eMPLOYMENT
COntract

Employment contracts and conditions for Dutch employees

The legal rights and obligations differ per type of contract, so you have to consider what option suites you most. To help you make this decision, the basic principles of the different contract options are explained below.

There are three rather common employment contract options. These are:

  • temporary employment contract;

  • permanent employment contract;

  • contract with an agency.

TEMPORARY EMPLOYMENT CONTRACT

An employment contract between the employer and employee is nothing more than an agreement between both parties. The employee obliges him or herself to work for the employer and the employer obliges him or herself to pay a salary for the work delivered by the employee.

We strongly advise that the contract is in writing, although a verbal agreement is also valid. The employer has the obligation to inform the employee about the main issues covered in the employment contract. Within the legal limits and applicable Collective Labour Agreement, employers and employees are free to decide what will be covered in the employment contract.

A temporary employment contract will end automatically and legally on the date agreed. This means that there is no dismissal procedure involved. A different situation occurs if either parties or one of them want to end the contract before the agreed date. In this case the option for termination of the contract before the final date, needs to be part of the contract. If the employer wants to end the contract before the date agreed, a legal dismissal procedure must be followed.

If repeating temporary contracts are used, the rules for a permanent contract can apply (if four temporary contracts with the same employer have been agreed within less than a three-month break between each contract).

PERMANENT EMPLOYMENT CONTRACT

The most important difference between a temporary employment contract and a permanent employment contract is the fact that a permanent employment contract has no ending date (including no indication or any other intention to limit the duration of the contract - such as “for the duration of the project”). This means that the item “the day the contract will end” included in the temporary employment contract will not be part of a permanent contract.

A permanent employment contract can be ended by one of the parties. The legal terms of “notice time” need to be respected. The rules are different for employers and employees. The employee has the legal right to end the contract without a procedure, but he or she has to respect the legal and agreed termination period, which usually is a one-month notice minimum. The employer needs to apply for a dismissal permit. The term of notice depends on the duration of the contract on the day the employer applies for the dismissal permit.

TRIAL PERIOD

The trial period is a very common part of an employment contract. A trial period will apply for both parties and needs to be agreed in writing. If the duration of the contract is less than 2 years, the maximum trial period is 1 month. Exceptions can only be made in case this is agreed by a Collective Labour Agreement. In any way the legal maximum trial period is never any longer than 2 months. An extension of this period is not possible.

CONTRACT WITH AN EMPLOYMENT AGENCY

The contract with a temp agency or commercial employment agency differs fundamentally from a contract with the employer as described above. In the temp construction the temp agency is the legal employer. In particular the protection against dismissal during a certain temp period will not be arranged. This on the other hand means that also the employee is free to leave during the same period of time. Temp agencies have their own Collective Labour Agreement. There is an `Allocation of Workers by Intermediaries Act` which regulates certain issues related to temp agencies.

WORKING CONDITIONS

WORKING TIME

The law lays down a maximum working time of 12 hours per shift and 60 hours per week (over a period of 4 weeks maximum 55 hours on average per week and over a period of 16 weeks maximum 48 hours on average per week).The average working week is 40 hours. The working week is usually organised over five days, with a mandatory legal minimum of one day of rest, normally Sunday. Persons, whose religion observes a day of rest on another day than Sunday, may opt for Friday or Saturday.

Note: the maximum duration of work may be exceeded for certain activities or under certain exceptional circumstances.

THE FOUR-DAY WEEK

In all sectors it is more and more common that people make longer working days, which allows them to work only four days a week. Because this is not the regular agreement, an agreement has to be made with the employer.

ANNUAL HOLIDAY

The number of days of paid statutory annual leave is equivalent to the number of working days a week multiplied by four, i.e. in most cases 20. Employers often allow five extra days. Workers receive normal pay from their employer, plus a bonus equivalent to 8% of annual earnings as holiday allowance, normally paid in May. Accumulation of leave entitlement is possible; employees can "save up" their days of paid leave.

Collective agreements often provide for more days of statutory leave in the main sectors of industry: 22-25 days or more depending on length of service or age. There are also more favourable arrangements for holiday pay.

SICKNESS AND ILLNESS

In case of illness the employer has to continue to pay the salary for at least 2 years. The first year the salary will be 100% of the 'old' salary, the second year the salary will be 70% of the 'old' salary. After these two years the government will take over payment. This is done to push employers to get employees back to work as soon as possible. The employer therefore has to take certain actions. Otherwise the term of 2 years may even get longer.

This rule can cost the employer a lot of money. Not only must the employee who is ill be paid, but also the employee must find somebody else to do the work instead. If the ill person takes a lot of time to recover, it will lead to double costs for the employer. 

To reduce this risk insurance companies have created several policies to cover this risk. In case of illness the insurance company will then take over the payment of the salary. The height of the premium depends on what will be insured. Relevant is the salary, the period the employer will continue the salary himself (one month, two months), the number of employees etc.

Besides the risk of having to pay the salary during illness the employer will also have to pay the premiums for the state disability insurance (plus for the state health insurance if applicable).

Roughly said, the extra costs for the employer will be 110% of the agreed gross salary. On top of this the employer can pay a premium for a private illness insurance, pension premium etc.

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