Flexible labour - effective date 1 January 2015 / 1 July 2015

• Netherlands

• Employment law

03-07-2014

Changes effective as of 1 January 2015

Notification of fixed term employees

As per 1 January 2015, an employer will be obliged to inform an employee who has entered into an employment contract of at least six months ultimately one month prior to the termination date of the fixed term employment contract whether or not the contract will be renewed. If the employer fails to do so, the employer is obliged to pay the employee up to one monthly salary. Please be aware that also in the event that the employment contract will be extended, but the employer has not informed the employee ultimately one month prior to the termination date, the employer is obliged to pay the employee up to one monthly salary.

Currently, there is no obligation in this respect, but it is general practice to inform employees timely in advance whether or not the fixed term employment contract will or will not be extended. To avoid these penalties, we advise to put the relevant notification dates in your electronic calendars.

Probationary period

Unlike under current law, as of 1 January 2015 a probationary period can no longer be agreed upon in a fixed term employment contract for 6 months or less. A probationary period can be agreed in a fixed term employment contract for 6 months and one (1) day or longer.

The Government anticipates that this, in conjunction with the amendments to the rules on consecutive fixed term contracts (see below), will lead to lesser use of short term employment contracts.

Non-compete clause

Non-compete clauses (this includes non-solicitation clauses) in fixed term employment contracts will in principle be banned as per 1 January 2015, unless the employer in the employment contract can explicitly show which overriding business interests the employer has that require protection by a non-compete clause. Case law should show when this would be the case. In the event that a non-compete clause is included in a fixed term employment contract and no motivation is included, the non-compete is null and void.

Change effective as of 1 July 2015

Consecutive fixed term contracts

Consecutive fixed term employment contracts will be converted into an employment contract for indefinite term by operation of law if either (i) the aggregate duration of consecutive fixed term employment contracts exceeds two years or (ii) more than three fixed term employment contracts are concluded consecutively with intervals of six months or less.

Considering also the new rules with respect to probationary periods, it could be sensible to make use of fixed terms of 8 months instead of the current practice of applying 12 months terms.