An employer has two options. Employees can be offered an employment agreement for either an indefinite period or a fixed term.  A fixed term agreement ends automatically on the agreed upon end date, while an employment agreement for an indefinite period has no end date.

The so-called ‘chain rule’ applies to fixed term contracts. This rule means that an employer can:

• offer an employee a maximum of three fixed-term employment agreements, and/or;
• keep an employee employed on a fixed-term basis for a maximum of 36 months (whichever comes first).

The fourth consecutive employment agreement with the same employer will automatically be considered to be an employment agreement for an indefinite period. The same applies if the total duration of employment exceeds the 36 months’ period. For two or more employment agreements to be considered ‘non-consecutive’, an interval of over six months must have lapsed between employment agreements.

Yes, a fixed term employment agreement ends automatically on the agreed upon end date. However, if the employment agreement has lasted for six months or longer, the employer has a so-called notification obligation. This means that the employer must, at least one month before the contractual end date, notify the employee in writing as to whether or not the agreement will be renewed and if so, under what conditions.

Failure to (timely) comply with this notification obligation may result in financial penalties.

You may be looking to terminate employment while avoiding the costs and time expenditure involved with getting permission from either a judge or the UWV.

You can do this by entering into a termination agreement with the employee. In such an agreement, the employer and employee agree to the mutual termination of the employee’s employment and lay down mutually acceptable terms. Usually, payment of severance will be one of the terms of such an agreement.

Regardless of which route you take, we highly recommend seeking legal advice prior to terminating an employment agreement. We would be happy to assist.

Should you have any question regarding the above FAQ, or any other employment law related topics, please feel free to contact us. We are more than happy to assist you!