The benefits and drawbacks of a permanent contract in the Netherlands
A permanent employment contract is something many people strive for because it means entering into an indefinite working agreement with an employer. This provides long-term job security and removes concerns about contract renewals. However, a permanent contract only defines the duration of the agreement, not the number of hours you have to work on a weekly basis. For example, one can have a permanent contract even with a zero-hours agreement. In this article we will talk more about the Benefits and drawbacks of a permanent contract in the Netherlands.
What are the benefits of a permanent contract for the employer?
Permanent contracts offer several advantages for both employers and employees compared to temporary contracts, primarily regarding risk management, stability, appreciation, and trust. The benefits for employers in the Netherlands include:
- The employer pays an hourly wage.
- Lower AWF (unemployment insurance) contributions for permanent employees.
- Permanent employees enhance customer trust through familiarity.
- The quality of work improves with long-term employment.
- The prospect of a permanent contract attracts better candidates during recruitment.
The benefits for an employee
For employees, a permanent contract provides security. Having guaranteed hours on paper ensures a stable monthly income, making long-term financial planning, such as buying a house, easier. Additionally, a permanent contract offers legal protections, including a fixed notice period, paid vacation days, and severance pay in case of termination by the employer.
What are the disadvantages of a permanent contract for an employer?
The major disadvantage for an employer when offering a permanent contract is that they cannot easily dismiss an employee with a permanent employment agreement. An employer must have a valid reason for dismissal, such as the elimination of the position or the employee's poor performance. Terminating a contract is only possible with mutual consent or with approval from the UWV (Employee Insurance Agency) or a subdistrict court. To convince the UWV or the subdistrict court, the employer must provide a valid employee file containing evidence justifying the dismissal. For example, this could involve an employee who does not comply with employment conditions.
Another drawback for employers in the Netherlands is the higher cost associated with permanent employment agreements. There are more secondary employment conditions attached to it, such as covering potential training costs. Additionally, a permanently employed worker also receives a salary increase of approximately three percent.
The disadvantages for an employee
One disadvantage of a permanent employment contract for the employee is that there is less room to negotiate salary or employment conditions, as these are typically determined in the collective labor agreement (CAO) or the employment contract.
How many contracts before a permanent contract?
In the Netherlands, it is not very common to be offered a permanent contract right at the start of a new job. In most cases, you will first receive one or more temporary contracts. Within a period of three years, an employer can offer a maximum of three temporary contracts. The fourth contract must be a permanent one. However, this only applies if there is an uninterrupted employment relationship. If there is a gap of six months or more between two temporary contracts, the counting restarts from the beginning.
What things should you pay attention to regarding a permanent contract?
There are several rules regarding permanent contracts that you need to be aware of. The contract must include all required information, such as personal details and a job description. A permanent employment contract includes a probationary period of up to two months. Additionally, pay attention to the following:
- Any training or courses related to the job must be paid for by the employer.
- You are allowed to have secondary employment.
- You have the right to request changes to your working hours, work schedule, and workplace.
- If you have received a permanent contract based on an on-call agreement, your employer must specify the days or time slots when you will be required to work.
A permanent contract in the Netherlands provides both employers and employees with long-term stability and security. While it offers benefits such as financial certainty, legal protection, and career development opportunities, it also comes with certain drawbacks, including higher costs for employers and less flexibility for employees. Understanding the implications of a permanent contract is crucial before entering into such an agreement. Whether you are an employer looking to strengthen your workforce or an employee seeking job security, weighing the advantages and disadvantages carefully will help you make an informed decision.
