Good employment contracts are important for doing business in the Netherlands, whether you are an employee or an employer. Understanding the contract you are about to sign is essential, says Godelijn Boonman from GMW lawyers, as the content will determine your rights within the employment relationship.

Following our recent workshop at the IamExpat Fair 2019, I realised how many people are still unaware of the value of certain points in Dutch employment contracts. Here is why they are so important:

10 key points

Before you sign a contract, ensure you understand these 10 key points:

1. Applicable law

While this depends on your place of work and any CLA (CAO) you agree to, most of the time, if you are working in the Netherlands, Dutch law will often fully or partly apply. This means that Dutch employment law will determine your rights.

2. Termination

The way in which your employment can be ended depends on whether your contract is for a fixed term (such as a one-year contract) or for permanent employment. This determines the right to terminate an existing contract, and how this can be done.

3. Trial period

If a trial period is included, then it must be agreed in writing. The maximum trial period for a contract shorter than two years is one month. A permanent contract may include a trial period of up to two months.

4. Notice period

The statutory and therefore most common notice period of an employee is one month. The notice period of the employer must be twice as long as the notice period of the employee. When giving notice, be aware that in the Netherlands notice is generally given from the start of a calendar month.

5. Job description

Pay particular attention to this as it not only defines your role and responsibility, it can also be used for appraisals, performance improvement plans and court proceedings.

6. Overtime

There is no specific legislation around overtime, so whether or not you will receive extra compensation will depend on your employment terms and conditions as well as your CLA.

7. Holidays and vacation money

If you work 40 hours per week, you can expect 20 holiday days per year. Vacation money comprises 8% of your annual salary, so it has significant value.

8. Sick leave and disability

Under Dutch employment law, an employee can receive 70% of their salary during the first 104 weeks of sickness, and enjoys strong legal rights in the event of a disability.

9. Non-compete and relations

If your contract includes a non-competition client, partner or business relations clause, do not violate it. You could be liable for (heavy) financial penalties. Instead, if you feel that these clauses unfairly restrict you, try to negotiate them.

10. Unemployment benefits

If you pay Dutch social security contributions, you could qualify for unemployment benefits: 75% of your salary for the first two months, and 70% of your salary thereafter.

Strengthen your legal position

If you are an employee, pay attention to these 10 points and ensure you understand what the wording in your contract means for you before you sign a new contract. It is much easier to negotiate upfront, and there may be more room for discussion than you expect.

If you are an employer, ensure that the contracts and terms you offer reflect your company’s current position, as well as the latest changes in Dutch employment law. This will help you to mitigate risk.

For legal advice or assistance with any of these points in your employment contract, please feel free to contact Godelijn Boonman from GMW lawyers. You can also download their new whitepaper for more information about Dutch employment law.