International HR briefing: Netherlands
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Repeal of temporary measure - fixed term contracts
In the Netherlands, consecutive fixed term employment contracts will be converted, by operation of law, into an employment contract for an indefinite period if either:
(i) the aggregate duration of the consecutive fixed term employment contracts exceeds three years; or
(ii) more than three fixed term employment agreements are concluded consecutively with intervals of three months or less (the “chain rule” or “ketenregeling”).
The “chain rule” was temporarily amended from 9 July 2010 as a crisis measure with the aim of keeping young employees at work. For employees under the age of 27 to whom either (i) or (ii) applied, the allowed aggregate duration of fixed term contracts was four years and the number of consecutive fixed term contracts allowed was four. This temporary measure was repealed from 1 January 2012.
The new Act on Management Board and Supervision provides, inter alia, that at least 30% of a management or supervisory board of a Dutch company has to be female and that at least 30% must be male. If a company does not comply with this rule, it has to draw up an improvement plan and explain why it is not complying, known as the “comply or explain” principle. It is envisaged that the new Act will come into force on 1 July 2012 and that it will remain in force until 1 January 2016.
In the Netherlands, an employment contract can be terminated by giving the employee notice of termination. Article 6 of the Extraordinary Labour Relations Decree 1945 (“BBA”) stipulates that notice from the employer requires, in certain circumstances, permission from the governmental body “UWW WERKbedrijf”. Until the UWW WERKbedrijf permission is obtained, any notice is null and void.
Whether Article 6 BBA applies depends on the extent to which socio-economic relationships in the Netherlands and the interests of the Dutch labour market are relevant. Whether the dismissed employee would rely on the Dutch labour market is also relevant.
On 24 February 2012, the Supreme Court ruled on the applicability of Article 6 BBA to an international employment contract. In this case, an American employee residing in the Netherlands entered into an employment contract with a Dutch employer. The employment contract was governed by Dutch law. The employee returned every year to America where he still had a house. The employer did not obtain the permission of the UWW WERKbedrijf to terminate the employment contract as the employer expected that the employee would return to America after its termination and that therefore he would not fall back on the Dutch labour market. However, in this case the Supreme Court determined that Article 6 BBA was applicable as its purpose was not to protect the Dutch labour market, but to protect employees against unfair dismissal. The issue of whether or not the employee would not fall back on the Dutch labour market is only therefore of minor importance. Of greater significance is whether the employee could be treated differently to Dutch employees who have the benefit of BBA to protect them against unfair dismissal.
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