Dutch Employment Contracts

Dutch Contracts

International companies hiring employees for their global expansion into the Netherlands face wide-ranging tax, employment, and social insurance regulations. Compliance is essential with regulations set at national level and by Collective Labor Agreements (CAOs), as well as directives from the European Union (EU). The Dutch Civil Code, Dutch Tax and Customs (Belastingdienst) and the Ministry of Social Affairs and Employment also feature. To hire from abroad, employers must comply with the Foreign Nationals Employment Act (WAV).

This legal framework covers payroll and tax law, social security, termination and severance rights, vacations, sick leave, minimum wages, and other areas. These factors apply particularly when a foreign company wants to hire local employees in the Netherlands, as they must comply with all obligations on behalf of the employees

Employment Contracts in Netherlands

• Permanent or Indefinite Employment Contracts (Vast contract): These are the norm and can be either written or verbal. In the absence of a written contract, once an employee begins employment the contract is deemed to be in place and the employer must supply written details of the terms within one month, indicating whether a CAO applies. 
  Written contracts are strongly advised, however, as under Dutch law certain clauses are valid only in written form. The contract can be ended by either party, adhering to terms of notice. Where an employee does not agree to reasons for dismissal, employers need permission from the Employee Insurance Agency (UWV) to carry out the dismissal.
• Fixed-term or Temporary Employment Contracts (Tijdelijk contract): After receiving three fixed-term contracts, or if contracts cover three years, the employee must by law be given an indefinite, permanent contract. Even when an end date is specified, employers must give one month’s notice that they do not intend to offer a new contract, at risk of being fined one month of the employee’s salary.
• Probationary or Trial Period Employment (Proeftijd): The maximum permitted period is two months for indefinite contracts and for fixed-term contracts of more than two years. Fixed-term contracts of less than six months cannot specify a probationary period, but a contract between six months and two years can have a one-month trial period.
• Recruitment Agency Employment Contracts (Uitzend contract): The employee signs the contract with the agency, who place the worker with a company for a specific project or period.
• Freelance Employment Contracts (DBA modelovereenkomst): Companies are obliged to give contracts to freelances working for them under the provisions of the Declaration of Employment Relationships Act (DBA). The contract differentiates the freelance from salaried employees.