When Can I Offer Employees Temporary Contracts?

Monday, 1 May 2017

As an employer, you are likely to want to conclude temporary employment contracts with your employees. Under Dutch law, under what circumstances is this permissible? 

Hopefully, you'll grow your business and become an employer. New people provide an impulse in every company. However, employment contracts also give rise to lots of legal issues. Particularly in The Netherlands, where there  is a relatively high level of employee protection.

In principle, you're allowed to conclude temporary employment contracts with every new employee that enters your company. There are limitations however as to how many temporary contracts you can offer the same employee in a row.

Since 1 July 2015, there has been a dramatic change in the law governing consecutive employment agreements.

Basically, as an employer, you are allowed to offer the same employee temporary arrangements for two (2) years in a row. After that, the employee's contract is concluded for an indefinite period of time (meaning inter alia it becomes exceedingly difficult for you to dismiss this particular employee).

Alternatively, if you offer an employee more than three (3) temporary contracts, the labour relationship will automatically converse into one for an indefinite period as well. This 'chain' is only interrupted if there is an interval of more than six (6) months between consecutive temporary contracts.

Please note that statutory rules vary depending on the particulars of any given situation. For example, different rules may apply if social partners have concluded a collective agreement for your economic sector. Also, be wary of transitional law in case of people who have been employed since before 1 July 2015. For temporary staff send by an employment agency, different rules apply altogether.

As of 1 July 2015 the Dutch government also introduced the transitional allowance (transitievergoeding). In case of non-renewal of a temporary contract that has lasted at least 2 years the employer has to pay the employee a transitional allowance.   

Temporary contracts entered into for 6 months or less can no longer include a probation clause. Therefore, a lot of Employers offer a temporary contract with a duration of 7 months. This allows the employer not only to add an probation clause, it gives the employer also the possibility to sign two consecutive contracts with a duration of 8 months, leading to a total of 23 months. As result the employer isn’t required to pay the transitional allowance.

It is worthwhile consulting a Dutch lawyer if you are uncertain, because of the (serious) financial impact a dismissal case may have on your business.