Dutch employment law, like most other jurisdictions, can have both temporary or permanent durations in employment agreements. The specified amount of time in these agreements must be clearly understood by both parties, to be sure they are aware of their continuing obligations and the date at which these obligations end with the termination of the agreement.
Employment agreements that have been concluded with a fixed term generally make the obligations and rights of both parties equally clear. The duration of employment is clearly outlined in the terms covered under the agreement, with the date of expiry being the official date of termination. The employer is generally under no obligation to give notice to the employee of the termination, as it is already codified in the agreement itself.
An exception is if the duration of a Dutch employment contract is sixth months or more, then the employer has a resulting obligation to request whether the employee would like to extend the contract. This must be done no later than one month before the expiry date stipulated in the contract. The employee must be informed of any updated or changed terms and conditions in this possible extension to the contract. Dutch law carries certain penalties when failing to meet these obligations. If the employer does not inform his employees at all, then he will be legally obligated to pay an amount equal to one month’s salary of the relevant employee. However, if he instead informs the employee, but not within the allocated period of time (one month), then a penalty proportionate to the time lost will be imposed.
An employment agreement that exists for an unspecified period of time, has no set expiration date. The route to take in determining the duration of the agreement and thus its termination, is quite different from the above-mentioned fixed term agreements. Subsequently, the level of protection available to employees in this instance, is abnormally high compared to other legal systems.
For the agreement to come to its conclusion, it must be formally set aside by a relevant and competent court. The only other possible solution for dismissal is for the Employee Insurance Agency to consent the termination.
Fixed term employment agreements can also be continued by renewal when nearing the end of the current agreement. In addition, as of July 2015, fixed term contracts can be modified or even changed into an indefinite term contract.
Simple renewal of the agreement can be accomplished via means of a notification letter. However, Dutch employment law limits the possibility of renewal to three times. Further, the entire duration of a fixed term agreement may not exceed 36 months, including any granted extensions to the contract. In the event an agreement is renewed a fourth time, or exceeds the 36 months limit, then the employment agreement will be considered permanent.
These principles of renewal also apply to employment agreements under Dutch law that have succeeded each other within a three-month period. Under employment law in the Netherlands, the employer cannot circumvent the rules by reintroducing a new employment agreement for their employees every few months.