In the Netherlands, there are a variety of contracts to suit the needs of each business. The most common hiring procedure consists in offering a temporary or permanent contract depending on what the company requires. Below you will find a description of each of these two contracts so you can get familiar with them:  

Temporary contracts:

This type of contract has a fixed end date, after its conclusion the employer can decide to start a new contract or terminate the employment relation without the need for any dismissal process. However, the employer is obliged to inform the employee at least one month in advance if the contract is to be renewed or not.

Companies may employ people on fixed-term contracts because they have projects with specific needs within a specific time frame. It is also generally used since some companies prefer not to go for a permanent contract in the first instance as they want to know the employee’s skills and abilities, as well as their fit with the company, before offering a permanent contract.

Keep this in mind! Dutch labor law has required companies to move to a permanent contract if the employee has received more than 3 consecutive temporary contracts or if the employee has had multiple temporary contracts with the employer for more than 3 years. This applies unless other arrangements have been made in the CAO (Collectieve Arbeidsovereenkomst – Collective Labor Agreement)

Permanent contracts:

This type of contract does not have an end date and it can only be terminated if the employee resigns or if the employer finds a valid reason to dismiss the employee, within strict compliance with the law.

Regarding the benefits for the parties involved, a permanent contract is of great use for a company when staff are required to undergo a longer training process and involve a significant investment of resources. At the same time, it also benefits the employee by providing stability and a greater sense of belonging and motivation to perform their duties for their own and the company’s growth.

It’s important to point out that the law foresees a specific and strict procedure for permanent contracts termination, aiming to protect the employee’s rights.

Are you looking for some extra help?

If you have any questions, please do not hesitate to contact us! We will help you determine which type of contract is most suitable for each of your company’s needs. In addition, we offer full contract management services, which means you don’t have to worry about regulations, terms and conditions, deadlines, and any other contract-related administrative tasks. We have a tailor-made service that will contribute to the success of your business.