Employment Contract in Netherlands
Employment Contract in NetherlandsUpdated on Thursday 05th January 2023
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In Netherlands, the labor and employment laws are complex, but our experts are able to guide you for all the issues regarding the employment contract in the Netherlands.
The labor and employment laws are divided in two different parts: individual and collective law, both of them being in close relation to social security law and reflected in the employment contract.
When signing the employment contract, the document must contain the following elements:
- the name for both parties and the residence/headquarter
- the working location
- the employee’s occupied position and his tasks provided by the job description
- the date when the contract was signed and the moment when it enters into force
- the time period, when it is about a fixed period
- the employee’s vacation rights
- the remuneration/salary
- the payment interval between two salaries
- the amount of the work, expresses in days, weeks, project finalization and the price per item, in case it is about this kind of contract
- the number of working hours
- the pension rights, when this may be applied to the type of contract
In Netherlands the employment contracts may be signed for a limited or non-limited period. If you need an Amsterdam accountant who can help you draft an employment contract, you can rely on our team.
The Dutch Civil Code provides that a fixed-time employment contract turns into an open-period employment contract when several consecutive contracts cover a period longer than 36 month or when three fixed-time contracts are signed in consecutive order. For this to happen, the maxim period between two fixed-contracts must not exceed three months.
A fixed-term employment contract ends when the specified period expired and the employer is not required to notice the employee about this. The employer must inform the employee about any vacant position with an open-ended contract when the fixed-time contract ends.
In case of an open-ended employment contract, it can end when the employer serves a notice to the employee; by court proceedings; when both parties agree to end the contract; dismissal when an urgent reason occurred.
The standard periods provided by the law for the statutory notice are:
- four month for more than 15 years of employment
- three month for a service period between 10 and 15 years
- two moths for a contract that lasted between five and 10 years
- one month for a period lower than five years of employment
These periods are applied for a period of time spent in the same position at the same employer.
It is considered a situation of collective dismissal when the employer dismisses 20 employees or more within a period of three months. This must be notified to the trade unions in the sector and also to the insurance agency (UWV WERKbedrijf).
The Dutch civil code also provides detailed information about the following issues concerning the employment contract:
Minimum work conditions, with the parties’ obligation of maintaining the safety, health and wellness in the working place.
Salary, which is regulated by the Act on Minimum Wages and Minimum Holiday Allowances and must be agreed by both employer and employee.
Working hours, in accordance to the Working Hours Act which provides that, in general, the maximum number of working hours per days is 12, with a maximum of 60 hours of work per week. An employee may work a maximum of 55 hours per week over a period of four weeks and 48 hours per week over a period of 16 weeks.
The minimum number of vacation days per year is 20.
In case of illness, the employee is entitled to receive payment from the employer for two years: 70% of the salary and not less than the minimum wage for the first 52 weeks and for the next 52 weeks the same 70%, unless that the amount is not calculated in accordance to the minimum wage.
The social security, which is established by several laws and decrees and subdivided into social insurance benefits, extracted directly from the employee’s salary, and social welfare benefits, financed by the government.
When an employer hires a foreign employee, there are certain conditions which must be met: the employee must have a residence permit and the employer is obliged to obtain a working permit for the employee. An exception to these rules is applied for employees from Switzerland and from member states of the European Economic Area. However, the Dutch law does not govern the relationship between the employee and employer and the foreign employee may be employed in his country by a foreign employer and be transferred to work in Netherlands. In this case, the Dutch employer is not obliged to offer him a Dutch employment contract.
Please contact us for further information and professional advice, including payroll administration. A company that handles all aspects of payroll on behalf of another business is known as a payroll service provider. Employers who value their time and want to make sure that their employees and taxes are paid appropriately and on time frequently find this arrangement to be advantageous. For this purpose, if you have a Dutch business, you can use our services related to payroll in the Netherlands.