Introduction

An employment contract is the foundation of every working relationship. It not only defines the rights and obligations of both employer and employee but also provides legal certainty and prevents misunderstandings. In this blog, we explain why a solid employment contract is essential and how to ensure it complies with Dutch labor laws.

Why is a good employment contract important?

A clear and legally sound employment contract:

• Prevents misunderstandings between employer and employee.

• Ensures compliance with Dutch labor legislation.

• Provides protection in case of disputes or dismissal procedures.

• Clearly outlines agreements on salary, working hours, and responsibilities.

Employers who operate without well-defined agreements risk legal conflicts, unclear employment terms, and complications during termination procedures.

Legal requirements for an employment contract

Dutch law imposes strict requirements on employment contracts. At a minimum, a contract must include the following:

• Name and address of both employer and employee

• Job title and description of duties

• Salary and payment frequency

• Working hours and duration of employment

• Probation period (if applicable)

• Notice periods and termination conditions

• Vacation and leave entitlements

• Any applicable collective labor agreement (CAO)

In addition, supplementary clauses such as confidentiality agreements, non-compete clauses, and sick leave arrangements can be included in the contract.

Types of employment contracts in the Netherlands

There are several types of employment contracts companies can use, depending on the nature of the work and duration of the collaboration:

• Fixed-term contract: For a set period, e.g., six months or one year. Can be renewed a limited number of times before it becomes a permanent contract.

• Permanent contract: Open-ended, with statutory notice periods and greater security for both parties.

• On-call contract (zero-hour or min-max): Employees work only when called upon, with minimum and maximum hours agreed.

• Freelance or self-employed (zzp) contract: For independent contractors without an employment relationship, subject to the Dutch DBA (Assessment of Employment Relationships) legislation.

Key considerations when drafting a contract

• Clarity on probation period: Must comply with legal limits (max. one month for contracts up to six months; max. two months for longer contracts).

• Employment terms and collective agreements: Check whether a mandatory CAO applies to your industry.

• Non-compete and non-solicitation clauses: These must be reasonable in relation to the employee’s role and legally enforceable.

• Termination clauses and notice periods: Ensure that contractual terms align with statutory requirements.

• Tax and social security: Employers must maintain accurate payroll records and ensure proper payment of wage taxes and social premiums.

Contract management and legal compliance

It is important for employers to regularly update their employment contracts and ensure they remain legally compliant. We recommend conducting periodic legal checks, especially following changes in legislation.

A well-drafted employment contract is essential for a smooth and legally secure employment relationship. By clearly defining agreements and ensuring legal compliance, you prevent conflicts and foster a stable working environment.

Want to ensure your employment contracts are legally compliant and up-to-date?
Dutch Tax Comply offers professional support for contract management and Dutch labor law compliance.