Employment contract

The employment contract (or labour contract) is one of the most common contracts in a business. It is also one of the most heavily regulated ones. Meaning that an employer is not allowed to put whatever clause in the agreement. Instead, labour laws are strict and first and foremost protect the worker. The employment contract should not cross with the Dutch civil law. Neither should it deviate from the collective labour agreement (CAO) that applies to many industries in the Netherlands.

What are some of the most important things arranged in a Dutch employment contract?

That depends a bit on what you find important and whether you are an employee or employer yourself. The following points are often regarded as important issues:

• Salary: As an employer, you must withhold taxes from the salary of your staff. In the contract you determine the gross salary of the employee.
• Vacation time: Every employee is entitled four times the average number of hours worked per week. A full-timer is therefore entitled to at least 20 vacation days.
• Sick days: If an employee cannot work because they are sick, they are still entitled to a salary.

When do I need a Dutch employment contract?

If you are employing yourself or any staff in your company. This can be both in case of a BV (limited company) and a sole proprietorship or general partnership. In case of a BV, the major director-shareholder is employed in the BV and owns more than 5 percent of the shares in the company. To formalise the relationship to the BV, an employment agreement is drafted.

Is this contract for temporary and/or permanent employment?

This contract service covers both temporary and permanent positions. And both full-time and part-time.

As an employer, it possible to extend the maximum probation period of 2 months?

As I understand it, the employment agreement you are mentioning is a permanent / open-ended one. This means the probationary period is a maximum of 2 months. after those 2 months you should know whether you want to hold on to the employee or if you would rather terminate the agreement.

It is understandable from the perspective of the employer that one wants to extend the probation period. However, this is actually one of the areas where the employee enjoys loads of protection. The law is strict on the probation period which is why a 2 month period is absolutely max when it concerns a permanent contract.

A solution would logically be to convert the open-ended contract into a fixed-term contract. However, changing the employment contract during the probationary period can be seen as abuse of the probationary period. The probationary period may in no way be longer than permitted by law. If it turns out that the employment contract is being amended or converted in order to extend the probationary period, this is never allowed.

There is some jurisprudence that could work in your favour on these types of matters. In a ruling, a judge considered whether a fixed-term contract could be offered to an employee, after the permanent contract was terminated during the probationary period. After the employer terminated the employment contract for an indefinite period during the probationary period, the employee asked for a second chance. A new fixed term employment contract was then offered. The judge ruled that the probationary period clause was not abused here. A factor in this case was the fact that the employer had offered the new employment contract (to give the employee a second chance), at the employee’s request.

In short, it depends on the specifics of the case whether this would be legal or not. I would be very careful with trying to convert the contract or offer a new one. If done as described above it might be possible, but I would recommend to, one way or another, figure out if the employee is the right fit.

Employee study costs

Is the employee obliged to refund the study costs to the employer (pro rata) in the event of premature termination of the employment contract? 

If an employee takes compulsoy education/training, this training must be offered to the employee free of charge. Additionally, no training costs clause may be agreed for compulsory training. Furthermore, the training time for compulsory training must be regarded as working time and the training must as far as possible take place during working hours. These rules do not apply to non-compulsory training. It is therefore very important to determine which training is compulsory. If the training is compulsory, the answer is “no”.

Secondary employment

Does the employer have to give permission for the work to be carried out at an ancillary activity and/or to receive gifts?

A general ban on secondary employment is no longer possible. However, the employer may require the employee to request permission in advance. The employer may only refuse the ancillary activities if there is an objective reason for doing so, for example if the ancillary activities are not compatible with the activities that the employee performs for the employer. It may also be refused if the employee violates the Working Hours Act by carrying out ancillary activities, for example, if the employee works too much.

(Un)predictable working hours

In the newest labour law update, employers must provide employees who work unpredictable hours with greater clarity about the days and times when they can be scheduled. The employment contract or staff manual must state the reference days and times when the employee can be scheduled.
In addition, employees with unpredictable work patterns can request a more predictable schedule from the employer.

Furthermore, the employer does not have to agree to the request, but must respond within a month. If he does not, the request is granted and the employee’s proposed schedule is a fact.

Information obligation

In addition, the employer’s information obligation when entering into an employment contract is further extended. The following points are particularly important:

• the workplace, if it is not one fixed place;
• entitlement to training
• the arrangements regarding overtime;
• the procedure in the event of termination of the employment contract;
• the duration and conditions of the probationary period.

Paid parental leave law

Currently, working parents in the Netherlands are entitled to 26 weeks of unpaid parental leave. This will change from 2 August next. Then, nine of the 26 weeks of parental leave will be partly paid. During these nine weeks, parents will be entitled to UWV benefit equal to 70% of their wages. However, these nine weeks must be taken during the child’s first year of life.
If the child is younger than 1 year old when the law takes effect, the law already applies to that child’s parents.

Pension agreement

An employment agreement usually contains an arrangement about the employee’s pension. This pension scheme can be structured in several ways. Either the ‘benefit agreement’ or the ‘premium agreement’ applies. The capital agreement is uncommon.

The benefit scheme

A benefit agreement is a pension scheme in which agreements have been made about the amount of your pension benefit. Your employer pays a premium to a pension provider. As an employee, you usually also pay part of the premium.

Benefit agreements can be divided into:

• Average pay scheme. The pension depends on the number of years you have been employed by your employer and the level of your average salary during this period.
• Final salary scheme. The pension depends on the number of years you have been employed and the last salary you earned. This arrangement only occurs sporadically.

The premium agreement or defined contribution plan

• Premium & fixed benefit. With a premium agreement you know which premium your employer pays to the pension provider. Because the premium is invested, the return is not certain. With the proceeds of the investments you buy a pension benefit. You will then receive a fixed benefit on your retirement date. This fixed payment provides certainty about the amount in euros.
• Premium & variable payment. With a premium agreement you know which premium your employer pays to the pension provider. Because the premium is invested, the return is not certain. With the proceeds of the investments you buy a pension benefit. On your retirement date you can choose to let your investment continue. You will then receive a variable benefit; its height varies. Your payment does not provide security in euros, but can be higher than with a fixed payment, if things go well with the investment, among other things.