When entering into an employment relationship, it is important to lay down the terms and conditions in an employment contract ensuring that parties are aware of their rights and obligations. We recommend paying adequate attention when entering into an employment relationship in order to prevent misunderstandings or discussions at a later stage.
What should be included in the employment contract?
The contracting parties are in principle free to determine the employment conditions. However, certain clauses need to comply with the corresponding Dutch statutory rules, for example a probation period clause or a non-competition clause.
It is also important to check if a collective labour agreement (in Dutch: collectieve arbeidsovereenkomst, “cao”) is applicable. This is an agreement concerning employment conditions between one or more employers or employers’ organizations with one or more workers’ organizations, such as a trade union. The website of the Ministry of Social Affairs provides an overview of the existing collective labour agreements in the Netherlands.
When in doubt if a collective labour agreement is applicable, please do not hesitate to contact us. We would be happy to assist.
Important employment contract clauses
Below we discuss several important clauses to be included in an employment contract.
Duration of the employment contract
The employment contract can be entered into for a fixed period of time or an indefinite period of time.
Please be aware of the so-called chain rule: if subsequent contracts for a fixed period of time succeed each other, the employment contract may convert to an employment contract for an indefinite period of time by operation of law. According to the chain rule a contract for an indefinite period of time will come into existence (a) after 36 months or (b) as of the commencement of the fourth contract for a fixed period of time, unless there is a break of more than six months between such successive contracts.
Notice period
When terminating the employment, both employer and employee will have to take into account a notice period. The notice period to be respected by the employer depends on the employee’s years of service. The notice period for the employee is, in principle, one month. For more information on the notice period, please refer to our blog.
Working hours and job location
The employment contract includes the number of working hours per week, the working schedule, and the location(s) where the job is usually performed.
Probation (trial period)
The employment contract may include a clause stipulating a probation period. During such probation period, both parties can terminate the employment relationship with immediate effect. The maximum duration of the probation period depends on the duration of the contract. For more information on the probation period, please refer to our blog.
Non-competition and non-solicitation clause
The employment contract may include a non-competition and/or a non-solicitation clause. A non-competition clause prohibits the employee from being directly or indirectly active or involved in a business performing similar activities during and after the term of the employment contract. A non-solicitation clause prohibits the employee from being active for or having contact with clients or other business relations of the employer once the employment contract has ended. For a non-competition and a non-solicitation clause, strict rules apply (please refer to this page for more information). Breaching a non-competition and/or non-solicitation clause often triggers a contractual penalty clause.
Ancillary activities during the employment
The employment contract may include a clause prohibiting the employee to perform ancillary activities during the employment without the employer’s permission.
As of 1 August 2022, a contractual prohibition of ancillary activities is only enforceable if it can be justified due to an “objective reason”. This new statutory rule also applies to such restrictive clauses in employment contracts that have been entered into before 1 August 2022. The objective reason does not need to be included in the employment contract. The employer can also raise objections at a later stage. If the employee indicates that he or she wants to perform ancillary activities and the employer objects to such activities. The employer must then provide an objective reason why this is not permissible.
Objective reasons could be based on, for example, protecting health and safety. Protecting the confidentiality of business information, the integrity of public services, avoiding conflicts of interest or complying with the statutory restrictions of working hours.
Confidentiality clause
During the employment, the employee acquires confidential information about the employer’s business. A confidentiality clause has the purpose to prevent the employee from sharing confidential information with third parties. Breaching a confidentiality clause often triggers a contractual penalty clause.
Contact us
We have extensive experience in reviewing employment contracts and advising expats on negotiating better terms and conditions. Would you like to discuss your situation with us? Do you need legal advice or assistance?
We would be pleased to assist you. You can contact us by using our contact form below. Or send us an email to info@noordamadvocatuur.nl. All information you share with us will be treated strictly confidential.