What is a fixed-term employment contract?

A fixed-term employment contract is a temporary contract that ends automatically at a pre-agreed time — usually on an end date or upon completion of a project — without the need for notice. The contract ends “by operation of law”. However, there are a number of statutory rules governing this: the chain rule limits the number of temporary contracts, there is a notification obligation, and the probationary period is subject to limits. Anyone who misses these rules may find themselves tied to a permanent contract sooner than expected.

The short answer

• What: employment contract that ends at a predetermined time (end date, project, or replacement).
• Termination: by operation of law — no notice of termination or dismissal permit required.
• Chain regulation: maximum of 3 contracts in 36 months; permanent thereafter.
• Notice requirement: for contracts of 6 months or longer, you must notify in writing at least 1 month in advance whether you are renewing.
• Probation period: not permitted for a contract of 6 months or less.
• Early termination: only possible if stated in the contract.

Why a temporary contract?

• Flexibility. You are not immediately tied to a permanent contract, for example for new positions or an uncertain order book.
• Assessment period. You get to know the employee before offering a permanent contract.
• Peak or project. For temporary work (season, project, replacement during illness or leave), a temporary contract is more suitable.
• Simple termination. The contract ends by operation of law — you do not have to go through the dismissal process via the UWV or the subdistrict court.

How does a temporary contract end?

A fixed-term employment contract ends automatically at the agreed time. This can be a calendar date (“up to and including June 30”), but also an objectively determinable moment, such as “until the sick employee returns” or “until the completion of project X”. It is important that the end is objectively determinable; otherwise, it may be considered an indefinite-term contract.

Because the contract ends by operation of law, no notice of termination, no dismissal permit, and no transition payment upon termination are required. Please note: you are liable for the transition payment if the employment ends or is not continued at the employer's initiative — even in the case of a temporary contract that expires.

The chain regulation

The chain rule determines when a series of temporary contracts converts into a permanent contract. With the same employee, you may, at most:

• 3 enter into temporary contracts , or
• temporary contracts for a period of up to 36 months.

If you go beyond that — a fourth contract, or longer than 36 months — an employment contract for an indefinite period is automatically created. The chain is only broken by an interval of more than 6 months. If the interruption is 6 months or shorter, the previous contracts simply count.

Notice requirement and probationary period

Two rules that many employers stumble over:

• Notice requirement. For a contract of 6 months or longer, you must notify the contract in writing no later than 1 month before the end date whether you are extending it and, if so, under what conditions. If you fail to do so or do so too late, you owe a notice payment (pro rata, up to a maximum of one month's salary).
• Probation period. For a contract of 6 months or less, a probation period is not permitted. For a contract of more than 6 months up to 2 years, a maximum of 1 month applies; for 2 years or longer, a maximum of 2 months. A probation period must always be agreed upon in writing.

Early termination

In principle, you cannot terminate a temporary contract prematurely. If you wish to retain this option—for example, in the event of disappointing results—the contract must include a clause allowing for early termination. Without such a clause, you are in principle bound until the end date, even if the collaboration is unsatisfactory. Early termination without such a clause can result in compensation being payable to the other party.

Small example

An installation company hires a technician with a 7-month contract. Because it is longer than 6 months, a 1-month probationary period is permitted and the notification obligation applies. The employer forgets to give notice one month before the end date and only informs the employee on the last day that they will not be renewing the contract. The result: a notification payment of approximately one month's salary, while the employment simply ends. One short written notification would have prevented this.

Honest recommendation

For a single, short temporary contract with standard terms, you usually do not need a lawyer — a correct template with the right end date, a notice date in your calendar, and an present or absent probationary period suffices. Consulting a lawyer is worthwhile as soon as things become more complex: a series of contracts where the chain rule threatens to turn into a permanent contract, an early termination clause, a non-solicitation or non-compete clause in a temporary contract, or doubt regarding the notification obligation. In any case, put the notice date and the end of the chain in your calendar — that prevents most mistakes.

Read more: view the fixed-term employment contract, read how to draft a temporary contract and which pitfalls to avoid.

Frequently Asked Questions