract to replace a sick teacher in a primary school, if the CBA for primary schools applies, a permanent contract will not be formed after more than one temporary contract. You can read more about the change in the regulation on ketenbepaling for special functions.
As of January 1, 2020, it has been added to the law that teachers who work temporarily to replace an ill teacher in a primary school or special education will not automatically have a permanent contract after multiple temporary contracts. This will now apply without the need to be specified in the CBA.
Management Positions
In the case of a management position in a company or organization, it is possible to deviate from the two-year period by written agreement (including a CBA).
Education
If the employment contract is made primarily for the purpose of training an employee, ketenbepaling may be determined by the CBA to be wholly or partially unenforceable.
Rotating Temporary Work
In the case of “rotational temporary work” that can be performed for a maximum of nine months a year, the CBA may shorten the interim period by up to three months. This is not limited to seasonal work. This must be agreed in the CBA.
Obviously, employment contracts in the Netherlands are subject to a number of legal requirements and obligations and it is important to seek legal advice from a qualified lawyer before signing any contract. Seeking legal advice from a qualified lawyer helps to ensure that you fully understand the implications of contracts.
As DYC Legal Consultancy, we provide legal support to our expat clients who have problems with the preparation and review of their contracts within the scope of Netherlands Law and to resolve these problems.
