Types of employment contracts in the Netherlands
If you work in the Netherlands, you will have an employment contract. But what types of employment contracts exist, and what are the differences? Whether you are looking for a permanent job, temporary work, or a flexible on-call position, the type of employment agreement determines your rights and obligations. In this blog, we will discuss the different types of employment contracts available in the Netherlands so that you know exactly what to expect when signing a new agreement.
What does an employment contract entail?
An employment contract is a legal agreement between an employer and an employee that sets out the terms of the working relationship. This document typically includes key provisions such as the job position, salary, working hours, contract duration, and any secondary employment conditions, such as vacation days and pension schemes.
How is an employment contract structured?
What are the mandatory components of an employment contract? What should you pay attention to when signing an employment agreement? Consider these factors:
- Probation period
- Working hours
- Work location
- Salary and holiday payment
- Number of vacation days
- Pension accrual
- Termination of contract
- Secondary employment conditions
- Confidentiality clause
- Non-compete clause
Which types of employment contracts are there in the Netherlands?
There are different types of employment contracts in the Netherlands, depending on the nature and duration of the agreement. The most common types include the permanent contract, which provides long-term employment without an end date, and the temporary contract, which has a fixed duration and may be extended or converted into a permanent contract. Each type of contract comes with its own rights and obligations, such as notice periods, continued payment during illness, and dismissal rules.
Permanent contracts
A permanent contract is an indefinite employment agreement. This type of contract differs from a temporary contract in how it is terminated. Permanent contracts continue until one of the parties decides to end the agreement.
Temporary employment agreements
A temporary employment agreement, also known as a fixed-term contract, means that the contract automatically ends after a set period. A temporary contract can last six months, a year, or another specified duration. If both employer and employee wish to continue, they can extend the contract for another fixed term. For contracts lasting six months or longer, a notice period applies. This means that the employer must inform the employee whether the contract will be extended and under what conditions in writing.
An employer can offer up to three temporary contracts within a three-year period. If an employee receives a fourth contract or exceeds this timeframe, they are entitled to a permanent contract.
Temporary agency contracts
With an agency contract, there are three parties involved: the employer, the employee, and the employment agency. The employment agency is the formal employer and responsible for salary payments. The agency assigns workers to companies (clients) that need temporary employees. If the client no longer has work available, the agency contract ends. If a new project becomes available at another company, the worker may receive a new agency contract and start working there.
Employees who work for more than 26 weeks via an employment agency must be notified at least 10 days in advance if their contract is ending. If they have worked for 78 weeks continuously, they will receive a fixed-term employment contract. After six consecutive temporary contracts or four years of agency work, the employee is entitled to a permanent contract.
Payroll contracts
Payroll contracts are similar to the temporary agency contracts. A payroll company officially employs the worker and handles salary payments, while the worker exclusively works for a specific company. However, the hiring company determines daily tasks and responsibilities. Since the Balanced Labor Market Act in 2020, payroll workers have gained improved rights, ensuring they receive the same employment conditions as regular employees in similar positions.
Secondment contracts
A secondment contract is similar to an agency contract but has some key differences. A secondment agency is the official employer, and it pays the employee’s salary. Unlike agency work, a secondment contract is often for a fixed period and a set number of working hours. If a project ends before the contract’s duration is complete, the secondment agency must continue paying the employee’s salary for the remainder of the contract.
Model contracts
A model agreement applies to freelancers and self-employed professionals. It is a contract in which employers and freelancers agree on specific tasks or projects. Once the project is completed, the contract ends. However, it is crucial to ensure that the freelancer is not secretly working as an employee under disguised employment.
Project-based contracts
A project-based contract is an employment agreement tied to the duration of a specific project. The project description must be clearly defined and objectively measurable. Once the project is completed, the employment contract automatically terminates.
On-call contracts
An on-call contract, also known as a flex contract, means that an employee only works when called upon by the employer. This can lead to busy periods with a lot of work, followed by quieter times with little or no work. Since 1 January 2020, employers are required to offer a permanent contract if an employee has worked on an on-call basis for at least 12 consecutive months. The most well-known on-call contract is the zero-hour contract, which can be fixed-term or indefinite. It does not specify a minimum number of working hours, but when called upon, the employee must work for at least three hours per shift.
Minimum-maximum contracts
A min-max contract is another type of on-call agreement. It specifies a minimum and maximum number of hours that an employer can require the employee to work per week, month, or year. The employee is obligated to work at least the minimum agreed hours. If the employer does not provide enough work, they must still pay for the minimum hours stated in the contract.
How can the types of employment contracts be terminated?
The termination process for employment contracts varies depending on the type of contract. Below is a summary of how each type of agreement can be terminated:
- Permanent Employment Contract: Termination during the probation period, mutual agreement, dismissal via UWV or court, or immediate dismissal.
- Temporary Employment Contract: Termination during the probation period, immediate dismissal, contract expiration with proper notice, early termination, mutual agreement, or dismissal via UWV or court.
- Agency Contracts: End of contract when the client no longer has work.
- Payroll Contracts: Termination by mutual agreement or on legal grounds.
- Secondment Contracts: Ends when the assignment is completed.
- Model Agreement: Ends upon completion of the project or task.
- Project-Based Contracts: Ends when the project is completed.
- On-Call Contracts: Depending on the duration (fixed or indefinite), with a minimum four-day notice period.
- Min-Max Contracts: Depends on the contract duration.
Understanding the different types of employment contracts in the Netherlands is essential for both employees and employers. Each contract type comes with specific rights, obligations, and conditions regarding job security, termination, and benefits. Whether you are seeking long-term stability with a permanent contract or prefer the flexibility of an on-call or project-based agreement, being aware of the distinctions can help you make informed decisions. By carefully reviewing the terms before signing, you can ensure that your employment contract aligns with your expectations and career goals.
