What is a temporary employment contract? Explanation and usage

What is a temporary employment contract? It is the employment contract under Article 7:690 of the Dutch Civil Code, whereby an employee is made available by an employer (the temporary employment agency) to a third party (the hirer) to perform work under the supervision and direction of that third party. The temporary employment agency is therefore the legal employer, while the temporary worker actually works at and for the hirer. This creates a triangle: temporary employment agency, temporary worker, and hirer. A partially simplified labor law regime applies to this form.

The short answer

• Legal basis: Article 7:690 of the Dutch Civil Code defines the temporary employment contract as an employment contract.
• Triangle: employment agency (employer), temporary worker (employee), and hirer (actual supervision and management).
• Allocation function: the agency brings supply and demand together on the labor market.
• Simplified regime: Article 7:691 of the Dutch Civil Code permits the agency employment clause and a broader chain provision.
• Hirer's remuneration: pursuant to the Waadi, the temporary worker receives at least the same remuneration as the hirer's own staff.

What is a temporary employment contract according to the law?

Article 7:690 of the Dutch Civil Code defines the temporary employment contract as the employment contract whereby the employee is made available by the employer, within the framework of the exercise of the employer's profession or business, to a third party to perform work under the latter's supervision and direction. Two things stand out. First, it is simply an employment contract: the temporary worker is an employee, with wages and the associated protection. Second, there is a third party involved: the hirer determines how and where the work is performed, while the agency formally remains the employer.

An example. A garden center needs extra hands at the checkout in the spring. It hires a temporary employment agency that supplies a cashier. The employee has a contract with the agency, receives wages from the agency, but works under the direction of the garden center manager. When spring comes to an end, the assignment ends.

The triangle: three parties, two agreements

The temporary employment structure involves three parties but two legally distinct agreements:

• The temporary employment agreement between the agency and the temporary worker. This is the employment contract under Article 7:690 of the Dutch Civil Code.
• The hiring or assignment agreement between the agency and the hirer. This is a commercial agreement setting out rates, liability, and conditions. It is not an employment contract.

The temporary worker and the hirer do not have an employment contract with each other. Nevertheless, the hirer exercises daily supervision and management. This distinction is important: liability, wage payment, and dismissal are handled through the agency, whereas instruction on the work floor rests with the hirer.

Difference from a regular employment contract

The allocation function plays a role in determining whether the special temporary employment regime applies: bringing together supply and demand in the labor market. A traditional temporary employment agency fulfills this function by actively matching job seekers and clients. Anyone who merely places their own permanent staff with a client without fulfilling this matching role does not automatically fall under the full temporary employment regime.

A standard employment contract involves two parties: employer and employee, who work together in the workplace. In a temporary employment contract, the hirer sits in between, and a simplified regime applies pursuant to Article 7:691 of the Dutch Civil Code. The main differences:

• Temporary employment clause: the temporary employment agreement may terminate by operation of law as soon as the assignment ends at the request of the hirer. This clause is permitted during the first 26 weeks worked; this period may be extended by collective labour agreement.
• Chain provision: the standard chain rule of Article 7:668a of the Dutch Civil Code (when a series of temporary contracts converts into a permanent contract) only applies to agency work after a longer period or multiple contracts, partly due to collective labour agreement provisions.
• Flexibility: in the first phase, there is in principle no obligation to continue paying wages if there is no work.

The phase system from the ABU and NBBU collective labour agreements

Most temporary employment agencies fall under the ABU or NBBU collective labour agreement. These have a phase system that is broadly structured as follows:

• Phase A (ABU) or phase 1-2 (NBBU): the flexible initial phase. Often with an agency employment clause, broad applicability, and in principle no continued payment of wages without work.
• Phase B (ABU) or phase 3 (NBBU): fixed-term contracts, with a limited number of contracts within a specified period.
• Phase C (ABU) or phase 4 (NBBU): a contract for an indefinite period, with more security for the temporary worker.

The exact duration and numbers per phase may vary per collective labour agreement and per year. Therefore, always refer to the current ABU or NBBU collective labour agreement and not to fixed figures from older texts.

Borrower's remuneration and the Waadi

Pursuant to Article 8 of the Waadi (Labour Allocation by Intermediaries Act), the temporary agency worker is entitled to at least the same remuneration as employees in similar positions at the hiring company. This is known as the hiring company's remuneration and includes, among other things, the periodic wage within the scale, allowances, periodic increments, and expense reimbursements. Furthermore, anyone providing labour must register in the Chamber of Commerce Trade Register (Waadi registration obligation). The hiring company can verify whether the agency has this registration in order.

You can read more about the content and drafting of this contract on the page about the temporary employment agreement, in the explanation about drafting a temporary employment agreement , and in the article about having a temporary employment agreement drafted.

Honest recommendation

If you work as a regular employment agency with the ABU or NBBU collective labour agreement and a standard temporary employment clause, you usually do not need a lawyer for the contracts themselves: the CLA templates already cover the temporary employment clause, the phase classification, and the hirer's remuneration. Keep your administration and Waadi registration in order and follow the current CLA.

Consulting a lawyer is advisable if you fall outside a collective labour agreement, wish to have your own phase structure or deviating remuneration agreements, or if there is a question as to whether your arrangement truly falls under the temporary employment regime of Article 7:690 of the Dutch Civil Code. Legal review is also worthwhile regarding the hiring agreement with your clients, which sets out liability and rates.

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