Employment contract

By means of an employment contract, an employee and an employer enter into an employment relationship. The employee performs work for the employer in return for wages. In order to legally qualify as an employment contract, three requirements must be met: (1) there is labour; (2) for which wages are paid; and (3) the employee is under the authority of the employer for the performance of his work.

Content of the employment contract

The way in which the employment contract is structured is subject to mandatory provisions. For example, the employment contract must include (i) the location where the work will be performed, (b) the date on which the employee commences employment, (iii) the duration of the contract, (iv) the amount of the salary, (v) the moment of payment of the salary, (vii) the job description of the employee, (viii) the amount of working hours (per day or per week), (ix) the holidays and (x) the duration of the notice period.

In writing or orally

An employment contract can be concluded either verbally or in writing. However, in order to avoid ambiguity or discussion, we recommend the employment contract to be in writing.

Fixed term and indefinite term

An employment contract can be entered into for an indefinite or definite period of time.

An employment contract for an indefinite period of time is also referred to as a 'permanent contract'. A permanent contract has no end date. This contract can only be terminated by giving notice to the employee or the employer. Unless an employee and employer can agree on the termination of the employment contract together (termination by mutual consent), the employer will need either a dismissal permit or permission from the subdistrict court in order to be able to terminate the employment contract for an indefinite period of time.

The employment contract for a definite period does have an end date. The agreement actually ends on the end date.

Obligation to give notice

Employment contracts entered into for a period of at least six months shall be subject to a notice period. This means that the employer must inform the employee in writing no later than one month before the end date whether or not the employment contract will be continued. If no notice is given, then the employer shall owe the employee compensation (notice indemnity). The compensation shall be equal to the salary for the time that the employer has completely failed to give notice. Contrary to popular belief, failure to comply with/forget the obligation to give notice does not result in continued employment.

Transition compensation

In situations where, on the initiative of the employer, an employment contract terminates by notice or dissolution, the employee is entitled to transition compensation. Please note: in principle, this also includes the situation that a temporary employment contract is not extended.

In order to be able to determine the amount of the transition allowance, the duration of the employment contract and the (monthly) salary are important. For each year that the employment contract has lasted, the transition allowance amounts to one third month's salary. For each other part of the employment contract, or if the employment contract has lasted less than one year, the transition allowance shall be calculated pro rata.

Important provisions in the employment contract

Some important provisions and agreements in an employment contract are:

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Diane Renders

Diane Renders

A good employment contract provides clarity between the employee and the employer.
Diane Renders - Specialist

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