Employment Agreement for Indefinite Term (EN)

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What is it?

An employment agreement cites the 'rules' that are applicible between an employer and employee. An employment agreement for indefinite term is used for permanent staff members. There is no end-date, which means that if the parties want to terminate the agreement, they have to do so in mutual agreement, or through a judge. In an employment agreement you include the 'rules' on:

• working hours;
• the employee's salary;
• paid sickness leave and holiday leave.

Why do I need it?

An employment agreement is important, because both employee and employer know what they can expect from each other and what is expected from them. This will reduce any chance of disputes between the employee and employer.

In addition, in Dutch law, you can only deviate from some rules of law in a written agreement. A good example of this is a non-compete clause.

To finish off the reasons why you need this contract is that in Dutch law an employer is obligated to make the renewal of a contract into an indefinite one, when:

• this is the third renewal (or: the fourth contract); or
• the employee is working in your company for over two years.

Important notes!

Convenience translation

This is a convenience translation from the original Dutch arbeidsovereenkomst. Although we try to assure that the agreement is without errors, we do not guarantee this is any way. Also, translated Dutch law concepts may mean something else in other jurisdictions. Note that this agreement is to be used in a Dutch context only. 

The Chain rule

The rule of law which states that with the renewal of the third contract (so the beginning of the fourth), the new contract is automatically an agreement for an indefinite term, only applies when there is no break of at least six months between the contracts. If there is a break of 6 months (or longer), the 'renewalcounter' resets to zero.

Strict rules concerning termination

An employment contract for indefinite term cannot be terminated easily, according to Dutch Law. In short, there are three ways: a termination in mutual consent, a termination through a judge or the employer has to obtain a 'termination permit' from the UWV (the national body for employees' insurances).