Pursuant to Dutch employment law, a fixed term employment agreement terminates by operation of law upon expiration of the agreed fixed term, unless the relationship is continued after the expiration date by (tacit) renewal of the employment.
However, if, between the same parties, fixed term employment agreements have succeeded one another over a period of in aggregate 36 months or more, or more than 3 fixed term employment contracts have succeeded one another, including intervals of not more than 3 months, the last employment contract shall be deemed to have been entered into for an indefinite term.
As a consequence, the (now indefinite term) employment will no longer terminate by operation of law, but can only be terminated with mutual consent, by court rescission or by giving notice of termination (with prior consent of the UWV WERKbedrijf, a Dutch government body).
From 9 July 2010 a new law entered into effect which temporarily extends the possibilities for employers to enter into consecutive fixed term employment agreements with young employees (below 28 years old). The aim of this new regulation is to prevent young employees from being unemployed during - and as a result of - the financial crisis.
The new legislation prescribes that for employees aged 27 or below the latest fixed term agreement will be converted into an indefinite term by operation of law:
- not after a period of 36 months but after a period of 48 months of consecutive fixed term employment agreements ; and
- not upon conclusion of the fourth but upon conclusion of the fifth fixed term employment agreement.
- Please note that the employer and employee should determine whether the employee is aged 27 or below each time they enter into a new consecutive employment agreement.
The temporary legislation will expire on 1 January 2012 but may be extended by the legislator until 1 January 2014 at the latest.