Welcome to Penrose Employment contracts
The attorneys of Amsterdam based law firm Penrose specialise in employment contracts under the laws of the Netherlands. Our Dutch lawyers assist employers and employees in drafting, amending and terminating employment contracts. A number of relevant topics and frequently asked questions regarding employment contracts is discussed below.
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The contractual relationship between the employer and employee in the Netherlands is usually laid down in a written employment contract. The written employment contract states the terms and conditions of employment agreed between the employer and employee, often referring to certain appendices and applicable (personnel) regulations, bonus plans, insurances and/or pension plans. The employment contract usually mentions at least the primary conditions such as working hours, salary and holidays. But it may also include fringe benefits and further specific agreements between parties, such as a non-solicitation clause or a non-competition clause and the protection of company information. It is difficult for an employer in the Netherlands to circumvent or avoid the protective nature of Dutch labour law.
A fixed-term employment contract is basically limited in duration and expires automatically on the last agreed working day provided that notification of the last working has been sent in time. The duration of the contract is therefore predetermined and the parties cannot terminate the contract prematurely, unless otherwise agreed. It is moreover possible that no end date has been set, and instead, that the contract will (automatically) end after a certain project has been completed. In case of a fixed-term employment contract, a notice by the employer must be allowed for, which means that the employer must give notice in writing 1 month before the end of the contract stating that the fixed-term employment contract will effectively end
An employment contract for an indefinite period of time is entered into without a fixed end date. The employment contract for an non-fixed period of time, also referred to as a permanent contract, that continues until either the employer or the employee terminates the contract. The agreed notice periods under Dutch law are relevant here, as are the restrictions and rules that apply in the event of termination by an employer.
The employment contract is usually set down in writing in the Netherlands. Yet, a written employment contract is not always made. The position of the employer and the employee is governed by Dutch employment law also in the absence of a written employment contract.
Whether an employment is in place is a question that needs to be considered case by case based on the following criteria:
- an employer/employee relationship exists (the employee is in the employer’s service)
- the employee receives payment (wages) in return for work, and
- the employee performs the work personally.
In most cases, an employment contract is created when both the employer and the employee set down a (written) agreement to this effect. However, this is not a requirement. An employment contract can also be entered into verbally or -implicitly- when the parties start to behave in a certain way and by doing so, the three Dutch labour law criteria are met. Since it makes a very big difference to the parties whether their relationship constitutes an employment contract or not, and which agreements then apply, it is essential to set down an employment contract in writing. By doing so, the agreements are clearly established and discussions afterwards are avoided where possible.
Once an employment contract is in place, this brings a number of benefits for the employee. For example, the right to the minimum wage, holiday pay, continued payment of wages in case of illness, protection against dismissal and, possibly, the right to unemployment benefits after dismissal.