What is an employment contract? Agreements between employer and employee

An employment contract is the agreement between employer and employee stating the conditions under which someone works. The law (Article 7:610 of the Dutch Civil Code) requires three elements: performing work, being in the service of (authority), and receiving wages. Everything agreed upon surrounding this—job title, salary, working hours, probationary period, notice period, holidays—constitutes contractual freedom within the limits of mandatory Dutch employment law. Below are the minimum requirements, optional requirements, and mandatory law.

Linda is an HR manager at an SME with 25 employees. Three times a year, she negotiates new employment contracts — sometimes she does it herself, sometimes with a lawyer present. Below is the basic knowledge every employer needs to know before signing.

The short answer: what is an employment contract?

Three statutory characteristics (Art. 7:610 BW):

• To perform work: to personally deliver work.
• In the service of (authority relationship): follow instructions from the employer.
• Wages: monetary consideration (and possibly other benefits).

Is one of these three missing? Then, legally speaking, it is not an employment contract, but possibly a contract for services (ZZP) or something else. Stricter enforcement regarding the ZZP boundary has been in place since 2025 — consult a lawyer if in doubt.

What is the minimum requirement?

According to Article 7:655 of the Dutch Civil Code (employer's duty to provide information), you must record at least the following within one month:

• Name and place of residence of employer and employee.
• Place of work or place of employment.
• Position or type of work.
• Date of commencement of employment and (if temporary) end date.
• Wages and payment terms.
• Working hours (hours per week).
• Holiday schedule.
• Notice period.
• Potential application of the collective labor agreement.
• Pension scheme.

As of 2022, rules have also been added regarding predictable working conditions (EU Directive) — minimum predictability of working time and interpretation of rights.

Permanent versus temporary contract

Two main forms:

• Temporary contract (fixed term): for a specific period or project. A maximum of three temporary contracts in three years (chain rule, Art. 7:668a BW). After that, a permanent contract is automatically created.
• Permanent contract (indefinite term): without an end date. Termination requires the UWV, a sub-district court, or a settlement agreement.

Since the WAB (2020), a temporary contract is relatively more expensive than a permanent one — employers pay higher unemployment insurance premiums for flexible contracts.

Common clauses

• Probation period: maximum 1 month for a contract of less than 2 years, 2 months for a contract of ≥ 2 years or for an indefinite period. To be recorded in writing.
• Non-compete clause: only valid for contracts of indefinite duration (since 2015), with justification. For temporary contracts, only in cases of compelling business interests.
• Non-solicitation clause: a variant of a non-competition clause, limited to customer contacts.
• Confidentiality: protection of company information during and after employment.
• Penalty clause: in case of violation of special clauses.
• Study cost clause: reimbursement of training costs in the event of early departure.

For the difference between Dutch and English contracts: Dutch vs English employment contract.

Mandatory law versus freedom of contract

Much Dutch employment law is mandatory — the employee is protected by operation of law, even if you agree otherwise in the contract. Examples:

• Minimum wage and minimum holiday allowance.
• Continued payment of wages during illness (104 weeks, minimum 70%).
• Statutory holiday (4 weeks per year).
• Notice period (minimum 1 month for the employee, increasing for the employer).
• Transition payment upon dismissal.

Agreements that conflict with mandatory law are void — the employee cannot comply with them, the statutory regime applies.

Termination

Six routes:

• Expiration of temporary contract: by operation of law. Notice period of 1 month (Art. 7:668 BW).
• Termination by employee: in writing, with observance of the notice period.
• Settlement agreement: termination by mutual consent — see settlement agreement.
• UWV route: in the event of dismissal for economic reasons or long-term illness (after 104 weeks).
• Sub-district court judge: in the case of other grounds for dismissal (poor performance, strained relationship, urgent cause).
• Summary dismissal: only for urgent reasons, with immediate termination.

For details: dismiss employee.

Honest recommendation

An employment contract is not a formality. The clauses you include now (probationary period, non-competition clause, study costs) determine your rights and obligations for years to come. Invest in sound advice for the first contracts — a template that is right for your industry will save a lot of repair work later. For the broader context: impact of the new employment law.

Frequently Asked Questions