As you may know, some very extensive changes to Dutch employment law are due to take place very soon. These changes will affect the rules regarding termination and fixed term employment agreements mainly.
Based on information that has been made public so far, the aim is to implement the proposed amendments as of the 1st of July 2015. The amendments with regard to fixed term employment contracts and all clauses relating to them (with the exception of the new rules regarding the "chain regulations" for consecutive fixed term employment contracts, which will also be implemented on July 1st, 2015), will likely be implemented as of the 1st of July 2014. Very soon, therefore.
In this newsletter we will only be informing you about the changes that are due to be implemented on July 1st, 2014.
It will no longer be allowed to include probationary periods in employment agreements for a fixed term that is shorter than six months. Currently having a probationary period of a month is allowed. If a probationary period is included in a fixed term employment agreement for (less than) six months, it will be void and no claim can be made to it.
This new rule applies to employment agreements that have been entered into on or after July 1st, 2014. The rule will not apply to employment agreements that are dated before July 1st, 2014 but take effect after that date. Probationary periods can be included in such employment contracts, even if they have been entered into for a period of (less than) six months.
A probationary period can be included in a contract for six months or less if the Collective Bargaining Agreement (CBA) includes a provision to that extent and that CBA was already in force before the 1st of July 2014.
Non compete clause
As of July 1st, 2014 it will not be allowed to include a non compete clause in a fixed term employment agreement, unless by way of a written motivation the employer can show that including a non compete clause is of the utmost importance due to compelling business interests. The assessment of whether such is the case is a very rigorous and therefore a non compete clause will only be able to be included in fixed term employment agreements if the employee is to fulfill a very special and specific position and/or the employer’s enterprise is of a very special or specific nature. Moreover, the compelling business interest not only have to be present at the moment that the clause is agreed upon but also at such time as it is called upon after termination of the employment.
If a non compete clause is included in a fixed term contract without a written motivation then the non compete clause is void. This means that the non compete clause will lapse completely. If a written motivation for the non compete clause has been provided but the employee challenges the compelling business interests, the employee can take the matter to court. A judge can then nullify the non compete clause if he is of the opinion that the motivation insufficiently substantiates the need for a non compete clause.
The new rules have not changed any of the other applicable criteria for including a non compete clause in a fixed term contract.
These new rules regarding the non compete clause apply only to employment agreements that are entered into on or after July 1st, 2014. Contracts that have been entered into before July 1st, 2014 but that take effect after this date, are safe. The restrictions do not apply and an employer does not have to motivate in writing why there are compelling business interests.
Duty of notification
Upon the lapse of a fixed term employment contract for six months or longer, a so called duty of notification will apply. The employer has to notify the employee at least one month before the end of the fixed term as to whether or not the employment agreement will be extended. If an extension is granted, then the employer has to provide the employee with information regarding the conditions based upon which the extension is granted. Beware! Notifying the employee also has to take place in case of an extension of the employment agreement.
If the employer does not notify the employee in a timely manner as to whether or not his employment contract will be extended, the employer will owe the employee a fine of one month’s salary. The employee has to claim this fine within two months after the fixed term of the employment agreement lapsed, otherwise his right to this fine lapses as well. In practice the employee will most likely only claim the fine if the fixed term employment agreement is not extended. If it is extended the employee will probably not claim payment of the fine.
These are the most important amendments to employment law that will likely be implemented as of July 1st, 2014. For more information on these and other proposed amendments to employment law or any other employment law issues you can contact one of the Employment Law attorneys.
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