Drafting an employment contract for an indefinite period: this is what belongs in it

Drafting an employment contract for an indefinite period involves recording all legally required details (parties, position, salary, duration of employment, start date) and supplementing this with the information regarding workplace, probationary period, training, and notice periods, which has been mandatory since August 2022. Put the contract in writing: only then does the low unemployment insurance premium apply, and are clauses such as the probationary period and non-competition clause legally valid. Below is exactly what should be included and where things go wrong.

The short answer

1. Basic data: parties, position, location, start date, working hours and salary.
2. Probation period: maximum two months, in writing and the same for both parties.
3. Notice periods: statutory or deviating (with a double term for the employer).
4. Mandatory 2022 information: workplace, entitlement to training, wage components, termination procedure.
5. Optional clauses: non-compete, non-solicitation, and confidentiality clauses, if necessary.
6. In writing and signed: required for the low unemployment insurance premium and validity of clauses.

Why draw up an employment contract for an indefinite period on paper?

Legally, an employment contract is established verbally, but a permanent contract without paperwork causes problems. Since the WAB, the low unemployment insurance premium applies only to a written, signed contract for an indefinite period. If this is missing, the employer pays the higher premium: a difference of approximately five percentage points on the wage.

In addition, important clauses (probationary period, non-compete clause, exclusion of continued payment of wages) are only valid if agreed upon in writing. Without a written contract, you miss out on those opportunities.

The mandatory basic data

Every permanent contract contains a fixed core:

• Parties: name and address of employer and employee.
• Function and duties: a description of the activities.
• Effective date: the date on which employment starts.
• Working hours: the number of hours per week, or the method by which this is determined.
• Wages: the gross salary, the payment term and any allowances.
• Holiday: the number of holiday days and the holiday allowance.

Mandatory information since August 2022

The Transparent Employment Conditions Act expands the duty to provide information. Therefore, also include:

• Workplace: the place(s) of work, or that which the employee freely determines.
• Probation period: duration and conditions, if agreed.
• Right to training: the right to training offered by the employer.
• Termination: the procedure and the applicable notice periods.
• Wage components: the individual parts of the wage and the payment date.
• Paid leave: the leave arrangements to which the employee is entitled.

Mandatory training (necessary for the position or legally prescribed) must be free of charge and, as much as possible, take place during working hours. A clause regarding study costs for this purpose is void.

Probation period and notice periods

For an indefinite contract, the probationary period may not exceed two months and must be in writing. A probationary period that is too long is void, meaning that no probationary period applies at all. The probationary period must be the same for both parties.

The statutory notice period for the employer increases with the duration of employment (1 to 4 months). For the employee, this is 1 month by default. If you wish to deviate, the term for the employee may be extended to a maximum of six months, but in that case, a double term applies to the employer.

Optional terms: only if you need them

In addition to the core clause, you can include extra provisions. Only include them if they are truly relevant; a superfluous clause will cost you goodwill later or be struck down by the court.

• Non-compete clause: restricts the employee after termination of employment. Only valid if entered into in writing and with an adult employee; the court may moderate or annul it.
• Non-compete clause: a variant that only prohibits contact with the employer's business relations.
• Confidentiality clause: protects commercially sensitive information.
• Penalty clause: links a fine to a violation; strict requirements (Art. 7:650 BW).
• Ancillary activities clause: since August 2022, only valid with an objective justification.

Don't forget the collective labor agreement and pension

If the company is covered by a collective labour agreement (CLA), the CLA provisions apply and the contract may not deviate unfavorably from them. Check whether a mandatory industry-wide pension fund applies: registration is then mandatory, regardless of what is stated in the contract. A concrete SME example: a hospitality company drafted its own contract with a lower wage than prescribed by the hospitality CLA; the employee was successfully able to claim the CLA wage retroactively.

Honest recommendation

For a regular position without special clauses, you can draft a permanent contract yourself using an up-to-date template that incorporates the requirements of August 2022. A lawyer is not necessary in this case. However, do seek assistance if you want a non-compete or non-solicitation clause that holds up, when a collective labour agreement or mandatory pension fund is involved, or in the case of a managerial position or high salary. You often only discover an incorrect clause upon leaving, at which point it is no longer possible to rectify it.

Read more: employment contract for an indefinite period, having a permanent contract drawn up and the most important provisions in an example.

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