Below we look at the specifics of Dutch employment contracts and different employment situations.
Types of employment contracts and situations
- Employment contracts for an indefinite period of time
If the employer and the employee have not agreed on a specific duration, an employment contract is considered to be entered into for an indefinite period of time.
- Employment contracts for a fixed period of time
Employers can agree upon three successive fixed-term employment contracts, which automatically expire after the lapse of each term. However, a fixed-term employment contract will be converted into an employment contract for an indefinite term if the total period of employment lasts longer than 24 months; or a fourth employment contract is concluded following three successive fixed-term employment contracts. An employer should inform the employee whether or not the employment will be continued one month at the very latest before the expiration date of the employment contract and, if so, under which conditions. If employers fails to comply with this notification obligation, they must pay compensation to the employee.
- Trial period
The employer and the employee may agree upon a trial period. During the trial period, the employment contract may be terminated by either party, with immediate effect and without compensation, by giving notice. A trial period must be agreed upon in writing and must be for a ‘valid’ period of time. The valid trial period for a fixed-term employment contract of more than six months and less than two years is one month. For an employment contract lasting two years or for an indefinite time period, the valid trial period is a maximum of two months. Trial periods are not permitted in employment contracts for six months or less.
Employee time off
- Employee sickness
In the event that an employee is unable to work due to sickness, the employer must, in principle, continue to pay at least 70% of the last-earned salary for the first 104 weeks (two years) that the employee is unable to work. However, the sick-pay should not exceed 70% of the social security maximum, which amounts to approximately €4,400 gross per month (2016). In the Netherlands, it is not uncommon to agree on sick-pay of up to 100% of the last-earned salary for the first 52 weeks of sickness and 70% thereof for weeks 53 to 104.
All employees are entitled to holiday leave. The minimum number of vacation days per year is 4 times the amount of weekly working hours. For a full 40 hour workweek that would be 160 hours of leave. For part-time employment, the leave hours are calculated proportionally. It is common for full-time employees in the Netherlands to be granted up to 25 holiday days per year or more if a personal arrangement exists with the employer. This leave does not include public holidays which are granted additionally. Employees are also entitled to a holiday allowance, which is paid out once a year around May or June depending on the employer and must be at least 8% of the employee's gross wage of the previous year.
Methods of contract termination
- Termination of employment by the employee
Under Dutch law, employees can give notice to terminate their employment contract with observance of a notice period. The standard notice period is one month, unless a different notice period has been agreed in the employment contract. The maximum notice period for the employee is 6 months. However, if you have agreed on a fixed-term contract, e.g. for one year, it is in principle not possible to give notice before the expiration date of the contract, unless the contract explicitly stipulates the right to give notice prematurely. If you need to be flexible and able to move abroad on short notice, you should take this into consideration when you sign your employment contract.
- Termination of employment by the employer
Under Dutch law, an employer is in principle not able to terminate an employment contract with an employee before the contract’s termination date, without ‘prior approval’. The same applies to employment contracts for an indefinite (permanent) term. Prior approval can be given by the employee by means of a settlement agreement regarding termination.
After signing the settlement agreement, the employee has the right to withdraw their consent within 2 (or 3) weeks without providing any reason. In order to receive unemployment benefits, the employee must be 'involuntarily' unemployed, which means the termination agreement should state that it was the employer’s initiative to terminate the employment contract and no reason for summary (instant) dismissal existed.
If no settlement can be reached, the employer needs the prior approval of the court or the governmental Employment Insurance Agency ‘UWV’ in order to terminate the employment contract. The termination will only be approved if a valid ground for termination exists.
Valid grounds include: proven incompetence or disrupted employment relations. Dutch law provides examples of 'urgent reasons', such as theft or fraud, for which termination can take place immediately and without compensation. The employee must be given the opportunity to react and the employee’s explanations must be taken into account. The courts tend to be very reluctant to accept summary dismissals.
You may be entitled to termination compensation (‘severance’) in case of termination of your employment contract. The amount of the severance depends on the circumstances of the case. The basic rule is that an employee is entitled to a severance of 1/3 monthly salary for every year of service.
After termination, you may be eligible to receive Dutch unemployment benefits. In some circumstances, you may even stay entitled to these benefits if you move to another EU-state in order to find a new job. More information about unemployment benefits is available on the website of UWV.
Under Dutch law, employers are allowed to protect their business interests by agreeing on a non-competition clause in the employment contract. This clause affects the employee’s labour market position after the termination of the employment contract. Such a clause could stipulate that the employee is not allowed to work for a competitor of the employer and/or work for clients of the employer after termination of the contract. The scope of such clauses is not necessarily limited to the Netherlands but can also cover the whole of Europe. Usually, the constraints last for about 6-24 months following termination of employment. Non-competition clauses in ‘fixed-term’ employment contracts are not valid unless the employer has ‘legitimate business interests’ to protect and has stipulated these interests in writing in the employment contract. It is recommended that you check whether your employment contract contains a non-competition clause before you sign it.
Parental leave makes it possible for employees to temporarily work less in order to care for their child or children. Both parents are entitled to parental leave for children up to the age of eight. To be eligible, however, you must have been employed for at least one year. Please note that parental leave is different from pregnancy and maternity and partner leave but it can be combined.
Parents can take up to 26 weeks of leave in total, 9 weeks of which are paid as of August 2, 2022, and have to be used in the first year of the child’s life. The parents will receive reimbursement from the UWV during these 9 weeks in the form of 70% of an employee's daily wage. The remaining 17 weeks are unpaid leave and can be used whenever parents wish, up to the child’s eighth birthday. Additional rules and arrangements may be included in a collective labour agreement. Also, employers can decide to supplement the salary up to 100%.
The parental leave scheme allows the flexibility to work part-time, for example, for half the working week during one year. The leave can also be split into several periods (up to a maximum of six), with each period lasting at least one month. The employer’s permission is required to spread or split the parental leave.
Application for parental leave must be submitted to your employer in writing at least two months before the intended starting date. The application should mention the period of the leave, the number of hours of leave per week and the distribution of the leave hours across the week. Parental leave as such can only be refused in exceptional circumstances involving severe disruption of business operations.
Advice for expats working in the Netherlands
Be aware that your employer should respect Dutch and international law even though your contract may state otherwise.
Do not sign an employment contract before obtaining legal advice from an expert.
Do not sign any termination agreement before obtaining advice from an expert and contact a lawyer as soon as your employer mentions that they intend to dismiss you. Several of our partners offer services relating to employment law and are happy to help with specific questions. You can also contact ACCESS, a non-profit organisation aimed at informing and helping internationals.
Discover employment opportunities within the Amsterdam Area by browsing our job board and ways to find work in the Netherlands. For more resources read our information on the 30% tax ruling and our guide to freelancing to get a better picture of the opportunities available across all fields. You can find more information on Dutch employment law for foreign nationals on the government website.