Understanding Fixed-Term vs. Permanent Contracts in the Netherlands



Modified on: Tue, 21 Oct, 2025 at 12:42 PM

TABLE OF CONTENTS


When offboarding employees in the Netherlands, it’s important to understand the type of employment contract in place, as this determines the applicable offboarding process and legal obligations.

Fixed-Term Contracts (Temporary Contracts)

A fixed-term contract is an employment agreement set for a specific and clearly defined period. It includes a predetermined end date, after which the employment relationship automatically ends—no formal dismissal procedure is required.


Key Points:

  • Automatic Expiry: The contract ends on the agreed date without the need for termination.
  • Notice Requirement: Employers must provide written notice at least one month before the contract’s end date if it will not be renewed.
  • Successive Contracts: Under Dutch law, if an employee receives more than three consecutive fixed-term contracts or works for the same employer for more than three years, the contract automatically converts into a permanent contract.



Permanent Contracts (Indefinite-Term Contracts)

A permanent contract has no set end date and continues until either the employee resigns or the employer initiates a formal termination process.


Termination Considerations:

  • Legal Oversight: Employers cannot unilaterally terminate a permanent contract. Termination requires approval from either:
    • The Dutch Employee Insurance Agency (UWV), or
    • The Subdistrict Court (Kantonrechter).
  • Types of Dismissal:
    1. Summary Dismissal (Ontslag op staande voet): Immediate termination for urgent and serious reasons. This is rare and must be justified with strong evidence and communicated immediately.
    2. Termination via Court: Requires a detailed personnel file, including 3–6 months of documented performance issues and at least three formal warnings.


Financial Implications:

  • Transition Payment (Transitievergoeding): A mandatory severance payment.
  • Equitable Compensation (Billijke vergoeding): May be awarded in addition to the transition payment, potentially amounting to one year’s salary or more.



Preferred Approach: Mutual Termination

Due to the complexity and potential cost of formal terminations, employers often pursue mutual termination. This approach:

  • Does not require government or court approval.
  • Is typically formalized through a Mutual Termination Agreement (MTA).
  • May include an ex-gratia payment (commonly 3–6 months’ salary or more), depending on the circumstances.

Learn More

For more detailed information, please refer to the Dutch Government’s official guidance on dismissal procedures.

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