Employment contract: 6 clauses that should be included

Employment contract: the contract employers enter into with their employees. Under Dutch law, the employer can in principle determine, in consultation with his employees, what is included in the employment contract. However, the law imposes a number of requirements on certain clauses. Which clauses are useful in an employment contract, what do they imply and what do you have to look out for? This article discusses various clauses that may be included in an employment contract, namely,

  • Probationary period clause
  • Outside activities clause
  • Changes clause
  • Incorporation clause
  • Confidentiality clause, and
  • Penalty clause

Probationary period clause
Upon entering into an employment contract, employer and employee can agree upon a period within which both parties can terminate the contract at any time: the probationary period. Since the introduction of the Work and Security Act, it is no longer allowed to include a probationary period clause in a fixed-term employment contract that does not exceed six months. If an employment contract is entered into for a period exceeding six months, it may be agreed upon a maximum probationary period of one month. A maximum probationary period of two months may be included in employments contracts for an indefinite period. A probationary period does only apply if it (1) has been agreed upon in writing and (2) is the same for both parties.

Outside activities clause
If an outside activities clause is included in the contract, it usually means that the employee is not allowed to perform other work than for his employer, unless he has received approval to do so. The prohibition of other paid activities is limited to the duration of the employment contract. An outside activities clause may prevent that an employee performs competitive work or that he will get overburdened by having several jobs.

Changes clause
If an employment contract contains a changes clause in writing, it may be a little easier for the employer to unilaterally modify the employment conditions of the employee. Employees may be protected by employment law and vested rights cannot be taken away, but by means of a changes clause the option to modify the employment contract in particular circumstances will remain.

Incorporation clause
The incorporation clause is a clause in the employment contract in which a staff handbook containing employment conditions and internal regulations will be declared applicable. The staff handbook will then be incorporated in the employment contract, by which employer and employee are required to adhere to the conditions and regulations.

Confidentiality clause
When performing their work, employees will get familiar with confidential information of the employer or business relations. To provide that employees will treat this kind of information carefully, a confidentiality clause can be included in the employment contract. A confidentiality clause determines that the employee will observe secrecy towards confidential information, both during and after the employment.

Penalty clause
The employment contract may include that the employee owes a penalty if he violates the agreed-upon conditions. It may be determined that an employee who breaches the confidentiality obligation has to pay a certain amount in penalties for each violation. The amount of the penalty can be by reduced by the judge.

More information
This newsletter provides a brief insight into Dutch employment law and the potential consequences for your Embassy. But the Embassy desk of our firm also focuses on:

  • Labour law
  • Rent law / Real estate
  • Investment / Doing business in the Netherlands
  • Matrimonial issues
  • Immunity issuesJan Dop, LL.M, Head of Embassy Desk

Jan Dop,
Head of Embassy Desk