Temporary contract: pitfalls, chain rule, and notice penalty

The biggest pitfalls of a temporary contract are a chain rule that imperceptibly converts into permanent employment, a missed notice resulting in a notice penalty, an invalid probationary period, and the absence of a clause allowing for early termination. Each of these are errors that strip the contract of its flexibility—precisely why you chose a temporary contract in the first place. Listed below are the pitfalls, along with the corresponding legal regulations and how to avoid them.

The short answer

• Chain rule: fourth contract or more than 36 months = automatically permanent.
• Interval: an interruption of 6 months or less does not break the chain.
• Notice penalty: notification forgotten or late = compensation up to one month's salary.
• Probation period: no probation period for a contract of 6 months or less.
• Early termination: only possible with an early termination clause.
• Vague end date: can change the contract to an indefinite term.

Pitfall 1: the chain regulation

The most common mistake. You may enter into a maximum of 3 temporary contracts, or temporary contracts covering a maximum of 36 months. If you exceed that—a fourth contract or longer than 36 months—an employment contract for an indefinite period is automatically created. A contract that is about to expire but is tacitly allowed to continue can also be considered an extension that counts.

Pitfall 2: misestimating the interval

Many employers believe that a short interruption “resets” the chain. That is incorrect: the chain only breaks with an interval of more than 6 months. If you rehire someone after five months, the previous contracts and months simply count. Therefore, calculate the interval carefully and pay attention to collective labour agreements that sometimes deviate from this.

Pitfall 3: the notification penalty

For a contract of 6 months or longer, you must notify the employee in writing no later than 1 month before the end date whether you are extending it and under what conditions. If you forget to do so or are late, a notice payment is due: pro rata, up to a maximum of one month's salary. This payment is due even if the contract simply expires — the employee does not need to request it. The remedy is simple: put the notice date in your calendar immediately when drafting the contract.

Pitfall 4: an invalid probationary period

A probationary period is not permitted for a contract of 6 months or less. If you include one anyway, the probationary period is invalid—also for you as the employer. For contracts of more than 6 months up to 2 years, a maximum of 1 month applies; from 2 years onwards, a maximum of 2 months applies. Furthermore, a probationary period must always be agreed upon in writing. A probationary period that is too long or not in writing is void.

Pitfall 5: no early termination clause

Without an early termination clause, you cannot terminate a temporary contract prematurely—even if the collaboration turns out to be disappointing. You are bound until the end date. If you terminate the contract early without such a clause, the other party may claim compensation. If you want to retain the option to terminate earlier, explicitly include an early termination clause.

Pitfall 6: a vague end date

A temporary contract only ends by operation of law if the end is objectively determinable. A calendar date is the safest; “for the duration of project X” or “until the sick employee returns” is also acceptable. However, wording such as “as long as there is sufficient work” is too vague and can turn the contract into an agreement for an indefinite period. In that case, the contract loses its temporary character.

Small example

A hospitality company employs seasonal workers. An employee receives three summer contracts in three consecutive years, each with an interval of five months. The employer believes that each season “starts anew,” but because the interval is shorter than 6 months, the contracts continue within the same chain. A permanent contract is automatically created at the start of the fourth season. An interval of more than 6 months — or deliberately staying within 3 contracts — would have prevented this.

Honest recommendation

You can avoid most pitfalls without a lawyer through simple discipline: keep track of the number of contracts and their total duration, calculate the interval accurately, put the notice date in your calendar, and align the probationary period with the duration. A lawyer is worthwhile as soon as the risk becomes high: a series of contracts approaching 36 months, a non-compete or non-solicitation clause you want to be able to enforce, or a collective labour agreement with deviating chain rules. When in doubt, a quick check is cheaper than an unwanted permanent employment contract or a notice penalty.

Read more: view the fixed-term employment contract, read exactly what a temporary contract is , and view an example with a notification requirement.

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