Whereas fixed-term employment contracts used to be the exception, they seem to have become the rule. A fixed-term employment contract is also called a temporary employment contract. Such an employment contract is concluded for a limited period. It is often concluded for six months or a year. In addition, this contract can also be concluded for the duration of the work. What should you pay attention to when offering the employment contract? What do you put in it? And how does the employment contract end?
What is it?
A fixed-term employment contract is entered into for a specific period. This can be for a few months but also several years. After that, the fixed-term employment contract ends. Therefore, it ends automatically, and no further action must be taken by either the employer or the employee. However, the employer may be liable for damages if he does not comply with the notice period when the fixed-term employment contract expires. The consequence of the ‘automatic’ expiry is that employees have less certainty with a fixed-term employment contract because the employer no longer needs to give notice (via a dismissal permit from the UWV) or dissolve (via the subdistrict court) to get rid of the employee. Termination or dissolution of the employment contract must occur in case of an employment contract for an indefinite period. There are quite a few conditions attached to these forms of termination.
Particularly in bad economic times, the fixed-term employment contract has become an interesting option for employers.
Offer a fixed-term contract.
There are several essential points to consider before offering a contract:
Chain arrangement: number of fixed-term contracts
You must consider the so-called chain rule with a fixed-term employment contract. This determines when a temporary employment contract turns into a permanent employment contract. According to this regulation, you may conclude a maximum of three successive temporary employment contracts in 36 months. Other arrangements may apply in the collective agreement
Do you conclude more than three successive temporary employment contracts? Or do the employment contracts exceed 36 months, including intervals of up to 6 months? And is there no provision in the collective agreement that increases the number of contracts or this period? Then the last temporary employment contract automatically turns into a permanent employment contract.
Employment contracts are successive if the employee has been out of service for six months or less between them. Do you want to break the chain of employment contracts? Then you have to ensure more than six months.
A collective bargaining agreement (CAO) sometimes contains provisions for offering a fixed-term employment contract. For example, a collective agreement may include exceptions to the chain-of-contracts rule. Think of provisions allowing more temporary employment contracts for extended periods. Does your company or industry have a collective labor agreement? Then check what is regulated in this area.
Employees should be able to count on equal treatment. This also applies when offering a fixed-term employment contract. For instance, it is prohibited not to renew the temporary employment contract of a pregnant employee or chronically ill employee on the grounds of pregnancy or chronic illness.
Are there successive employers? Then the chain of employment contracts continues (and may be counted). Subsequent employers may be the case in a company takeover. Or if an employee is employed by an employment agency and later directly by an employer. The employee then gets a different employer but continues to perform the same or similar work.
Content of contract
The content of the employment contract largely corresponds to that of an open-ended employment contract. However, there are some peculiarities:
A fixed-term employment contract must state the duration of the employment contract. The term is usually indicated with a start date and an end date.
It is also possible that a temporary employment contract does not contain an end date, for example, in the case of an employment contract for the duration of a project. Or to replace a long-term sick employee until they can resume work independently. In those cases, you must be able to determine the end of the project or the return of the long-term sick employee objectively. The end of the employment contract then depends on that objective determination and not on the will of the employee or employer.
Interim notice clause
Including an interim termination clause in a fixed-term employment contract is wise. This clause gives the possibility to terminate the employment contract early. Do not forget to name the notice period. Bear in mind that not only an employer can terminate an employment contract early, but also an employee.
A probationary period is only sometimes allowed in a fixed-term employment contract. You can only agree to a probationary period in temporary employment contracts with the following contract duration:
- More than six months but less than two years: maximum one-month probationary period;
- 2 years or more: maximum two months probationary period;
- Without end date: maximum one-month probationary period.
Since 1 January 2015, it has been prohibited to include a non-competition clause in a fixed-term employment contract. The exception to this main rule is that a non-competition clause may be included in a fixed-term employment contract if the non-competition clause is accompanied by a statement of reasons showing that the clause is necessary because of substantial business or service interests on the part of the employer. Therefore, a non-competition clause may only be included in a fixed-term employment contract in exceptional cases.
When does a quick contract turn into a permanent contract?
Permanent contract after three consecutive temporary contracts
An employee is automatically given a permanent contract if:
- He has had more than three temporary contracts with the same employer, or;
- He has had more than three temporary contracts with successive employers for the same type of work. (For example, if an employee first works through an employment agency and then joins the employer directly), and;
- The break (interval) between contracts is a maximum of 6 months. For temporary recurring work (not limited to seasonal work) that can be done for up to 9 months a year, there may be a maximum of 3 months between contracts. However, this must be included in the collective agreement, and;
- The employee’s 3rd contract ends on or after 1 January 2020, and;
- There are no other conditions in the collective agreement, as the agreements in the collective agreement take precedence.
Permanent contract after three years of temporary contracts
An employee automatically gets a permanent contract if:
- He has received multiple temporary contracts with the same employer for over three years. Or for the same type of work with successive employers;
- There is a maximum of 6 months between contracts (the interval). For temporary recurring work (not limited to seasonal work) that can be done for up to 9 months a year, there may be a maximum of 3 months between contracts. However, this must be included in the collective agreement;
- There are no other terms and conditions in the collective agreement.
The chain rule only applies to some. You are not entitled to an automatic extension to a permanent contract in the following situations:
- For an apprenticeship contract for a BBL (vocational training) course;
- Age under 18 with working hours of up to 12 hours per week;
- A temporary worker with an agency clause;
- You are an intern;
- You are a substitute teacher at a primary school in case of a teacher or teaching support staff illness;
- You have an AOW age. An employer may give the employee six temporary contracts in 4 years from the state pension age.
End of fixed-term employment contract
A fixed-term employment contract ends at the end of the agreed period or after the completion of a project. Is it a temporary employment contract of 6 months or longer? If so, you must give notice, i.e., let it be known in writing whether you wish to continue the employment contract and, if so, under what conditions. For example, if you do not extend the temporary employment contract. It would be best if you gave notice no later than one month before the end of the employment contract. If you fail to do so, you owe a compensation of one month’s salary. Or, if you give notice too late, a pro-rata amount. It is up to the employer to prove that he gave timely written notice. We, therefore, recommend sending the notice by registered mail and keeping the track & trace receipt. Currently, an e-mail with receive and read confirmation is also often used.
It is wise for both employer and employee to have necessary contracts (such as fixed-term and open-ended employment contracts) drafted by a lawyer. Especially for an employer, a single drafting can create a model he can use for all future employment contracts. Incidentally, if problems arise in the interim (e.g., dismissal or issues surrounding the chain of custody), it is also advisable to engage a lawyer. A good lawyer can prevent more problems and solve problems that have already arisen.
Do you have questions about temporary contracts or want a contract drawn up? If so, please get in touch with us. Our lawyers specialize in employment law and will be happy to help you!