New regulations on fixed-term employment contracts

There will be major changes to employment law in the Netherlands in 2015. These changes include strengthening of the legal position of flex workers, reforming dismissal law, and amending the Unemployment Insurance Act. Some of the changes will have serious consequences for the locally hired personnel of Embassies, Consulates and Diplomats. We will discuss these amendments in a series of articles. The first of these articles deals with a number of changes to fixed-term employment contracts which became effective on 1 January 2015.

No probationary period in short fixed-term employment contracts
The rules and regulations of the home countries of Embassies often provide probationary periods of three months or even longer. Dutch employment law is much stricter on that subject and has become even more strict. The following regulations have become effective on 1 January 2015:

Parties to an employment contract for an indefinite duration or a fixed term of more than two years can agree on a probationary period for a maximum of two months. In case the duration of an employment contract is less than two years, the probationary period may not exceed one month. Employment contracts for a period of six months or less may no longer include a probationary period.

A probationary period will only have legal effect if it is agreed upon in writing and if the period is exactly the same for both parties. During the probationary period, both parties may terminate the contract without prior notice. The termination takes effect immediately, irrespective of prohibitions of termination such as sickness or pregnancy. However, the reason for termination may not be one of these legal prohibitions.

Term of notification
Upon the expiry of a fixed-term employment contract lasting six months or longer, the employer must notify the employee at least one month before the employment contract expires about (1) whether or not the employment contract will be renewed and (2) the conditions under which the employment contract might be continued. If the employer fails to notify the employee entirely about whether or not the employment contract will be renewed, the employee will be entitled to a compensation of one month’s salary. In the event the employee will not be notified in a timely manner, the employer must pay a compensation pro rata.

On 1 January 2015, the term of notification has become effective for all existing and new fixed-term employment contracts of six months or longer.

Limiting exception of obligation to continue to pay salary
The period in which the obligation to continue to pay salary may be excluded (for instance, in the event of illness or reduction of activities) will be limited. As regards the first six months of the employment contract, it will remain difficult to exclude the obligation to continue to pay salary from individual employment contracts. The possibility to exclude the obligation to continue to pay salary will remain effective for employment agreements entered into before 1 January 2015.

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