Dutch employment contract: types, clauses and the chain rule

A Dutch employment contract is either for a fixed term (bepaalde tijd) or for an indefinite period (onbepaalde tijd), and that choice decides almost everything that follows. A fixed-term contract ends by law on the agreed date, but under the chain rule (ketenregeling) in article 7:668a of the Dutch Civil Code it becomes permanent once you pass three successive contracts or three years, with breaks of six months or less. Many of the clauses you may add on top, from the probationary period to a non-competition clause, are regulated by statute. If the statutory conditions are not met, the clause is void.

Fixed term or indefinite: which contract fits your situation?

A fixed-term contract ends automatically when the agreed period expires, without notice and without permission from the UWV or the court. A contract for an indefinite period runs until it is properly ended, and ending it needs the employee’s agreement, UWV permission or a court decision.

A fixed-term contract normally cannot be ended early. Under Article 7:667(3) of the Civil Code, interim termination is only possible if both parties agreed an interim notice clause in writing; without it, an employer must reach a settlement or ask the court to dissolve the contract.

A contract for an indefinite period gives much more protection. To end it, the employer needs the employee’s agreement, permission from the UWV (Employee Insurance Agency) or a decision of the kantonrechter (subdistrict court). The wider framework, including the grounds for dismissal, is set out in our guide to Dutch employment law.

An employment contract does not have to be in writing to exist: under Article 7:610 of the Civil Code, paid work performed personally under the employer’s authority is employment. Only the clauses the law makes conditional on written agreement must be in writing, in particular the probationary period, the non-competition clause and the interim notice clause.

Second, a fixed-term contract does not have to end on a calendar date. It can also be tied to an event, such as the completion of a project. That is permitted, but it affects the notification duty and the maximum probationary period, both discussed below.

When does a temporary contract become permanent?

A fixed-term contract becomes permanent when the chain of successive contracts passes three contracts or three years in total. Contracts count as successive when the gap between them is six months or less.

Under article 7:668a of the Civil Code, successive fixed-term contracts between the same employer and employee turn into a contract for an indefinite period once either of two limits is passed. The first limit is the number of contracts: the fourth contract is permanent. The second limit is duration: if the chain lasts longer than three years in total, the contract that takes it past that limit becomes permanent from that moment. A break of more than six months resets the chain to zero.

Which refinements should you check?

Three refinements matter in practice.

The rule follows the work, not only the employer. If a new employer must reasonably be regarded as the successor of the previous one for the work performed, the earlier contracts count as well. This catches businesses that take over an activity, or that move an employee from an agency contract to a direct contract.

A collective labour agreement (CAO) can deviate from the standard limits for specified functions and sectors. That is why you should check the applicable CAO before offering any contract.

For certain sectors and groups, such as seasonal work and some categories of young workers, separate rules apply.

What happens if you get the chain wrong?

The employee then has a permanent contract by law. An employer who lets the contract lapse on the supposed end date is ending a permanent contract without permission.

That is an irregular dismissal. The employee can ask the court to annul it and claim back pay, or claim fair compensation instead. Keeping an accurate record of every contract, its start and end dates and the gaps between them is therefore not administration for its own sake. It is the evidence on which that question is decided.

An example to illustrate: an employee has had three one-year contracts in a row, each followed immediately by the next. The employer offers a fourth one-year contract. Under article 7:668a that fourth contract is by law a contract for an indefinite period, whatever the document says. If the employer later lets it “expire”, the employee can challenge the ending as a dismissal without a valid basis.

Is the chain rule about to change?

Changes have been proposed to lengthen the interruption period, but they are not in force. Until they are, a break of more than six months still resets the chain, so check the status before you build a staffing plan around it.

Which timing rules apply at the start and end of a contract?

How long may a probationary period be?

The maximum depends on the type and length of the contract, and the period must be agreed in writing. It must also be the same length for both parties. Article 7:652 of the Civil Code sets the maximum:

• a contract for an indefinite period: two months;
• a fixed-term contract of two years or longer: two months;
• a fixed-term contract of more than six months but less than two years: one month;
• a fixed-term contract whose end is not set on a calendar date: one month;
• a fixed-term contract of six months or less: no probationary period at all.

A clause that exceeds the maximum is void in its entirety. The consequence is severe: there is then no probationary period at all, not a shortened one. An employer who dismisses during what it believed was probation has then ended the contract without a valid basis.

A probationary period is also not allowed in a follow-up contract with the same employer, unless the new position clearly requires different skills or responsibilities.

During a valid probationary period, either party may end the contract immediately and without giving a reason. No notice period applies. The reason may not be discriminatory, because the ordinary prohibitions on discrimination continue to apply. Note also that the right to a transition payment (transitievergoeding) builds up from the first day of employment. A dismissal by the employer during probation can therefore still trigger one, however small.

When must you announce whether a contract continues?

At least one month before the end date. Article 7:668 of the Civil Code obliges the employer to inform the employee in writing, for every fixed-term contract of six months or more that ends on a calendar date, whether the contract will be continued and, if so, on what terms.

This is the notification duty (aanzegverplichting). It is separate from the question whether the contract ends: the contract still ends, but a failure to notify costs money.

An employer that gives no notification owes compensation equal to one month’s wages; a late notification costs a proportionate part. The employee must claim it within three months of the day the obligation arose.

What notice periods apply?

For a contract for an indefinite period, the statutory notice period for the employee is one month. For the employer it depends on the length of service, rising in steps from one month (less than five years of service) to four months (fifteen years or more).

Notice takes effect from the end of the calendar month, unless the contract or a CAO provides otherwise.

The parties may deviate in writing, but not freely. If the employee’s notice period is extended, it may not exceed six months, and the employer’s period must then be at least double the employee’s. A contract that requires two months’ notice from the employee and one month from the employer is therefore not merely unbalanced. It does not meet the statutory requirement.

Which contract clauses does the law regulate?

The non-competition clause, the ban on side activities, study cost repayment, the unilateral variation clause and the penalty clause are all only valid on statutory conditions. A Dutch employment contract can contain much more than the essentials, but these common clauses need extra care.

When is a non-competition clause valid?

Only if it has been agreed in writing with an employee of full age. In a fixed-term contract it is in principle not allowed at all. It is valid there only if the employer states in the contract itself the compelling business interests that make it necessary.

A clause without that written reasoning is void. Even a properly reasoned clause can be annulled or limited by a court if it unfairly harms the employee compared with the interest the employer is protecting. A relationship clause, which prohibits contact with clients rather than competition in general, is assessed in the same way.

What about side activities, training costs and other clauses?

A clause prohibiting side activities is void unless the employer can rely on an objective justification. Examples are health and safety, the protection of confidential information or avoiding a conflict of interest. The justification does not have to be written in the contract, but it must exist when the employer invokes the clause.

Training that the employer must provide, under a statutory rule or under a CAO, must be offered at no cost to the employee and, as far as possible, during working hours. A clause requiring the employee to repay the cost of such compulsory training is void. Study cost repayment clauses remain possible for training the employer is not obliged to provide, provided they are reasonable and reduce over time.

A unilateral variation clause allows the employer to change terms without agreement. That is only possible where the employer has an interest so substantial that the employee’s interest must give way to it, judged by standards of reasonableness and fairness. In practice courts set that bar high.

A penalty clause is subject to detailed statutory requirements about its form, the destination of the penalty and maximum amounts. Clauses copied from foreign templates regularly fail those requirements.

What must the contract contain, and what does the CAO add?

The employer must inform the employee in writing about the essential elements of the job, and in practice this goes into the contract itself. If a CAO applies, it sets minimum terms that the individual contract cannot undercut.

Since the implementation of the European directive on transparent and predictable working conditions, this information must largely be given in writing and within set periods after the work begins.

The essentials are:

• the identity of the parties and the place of work;
• the position and the nature of the work;
• the start date and, for a fixed-term contract, the end date or the objectively determinable event that ends it;
• the salary, its components, and the method and moment of payment;
• the working hours and how they are scheduled;
• the holiday entitlement, the probationary period (if any) and the notice periods;
• the pension arrangement, if there is one, and the training the employer provides;
• whether a collective labour agreement applies.

Why is the CAO so important?

A CAO applies because the employer is a member of an employers’ organisation that signed it, or because the Minister of Social Affairs has declared it generally binding for the sector. In that case it applies to every employer in the sector.

Where a CAO applies, it takes precedence over an individual arrangement that is less favourable to the employee. A contract that promises less than the CAO simply gives the employee the CAO entitlement. Checking which CAO applies is therefore the first step before drafting anything, not a formality at the end.

Which minimum rights come directly from the law?

Some entitlements come straight from statute and cannot be reduced by contract.

• Holidays: every employee is entitled each year to at least four times the agreed weekly working hours in paid holiday. For a five-day week that means twenty days.
• Holiday allowance: at least eight per cent of the wage is due under the Minimum Wage Act, normally paid in May or June.
• Minimum wage: the statutory minimum wage is revised twice a year and published by the government. Always take the current figure from the official table, not from an article or an older contract.
• Working time: the Working Hours Act limits a shift to twelve hours and a week to sixty hours, with lower averages over longer reference periods. It also prescribes minimum breaks and a weekly uninterrupted rest period.

Which situations need extra care?

What rules apply to on-call and agency work?

On-call workers must be called at least four days in advance, and after twelve months they must be offered fixed hours. Agency work is moving to a system in which agencies need official admission.

An on-call worker must be called at least four days in advance; if the employer cancels or changes the timing within those four days, the hours originally called must still be paid (Article 7:628a of the Civil Code). After twelve months, the employer must offer a fixed number of hours based on the average worked in the preceding twelve months. This applies whatever the arrangement is called: zero-hours, on-call or min-max.

Agency work is moving to a system in which agencies must be admitted before they may supply workers, and hiring from an agency that is not admitted will itself be sanctioned. Check the current dates for registration and enforcement with the Netherlands Labour Authority.

How do you know whether a contractor is really self-employed?

The real question is whether the relationship is an employment contract at all. The label the parties chose does not decide that; all the circumstances of the working relationship do.

The enforcement moratorium of the Dutch Tax Administration ended on 1 January 2025, and enforcement against false self-employment has resumed. A bill introducing a rebuttable presumption of employment below a certain hourly rate has been proposed but is not in force.

May you treat part-time or temporary staff differently?

No, unless the difference is objectively justified. Articles 7:648 and 7:649 of the Civil Code prohibit distinctions based on working hours or on a fixed-term rather than an indefinite contract.

The general equal treatment legislation applies alongside these provisions. It prohibits distinctions on grounds including sex, race, nationality, religion, sexual orientation, age and disability, both in recruitment and during employment. Job advertisements, selection criteria and pay structures all fall within its scope. Once the employee has established facts from which discrimination may be presumed, the burden of proof shifts to the employer.

Which law applies to an international employment contract?

Not simply whatever the contract says. Within the European Union, the Rome I Regulation decides, and an employee who habitually works in the Netherlands keeps the mandatory protection of Dutch law.

In practice, an employee who habitually works in the Netherlands enjoys the mandatory protection of Dutch law, including dismissal protection, whatever law the contract selects. Choosing a foreign law is not pointless, since it governs everything that is not mandatory. But it does not allow an employer to contract out of the Dutch dismissal system for staff working here. Jurisdiction is a separate question, decided by its own European rules. An employee can generally sue in the country where the work is carried out.

Employers posting workers to the Netherlands from another member state have extra obligations. These include notification before the work starts and applying a core set of Dutch employment conditions, such as the minimum wage, working time and holiday entitlement. These duties fall on the foreign employer, but the Dutch client that engages the service has verification duties of its own, and both can be sanctioned.

How can a Dutch employment contract end?

A fixed-term contract ends when it expires. Every other ending requires one of a limited number of routes, and the route depends on the reason.

Which route applies to your reason?

Where the reason is economic, such as a reorganisation or the disappearance of a position, or where the employee has been unfit for work for more than two years, the employer must obtain permission from the UWV before giving notice. Where the reason lies in the person, such as underperformance, culpable conduct or a seriously disturbed working relationship, the employer must ask the subdistrict court to dissolve the contract.

The third route is agreement: a settlement agreement (vaststellingsovereenkomst) in which the parties record the end date and the terms. An employee who signs one has a statutory reflection period in which the agreement can be revoked, and the employer must mention that period in the agreement itself.

The court examines whether the ground relied on is complete in itself; a combination of incomplete grounds is possible, with up to 50% extra compensation on top of the transition payment. For underperformance, the employer must show that the employee was told in good time and given a genuine opportunity to improve.

When is a transition payment due?

Whenever the employment ends at the employer’s initiative, including when a fixed-term contract is not renewed. It builds up from the first day and amounts to one third of the monthly salary for each full year of service, pro rata for the remainder.

There is a statutory maximum that is adjusted each year, so always use the current figure. In insolvency the entitlement falls away, and the UWV guarantee scheme does not cover it. The procedure for each route is set out in our article on how to terminate employment in the Netherlands.

What changes if the employee falls ill?

Almost everything. During the first two years of incapacity the employer must continue to pay at least seventy per cent of the wage, in the first year not less than the statutory minimum wage, and a prohibition on termination applies, subject to exceptions.

Employer and employee must work together on reintegration. An employer who does not do enough can be required by the UWV to continue paying wages for a further period. Our article on employee sickness rights explains what both sides must do.

Can you change a contract that is already running?

Not simply on your own. The employer needs either a valid unilateral variation clause and a substantial interest, or a reasonable proposal that the employee can reasonably be expected to accept.

If the contract contains a valid unilateral variation clause, the employer must still show an interest substantial enough that the employee’s interest has to give way. Without such a clause, the employer can propose a change, and the employee must respond reasonably. Where the employer has a good reason connected to changed circumstances, and the proposal itself is reasonable, an employee who refuses may be in the wrong. Courts assess this in stages. They look first at whether the circumstances genuinely changed, then at whether the proposal was reasonable in the light of all interests, and finally at whether acceptance could reasonably be required of this employee.

The practical lesson is the same for both sides. An employer who wants to change terms should document the reason, consult properly, offer a transitional arrangement and put the proposal in writing. An employee who disagrees should say so in writing and continue working under protest rather than simply refusing, because walking away can be treated as the employee ending the contract.

What should you check as an employee?

Most mistakes in a Dutch employment contract cost the employee a right the law provides. Check these points:

• The probationary period does not exceed the maximum of Article 7:652; otherwise it is void.
• Count your successive contracts and the gaps between them: a fourth contract, or a chain longer than three years, is permanent.
• A non-competition clause in a fixed-term contract states the compelling business interests in writing.
• You received the end-of-contract notification at least one month before the end date, or you claim the compensation within three months.
• The applicable CAO gives you at least what your contract promises.
• Before signing a settlement agreement, you know about the 14-day reflection period (Article 7:670b).

What should you check as an employer?

The most expensive mistakes are made at the drafting stage. Check these points:

• You keep a register of every fixed-term contract, including agency periods, and check it before each extension.
• The probationary period fits the contract length, usually one month in a one-year contract.
• The notification duty for each fixed-term contract is diarised about six weeks in advance.
• If you extend the employee’s notice period, yours is at least double it and the employee’s does not exceed six months (Article 7:672).
• You have checked which CAO applies and pay its scales, allowances and pension contributions.

What can we do for you with your employment contract?

Our employment lawyers advise employees and employers on Dutch employment contracts, in Dutch and English. Specifically:

• We review your employment contract and point out void or risky clauses.
• We calculate where you stand under the chain rule and whether your contract has become permanent.
• We draft or check a non-competition clause, including the written reasoning in a fixed-term contract.
• We calculate the transition payment and any compensation for a missed notification.
• We review a settlement agreement within the reflection period.

Summary

• A fixed-term contract ends automatically; a contract for an indefinite period can only end by agreement, with UWV permission or through the court.
• Under article 7:668a of the Civil Code, a chain of more than three contracts or more than three years becomes permanent; a break of more than six months resets it.
• Probationary periods, non-competition clauses and notice periods are strictly regulated; a clause that does not meet the rules is void.
• Check the applicable CAO first: it can override a less favourable contract and change the standard rules.
• An employee who habitually works in the Netherlands keeps the mandatory protection of Dutch law, whatever law the contract chooses.

Frequently asked questions