9 Important aspects of Dutch employment law

28 juli 2021

Are you dealing with workers in the Netherlands, or are you planning to hire employees under Dutch law? Scroll down to view the list of 9 important aspects of Dutch employment law.

Dutch employment law

1. Fixed term or indefinite term

Employees are very well protected under Dutch law. It is not at all easy to terminate an employment contract. In short, there are two contract options: a contract for an indefinite period, or a fixed term contract. The latter expires automatically on the agreed end date. A contract with an indefinite term can only be terminated by the employer based on permission from the Employee Insurance Agency (UWV) or the court, mutual consent, or urgent cause for dismissal with immediate effect. The same applies to the termination of a fixed term contract before the end date. Because of this high level of protection for employees, it is advised to work with (short) fixed term contracts initially. 

2. Maximum fixed term contracts

It is not possible to enter into many fixed term contracts with the same employee. After 36 months the employment contract automatically reverts into an indefinite employment. This is a result of the Dutch ‘chain regulation’. Also, if the employment has not lasted 36 months yet, the fourth fixed term contract between the same parties automatically reverts into an indefinite employment. 

3. Minimum wage

Under Dutch law employees have the right to earn the statutory minimum wage, as well as 8% holiday pay. For 2022 employees older than 21 must receive € 1.725,- gross per month, excl. holiday pay, for a fulltime workweek. 

4. Probation period

A probation period can only be agreed upon in a contract for an indefinite period, or in a fixed term contract which lasts 6 months or more. Therefore, it is advised to choose a minimum duration of 7 months for a fixed term contract. 

5. Incapacity for work 

During sickness or injury the employer is obliged to pay a minimum of 70% of the wages for 104 weeks and to observe all rules and regulations with regards to the reintegration of the employee. It is not allowed to terminate an employment contract of an employee who is unfit for work due to sickness or injury, or during pregnancy and maternity leave. 

6. Failure to give notice

Based on Dutch law an employee is entitled to receive notice about extension or termination of a fixed term contract one month before the end date of the contract. If the employee is not informed on time, a penalty of a maximum of one month’s salary is to be paid to the employee.  

7. Transition fee

If the employer wishes to terminate an employment contract – either by not extending a fixed term contract, by initiating a dismissal procedure or even during the probation period – a statutory transition fee needs to be paid to the employee. This amounts to 1/3 month’s salary for each year of employment.  

8. Post-employment restrictions

Under Dutch law it is only possible to impose post-employment restrictions on an employee with a fixed term contract, if the contract includes the specific compelling business reasons for doing so. This must be specific per contract, for each employee in their specific role. Dutch law does not provide for mandatory compensation when agreeing on a non-competition clause. 

9. Unemployment benefits

Employees who have worked in the Netherlands on the basis of an employment contract can request unemployment benefits at the UWV. In order to receive them, there are several requirements. For instance, they need to keep applying for a new job, must have worked at least 26 weeks in the past 36 weeks, need to live in the Netherlands and must not be culpably unemployed. The benefits will not be granted if the employee has chosen to resign from the job.

Hopefully now you know more about Dutch employment law. But please note that there are many more rules to observe. Some of which may be included an applicable collective labor agreement. If you wish to learn more, feel free to contact me. Or visit this website.

Are you an employee working in the Netherlands? Or planning to work in the Netherlands? Please click here to read the blog that’s written especially for you.