Advantages and disadvantages of an employment contract for a fixed or indefinite period

A fixed-term employment contract ends automatically, whereas an indefinite-term contract does not. Between them lie important legal differences regarding the probationary period, the chain rule, the notification obligation, and the manner in which you can terminate the contract.

The core difference

A fixed-term contract expires on a fixed or determinable date. An indefinite-term contract continues until it is legally terminated, for example via a settlement agreement or with the permission of the UWV or the subdistrict court. That difference determines much of your flexibility and obligations.

Probation period

You can include a probationary period in both forms, but the rules differ. For a contract of six months or less, no probationary period is permitted. For longer fixed-term contracts and for indefinite contracts, maximum terms apply, and the probationary period must be in writing and the same for both parties.

Chain regulation and notification obligation

For fixed-term contracts, the chain rule applies: a permanent contract is created after a number of consecutive temporary contracts within a specific period. Furthermore, for a contract of six months or longer, you must give timely notice of whether you wish to extend it; otherwise, you owe compensation. These rules do not apply to indefinite-term contracts.

Termination and transition payment

Terminating a permanent contract requires a valid procedure and often a transition payment. A temporary contract ends by operation of law, but even then, a transition payment may be due. Weigh the flexibility of a fixed term against the security that a permanent contract offers your employee.

Frequently Asked Questions

Am I always allowed to agree on a probationary period?

No. For a contract of six months or less, no probationary period is permitted. Otherwise, maximum terms apply, and the probationary period must be in writing and equal.

When does a temporary contract become permanent?

Under the chain rule: after a number of consecutive temporary contracts within a certain period, a contract for an indefinite period is created.

Do I have to give notice of a temporary contract?

For a contract of six months or longer, yes: notify them in time whether you are renewing, otherwise you will owe a notice fee.

Choosing the right employment contract?

Our legal experts draft fixed-term or indefinite employment contracts . View our employment law team or schedule a free consultation .