The term of an employment contract is of major importance for the rights and duties of both, employer and employee. This applies in particular in the event of employment contracts of a total period of three years.
In just two days a lot can change regarding the rights and duties in the event of termination of an employment contract. These changes will be discussed on the basis of the following example:
An employer and employee have concluded an employment contract for one year. The employment relation is very satisfying and the employer and employee decide to continue the employment. What does the employer have keep in mind when deciding upon the term of the second fixed-term employment contract?
In case the second employment agreement is concluded for a term of two years or less, the employment agreement will end automatically when this period has expired. The employer has to pay the employee transition compensation in the event the contract will not be continued on the initiative of the employer. The employer must also fulfil the duty of notification.
If the term of the second employment contract is longer than two years, the chain rule will apply. In this event, the employment contract will exceed a total period of 36 months so that the second employment contract will be considered as an employment contract of indefinite duration.
This has major consequences for the employer’s options to terminate the contract. An employment contact of indefinite duration can only be terminated with the employee’s consent that will usually only be given in the event of dismissal on the spot or a high compensation. If the employee does not consent, the employer is dependent on the permission of the UWV or the setting aside of the contract by the subdistrict court. In the latter two events, the employer has to pay transition compensation upon termination of the employment.
On termination of an employment contract, the situation might have changed completely within two days. Therefore, be aware of the consequences the choice for a specific term of an employment agreement has.
Would you like to learn more about the rights and duties of employers and employees regarding the term of the employment contract? Or do you need advice on drafting an employment contract? Please contact us:
There will be major changes to employment law in the Netherlands. Russell Advocaten will inform you of these changes by a series of newsletters. This time: Tightening of the regulation regarding successive fixed-term contracts.
The salary thresholds for highly skilled migrants and European Blue Card holders are adjusted annually. What will be the amounts for 2026? Also, stricter rules for the highly skilled migrant scheme are proposed. What might change?
On-call contracts offer many advantages for both employers and on-call employees. However, there are also a few rules that they need to take into account. What are they?
What shall we do with the drunken employee? Sack him? That isn’t always allowed. Alcohol abuse may be the result of an addiction and in that case the prohibition on termination during illness may apply. What do you have to take into account when dismissing an employee due to alcohol consumption?
24 November 2025 was Equal Pay Day in the Netherlands: the day of the year when men have earned on average as much as women in a whole year. How can the European Directive on wage transparency ensure that men and women are paid equally?
Almost all companies now use some form of AI. This means that they may be subject to the prohibitions and regulations set out in the European AI Act. How can you ensure that you comply with these rules?
