Mistake one: using a template contract that ignores mandatory Dutch rules
An international template translated into English is the single most common source of trouble. Dutch law does not care what the document is called or which law the parties chose: if the work is performed in the Netherlands, the mandatory provisions of Dutch employment law and any generally binding collective agreement apply anyway. The result is a contract that looks complete and is unenforceable in exactly the places where it matters.Three clauses go wrong most often. A probationary period is only valid if it is agreed in writing, is the same for both parties and stays within the limits of article 7:652 BW: no probation at all in a contract for six months or less, a maximum of one month in a fixed-term contract of less than two years, and a maximum of two months in a longer fixed-term contract or a contract for an indefinite period. A probation clause that exceeds the limit is void in its entirety, not reduced to the maximum, so a dismissal during that period is then an ordinary dismissal without permission.The notice period is the second trap. Under article 7:672 BW the statutory notice period for the employer runs from one to four months depending on length of service, while the employee owes one month. The parties may extend the employee’s notice period in writing, but then the employer’s notice period must be at least double that of the employee. Notice is also given against the end of the month unless something else has been agreed.The third is the non-competition clause. Article 7:653 BW requires it to be agreed in writing with an adult employee, and in a fixed-term contract it is only valid if the employer sets out in the clause itself the compelling business interests that make it necessary. A generic clause copied into a fixed-term contract is therefore usually worthless. Check as well whether a collective agreement applies to your sector, because it can override your contract on pay scales, working hours, allowances and pensions.Mistake two: losing control of fixed-term contracts and the chain rule
Under the chain rule in article 7:668a BW an employment contract is deemed to be for an indefinite period once successive fixed-term contracts exceed three years, or as soon as a fourth contract is entered into. Contracts count as successive if the gap between them is six months or less, and a collective agreement can vary this in a limited number of cases. Miscount, and you have a permanent employee who can only be dismissed with the permission of the Employee Insurance Agency (UWV) or by the subdistrict court (kantonrechter).The second half of this mistake is the notification duty in article 7:668 BW. For every fixed-term contract of six months or more the employer must inform the employee in writing, no later than one month before the end date, whether the contract will be continued and on what terms. Forget it and the employee is entitled to compensation of one month’s salary; notify late and the compensation is pro rata. This is a deadline, not a formality, and it is one of the cheapest claims an employee can win.A change is coming here. The Act on greater security for flexible workers (Wet meer zekerheid flexwerkers) has been adopted and will enter into force by royal decree; it lengthens the interruption after which a new chain starts from six months to three years for most situations. Until that entry into force the six-month interruption applies. The four-day rule for on-call workers, under which an employee called up with less than four days’ notice may refuse the call and keeps the right to pay if the call is withdrawn, already follows from article 7:628a BW.Mistake three: treating working time, minimum wage and overtime as a matter of contract
Working time is regulated by public law, so an agreement between employer and employee cannot set it aside. The Working Hours Act caps a shift at twelve hours and a working week at sixty hours, and over any sixteen-week period the average may not exceed forty-eight hours a week. An employee is entitled to at least eleven consecutive hours of rest in each period of twenty-four hours, and to thirty-six consecutive hours of rest in each period of seven days. Anyone working more than five and a half hours is entitled to a break of at least thirty minutes, and more than ten hours to at least forty-five minutes. Separate and stricter rules apply to night work and to young employees.The Act also requires the employer to keep records of working and rest times in a way that allows supervision, and the Netherlands Labour Authority can impose administrative fines where the records are missing. What the Working Hours Act does not do is set overtime pay: that follows from the employment contract or the collective agreement. The common assumption that the law guarantees a premium for overtime is wrong, and so is the reverse assumption that overtime can be left entirely unpaid, because total pay divided by the hours actually worked may never fall below the statutory minimum wage.Since 1 January 2024 that minimum wage is expressed as a statutory minimum hourly wage for all employees, whatever the length of the working week; the amounts are revised twice a year and published by the government. On top of salary, the Minimum Wage and Minimum Holiday Allowance Act (Wet minimumloon en minimumvakantiebijslag) entitles the employee to holiday allowance of at least eight per cent of the gross annual salary, normally paid in May.Mistake four: getting holiday and leave entitlement wrong
The statutory holiday entitlement is four times the agreed weekly working hours per year, under article 7:634 BW, which is twenty days for a full-time week of five days. Anything above that is contractual. The distinction matters because of the expiry rules: statutory days lapse six months after the end of the calendar year in which they were accrued, unless the employee was reasonably unable to take them, whereas contractual days are subject to the ordinary five-year limitation period. An employer that never tells its staff about the expiry date will usually not be able to rely on it.Article 7:638 BW obliges the employer to enable the employee to take at least two uninterrupted weeks of holiday, or twice one week, each year. Employees continue to accrue holiday during sickness, which regularly surprises employers who have carried a long-term absence for two years.Alongside holiday sits the Work and Care Act (Wet arbeid en zorg). It provides for pregnancy and maternity leave of at least sixteen weeks in total, one week of paid partner leave immediately after the birth followed by up to five weeks of additional partner leave in the first six months at seventy per cent of the daily wage paid by UWV, and parental leave of twenty-six times the weekly working hours until the child turns eight, of which nine weeks are paid at seventy per cent of the daily wage if taken in the first year. Short-term and long-term care leave and emergency leave complete the picture. Record all of it in a leave policy and in your payroll administration, because entitlements that are not registered tend to be claimed at the end of the employment, when they cost the most.Mistake five: underestimating what sickness and reintegration require
An employer must continue to pay at least seventy per cent of the wage during illness for a maximum of one hundred and four weeks under article 7:629 BW, and in the first fifty-two weeks that payment may not fall below the statutory minimum wage. A collective agreement often raises this. During those two years a statutory prohibition on termination applies under article 7:670 BW, so dismissal for another reason has to be justified independently and will be tested strictly.The procedural side comes from the Gatekeeper Improvement Act (Wet verbetering poortwachter). The company doctor draws up a problem analysis in around the sixth week of absence, employer and employee agree a plan of action by around the eighth week, they evaluate progress at least every six weeks and take stock at the end of the first year, and reintegration in the employee’s own organisation comes before placement elsewhere. If UWV concludes at the end of the two years that the employer made insufficient reintegration efforts, it can extend the obligation to pay wages by up to fifty-two weeks. Employers must also have a basic contract with a certified occupational health service and access to a company doctor, and either party can ask UWV for an expert opinion when they disagree about capacity or about the efforts made.Mistake six: sloppy records and careless handling of employee data
In Dutch employment disputes the employer usually carries the burden of proving that it did what it says it did: that a warning was given, that a target was set, that a reintegration step was taken, that hours were recorded. A thin file is not a neutral fact, it is a losing position. Before the first working day the employer must establish the employee’s identity from an original valid identity document and keep a copy in the payroll administration; a driving licence does not qualify.Retention periods differ by document. Payroll and tax records fall under the seven-year retention obligation in the General Tax Act (Algemene wet inzake rijksbelastingen), and data relating to payroll taxes, including the copy of the identity document, must be kept for five years after the end of the employment. Data that is no longer needed for a defined purpose has to be deleted, because the General Data Protection Regulation (GDPR, in Dutch the AVG) allows storage no longer than is necessary.The other GDPR duties are equally concrete: a lawful basis for every processing operation, a record of processing activities, clear information to staff about what is collected and why, appropriate security, and notification of a personal data breach to the Dutch Data Protection Authority within seventy-two hours where the breach is likely to pose a risk. Consent is rarely a valid basis in an employment relationship because of the dependence between the parties. Any monitoring of employees, and any arrangement for processing their personal data, also requires the consent of the works council under article 27 of the Works Councils Act (Wet op de ondernemingsraden).Mistake seven: improvising the end of the employment relationship
Dutch dismissal law works with a closed list of grounds in article 7:669 BW, and the employer must show that one ground is completely fulfilled and that redeployment in another suitable position within a reasonable period is not possible. The route follows the ground: dismissal for business-economic reasons or after two years of incapacity for work runs through UWV, and all other grounds, such as unsuitability, culpable conduct or a disturbed working relationship, run through the subdistrict court, which is asked to dissolve the contract. Choosing the wrong route costs months.Two mistakes recur. The first is the performance file that does not exist: dismissal for unsuitability requires that the employee was told in good time, given a genuine opportunity to improve and supported in doing so, and a court that sees only a final assessment will refuse the request. The second is summary dismissal (ontslag op staande voet), which requires an urgent cause, immediate action and an immediate statement of the reason; an employer that investigates for three weeks before acting has almost always lost the case before it starts.The statutory transition payment under article 7:673 BW is due on termination at the employer’s initiative, accrues from the first day of employment and is therefore also payable after a dismissal during the probationary period; its maximum is set each year by the government and published in the Staatscourant, so never quote a figure from an older document. Where the employer has acted in a seriously culpable manner the court can award a fair compensation on top. Many files end instead in a settlement agreement (vaststellingsovereenkomst), in which case the wording must protect the employee’s unemployment benefit, and the employee has fourteen days to reverse the agreement in writing without giving reasons. Our article on the transition payment explains the calculation in more detail.How to bring your Dutch employment law compliance up to standard
Compliance is a review cycle rather than a project. Start with the contracts actually in use and check the probation, notice and non-competition clauses against the statutory limits and against the collective agreement for your sector. Then map every fixed-term contract with its end date, the one-month notification deadline and its position in the chain. Check that working time is recorded, that pay per hour worked meets the statutory minimum, and that holiday and leave balances are visible in the system rather than in someone’s memory.Next, look at the files. One dossier per employee, containing the signed contract and amendments, job description, assessments, warnings, agreements on improvement and any sickness and reintegration documents, with access limited to the people who need it and a retention schedule that is actually applied. Finally, agree internally that no termination is announced before the ground, the route and the file have been checked, because that single rule prevents most of the claims described above. Our Law & More B.V. employment team carries out this review for employers and works councils.Law & More advises Dutch and international employers on employment contracts, collective agreement obligations, working time and pay, sickness and reintegration, employee data and dismissal, and represents both employers and employees before UWV and the subdistrict court. With offices in Eindhoven and Amsterdam and a multilingual team, we can review your documentation before it is tested by a claim. To discuss your situation, contact our team.Frequently asked questions
What is one of the most common mistakes employers make with Dutch employment contracts?
A frequent mistake is using the wrong type of contract for the situation, such as confusing fixed-term contracts, permanent contracts, on-call arrangements, and zero-hour contracts, each of which has specific rules and benefits. Using the wrong type can create extra work or legal problems later, so it is wise to consult experienced legal advisers when in doubt.
What employee rights do companies most often overlook under Dutch law?
Companies frequently overlook rules on working hours, overtime pay, and data privacy. The Working Hours Act sets firm limits on daily and weekly working hours and on rest periods, but it does not set overtime pay: that follows from the employment contract or the collective agreement, subject to the rule that pay per hour worked may not fall below the statutory minimum hourly wage. These protections apply strictly regardless of how established or new a company is in the Dutch market.
How long can employee personal data be retained under Dutch privacy rules?
Retention periods depend on the type of data: payroll records must generally be stored for seven years, while there is no statutory period for the data of unsuccessful job candidates: the Dutch Data Protection Authority advises deleting it within four weeks of the end of the procedure, or within a year with the consent of the candidate. Companies must have a clear reason for collecting any employee information and should not keep data longer than necessary under GDPR and Dutch privacy law.
What can happen if an employer mishandles the termination of an employee?
Courts may order the payment of substantial compensation or even require the employer to rehire the employee if the termination is found unfair. This can force the company to cover several months of extra salary payments or deal with ongoing workplace disruption, which is why following the correct procedure and documenting every decision is essential.
How should employers prepare before making a dismissal decision?
Employers should keep a close record of performance issues, feedback, and clear improvement plans well before any termination takes place, and establish well-defined policies for handling misconduct. For dismissals driven by economic reasons, employers should be able to clearly demonstrate the business need behind the decision.
