1. Introduction: What is Contract Non-Renewal and Why it is Important
Non-renewal of contract is a common situation in which a temporary employment contract ends on the expiry date without renewal. A fixed-term employment contract runs until the agreed end date; the contract automatically ends if it is not renewed. In this guide, you will learn everything about your rights, obligations and steps to take when contracts are not renewed, including important compensation you may be entitled to. If your contract is not renewed, your employer is not obliged to give a reason. An employer may decide not to renew a temporary contract because it was always intended to be temporary.
When your temporary contract expires, various rights and obligations automatically arise for both the employee and the employer. The contract ends by operation of law on the agreed end date, without the need for separate notice. However, there are important procedures that must be followed, especially when it comes to the notice obligation and financial compensation. A notice fee may also be charged for each day that the employer is late in giving written notice. If your employer does not pay the transition allowance, you must take action within three months of the end of your employment.
In this comprehensive guide, we cover:
- Key concepts and legal definitions relating to contract termination
- Your rights to notice pay and transition pay
- Step-by-step guide for both parties
- Practical examples and common mistakes
- Current regulations under the Work and Security Act
2. Understanding Non-Renewal of Contract: Key Concepts and Definitions
2.1 Basic definitions
A temporary contract is a fixed-term employment contract that automatically ends on the agreed end date. Unlike a permanent contract, which requires dismissal, a temporary employment contract expires automatically without further action.
Important terms when not renewing a contract:
- Notice period: The period during which the employer must notify the employee whether the contract will be renewed
- Notice compensation: Financial compensation for late or missing notice
- Transition payment: Compensation accrued from the first working day
- Chain provision: Rules on the maximum number of consecutive temporary contracts
2.2 Conceptual relationships
The non-renewal of temporary contracts is directly linked to the Work and Security Act (WWZ) and the Balanced Labour Market Act (WAB). This legislation regulates when employers are obliged to give notice and what compensation employees can claim. If the employer fails to give notice in time, this may lead to forced automatic contract renewal until the contract expires after a maximum of one year under the same conditions. Financial problems within the organisation may also be a reason for not renewing a temporary contract. However, failure to follow the procedures correctly may result in the employee losing rights or financial compensation.
Legal chain: Notice period → Notice compensation → Transition compensation → Unemployment benefit. If the employer fails to give notice in time, the employee can submit a claim to the subdistrict court within two months of the end of the employment contract.
3. Why not renewing a contract is important in employment law
Handling non-renewed contracts correctly prevents costly legal proceedings and protects both parties. Employers who do not comply with the rules risk notice payments of at least one gross monthly salary per violation.
Financial impact in figures:
- According to the Work and Security Act, approximately 70% of employees with contracts of 6 months or longer are entitled to notice
- In the event of incorrect procedures, employers may have to pay notice payments of up to £15,000 or more
- Since 2020, transition payments have been accrued from day one of employment
- The amount of the transition payment depends on the gross monthly salary and the length of service
For employees, correct handling means financial security during the transition to a new job. The combination of notice pay, transition allowance and possible unemployment benefits can provide a buffer of several months’ salary. The transition allowance is intended to make the transition to a new job easier, for example by following a training course or bridging the period between two jobs. Once you have finished your current job, you can focus on looking for a new one.
4. Overview table: Rights and allowances when a contract is not renewed
| Contract duration | Notice period | Notice payment | Transition payment | Unemployment benefits |
|---|---|---|---|---|
| < 6 months | None | No | Yes (from day 1) | Possible* |
| 6-12 months | 1 month | Min. 1 month’s salary | Yes | Usually |
| > 12 months | 1 month | Min. 1 month’s salary | Yes (higher amount) | Yes |
| With temporary employment clause | No | No | Yes | Possible* |
*Depending on employment history and availability for work. Please note: if you do not meet certain conditions, such as having unemployment insurance or being available for new work, you may not be entitled to unemployment benefits.
Specific examples of amounts based on a gross monthly salary of €3,000:
- 6-month contract: £500 transition payment + £3,000 notice payment (in the event of late notice). In the event of long-term illness, the payments for the employer can increase, for example in the case of a WGA benefit.
- 12-month contract: £1,000 transition allowance + £3,000 notice allowance (in case of late notice). Here too, long-term illness can have financial consequences due to benefits.
Below the table:
You are only entitled to unemployment benefits if you meet certain conditions, such as having unemployment insurance and actively looking for work.
5. Step-by-Step Guide: What to Do if Your Contract is Not Renewed
Step 1: Check your Contract Terms
As an employee, check the following:
- Exact end date of your contract
- Whether your contract is for a fixed term or indefinite
- Whether your employment contract contains a temporary employment clause
- The length of your employment (shorter or longer than 6 months)
Always ask why your contract is not being renewed, as this can help you accept the situation. An employee does not necessarily need to know the reason for the non-renewal of their contract, but employers often share the reason.
- Exact end date of your contract
- Whether your contract is for a fixed term or indefinite
- Whether your employment contract contains a temporary employment clause
- The length of your employment (shorter or longer than 6 months)
Example scenario: Lisa has an 8-month contract that expires on 31 December 2024. Because her contract is longer than 6 months and does not contain a temporary employment clause, she is entitled to notice before 1 December 2024.
Contract terms checklist:
- [ ] Contract end date noted
- [ ] Contract duration calculated
- [ ] Temporary employment clause checked
- [ ] Notice period determined
Step 2: Understand your rights and claim compensation
For notice compensation (only for contracts ≥ 6 months): The employer must notify you by letter or email at least 1 month before the end of your contract whether the contract will be renewed. If the employer fails to do so on time, the employee is entitled to notice compensation of at least one gross monthly salary.
Requesting notice pay:
- Document when you did or did not receive notice
- Send a letter to your employer within 2 weeks of the end of the contract
- Refer to Article 7:668a of the Civil Code and request payment within one month
Please note: It is sometimes wise to maintain a good relationship with your employer and not to demand compensation immediately, especially if you may want to work for this employer again in the future.
Every employee is entitled to a transition payment from their first day of work, unless they are at fault or have taken the initiative to terminate the contract. A transition payment is taxable income, so you will pay tax on this amount. The right to a transition payment also lapses if you have resigned in consultation with your employer or if you have been summarily dismissed.
Transition allowance calculation formula:
- 1/3 gross monthly salary per year
Recommended tools:
- Government transition payment calculator
- Legal Advice Centre for free advice
- UWV for information on unemployment benefits
Step 3: Plan your next steps
Apply for unemployment benefit:
- Register with the UWV within 1 week of the end of your employment
- Ensure you have all the necessary documents (annual statement, employer’s statement)
- You are usually entitled to benefits if you have worked for at least 26 weeks. Conditions for unemployment benefits include being unemployed, immediately available for work, and having worked for at least 26 weeks in the 36 weeks prior to unemployment. You must apply for unemployment benefits yourself at the UWV if your contract is not renewed.
- Register with the UWV within one week of the end of your employment
- Make sure you have all the necessary documents (annual statement, employer’s statement)
- You are usually entitled to benefits if you have worked for at least 26 weeks. Conditions for receiving unemployment benefits include being unemployed, immediately available for work, and having worked for at least 26 weeks in the 36 weeks prior to becoming unemployed.
Strategy for finding a new job:
- Start your search during your notice period
- Use your network and actively apply for jobs
- Consider temporary projects through employment agencies
- Finding a new job is easier with a financial buffer from allowances
- Even though your employer has the right not to renew your contract, it does not hurt to remain professional and positive.
- Start your search during your notice period
- Use your network and actively apply for jobs
- Consider temporary projects through employment agencies
- Finding a new job is easier with a financial buffer from allowances
Timeline for a successful transition:
- Week 1-2: Check your rights and claim benefits
- Weeks 2-4: Apply for unemployment benefits and make a financial plan
- Weeks 3-8: Apply intensively for jobs with the goal of finding a new job within 2 months
6. Legal assistance and advice on non-renewal of contract
Not renewing a temporary contract can raise questions and uncertainties for both employees and employers. Precisely because the rules surrounding temporary contracts, notice requirements, transition payments and notice payments can be complex, it is wise to seek legal assistance in good time. A solicitor or barrister specialising in employment law can explain exactly what you are entitled to and what steps you should take if your contract is not renewed.
It is important for employees to know that they are not alone. Legal assistance can support you in drafting a letter to your employer, submitting a request for notice compensation or transition compensation, and assessing your rights at the end of your temporary contract. Even if you are unsure whether your employer is complying with the rules, an employment lawyer can advise you on the best approach. This also applies to situations where you suspect discrimination or unfair termination of your contract.
Employers can also benefit from legal advice, for example to avoid unintentionally being obliged to pay notice pay or transition pay. A solicitor can help with the correct application of the notice obligation and the drafting of clear communication to employees when temporary contracts are not renewed.
Seeking legal assistance does not always have to be expensive. There are various organisations, such as the Legal Desk, trade unions and legal expenses insurers, that provide free or low-cost advice on temporary contracts and their non-renewal. This way, you can be sure that your rights are properly protected and you can avoid unpleasant surprises afterwards.
7. New job and applying for jobs after your contract is not renewed
When your temporary contract is not renewed, it can be hard to swallow. However, the end of a temporary contract also offers new opportunities. It is important to start actively looking for a new job immediately after your contract expires. Start by updating your CV and LinkedIn profile so that you are ready to apply as soon as you see an interesting vacancy.
Use your network: let friends, former colleagues and other contacts know that you are available for a new challenge. Many employers fill vacancies through their network, so a tip from someone in your circle could lead to a job interview. Also attend networking meetings or industry events to make new contacts and learn more about companies that are looking for staff.
Focus your applications on positions that match your experience and ambitions. In your cover letter and during interviews, emphasise the skills and knowledge you have gained during your previous temporary contract. Employers appreciate it when you can explain what you have learned and how you will use that experience in a new job.
Be flexible and open to different types of contracts, such as temporary projects or assignments through a temp agency. This can be a good stepping stone to a permanent contract or a new career opportunity. By staying proactive and preparing well, you increase your chances of a successful transition to a new job after the end of your temporary contract.
6. Avoiding common mistakes when not renewing a contract
Mistake 1: Not giving timely notice (employers) Employers who forget to give one month’s notice of whether a contract will be renewed are obliged to pay a notice fee. This can amount to thousands of pounds per employee.
Mistake 2: Not confirming in writing (employees) Many employees accept verbal notifications about contract renewal. Always ask for written confirmation by letter or email to protect your rights.
Mistake 3: Claiming compensation too late Both notice pay and transition pay must be claimed within certain time limits. For notice pay, the deadline is usually 2-3 weeks after the end of the contract.
Pro Tip: Keep a personal file with all communication about your contract. This will greatly assist in demonstrating your rights and prevent discussions afterwards.
7. Practical example: Not renewing a contract in practice
Case Study: Employee Lisa receives £3,200 due to late notice
Lisa worked for 8 months as an administrative assistant with a gross monthly salary of £2,800. Her contract expired on 31 December 2024, but she was not informed until 15 December that it would not be renewed.
Timeline of events:
- January 2024: Start 8-month temporary contract
- 30 November 2024: Deadline for notification by employer (missed)
- 15 December 2024: Employer informs Lisa verbally that her contract will not be renewed
- 2 January 2025: Lisa sends letter requesting notice pay
- 15 January 2025: Employer pays €2,800 notice compensation
- 31 January 2025: Automatic payment of €400 transition allowance
Final result of financial compensation: | Type of compensation | Amount | Reason | |—————–|——–|——–| | Notice compensation | £2,800 | Late notice (15 days late) | | Transition compensation | £400 | 8 months of service (£2,800 ÷ 12 × 8 ÷ 3) | | Total | £3,200 | In addition to regular December salary |
Lessons learned:
- Timely action pays off: Lisa claimed within two working days of the end of her contract
- Written communication is essential for proving rights
- Employers pay high costs for procedural errors
8. Frequently asked questions about not renewing a contract
Q1: Will I receive a notice payment if my 4-month contract is not renewed? No, the notice obligation only applies to contracts of 6 months or longer. For shorter contracts, you are entitled to a transition payment from day one.
Q2: Can my employer not renew my contract during pregnancy? Yes, the employer may allow a temporary contract to expire during pregnancy. However, pregnancy may never be the reason for non-renewal. If you have any doubts about discrimination, seek legal assistance.
Q3: How much is my transition allowance with a salary of €2,500 and 6 months of service? With a gross monthly salary of €2,500 and 6 months of work: €2,500 ÷ 12 × 6 ÷ 3 = approximately €417. Use the official government calculation formula for an exact calculation.
Q4: Will I receive unemployment benefits if I do not want to renew my contract? Usually not, because you are taking the initiative to terminate the contract yourself. If you decide not to renew your contract, you are not entitled to unemployment benefits. Exceptions are possible if the work is not suitable (e.g. much lower salary or different position than originally agreed).
Q5: Can tacit renewal take place if I continue to work after the end date? Yes, if you continue to work after the contract date and your employer accepts this without protest, tacit renewal may occur. In the event of tacit renewal of a contract, the contract is automatically continued. This usually means renewal for an indefinite period or for the same period as the original contract.
9. Conclusion: Key Points about Not Renewing a Contract
The 5 most important points to remember:
- Notice period is mandatory for contracts of 6 months or longer – employers must give 1 month’s notice if there will be no renewal
- Transition allowance always applies from the first working day, regardless of contract duration
- Claim your rights in a timely manner – both payments have strict deadlines of a few weeks
- Document everything in writing – verbal agreements are difficult to prove
- Applying for unemployment benefits can provide additional financial security while looking for a new job
Next steps for you: Check your contract terms today and note important dates in your diary. If your contract is due to expire soon, start gathering documents and preparing any claims now.
If you are unsure about your specific situation, contact an employment lawyer at Law & More. A good understanding of your rights will prevent financial damage and ensure a smooth transition to the next step in your career.