The labour agreement

When you start working for an employer or when you hire an employee, you will make agreements about the work and the compensation for that work. The agreements in regard to the employment are recorded in the labour agreement, This article will explain what conditions the agreements must meet and what your rights and obligations are. 

Signing a labour agreement

What is the labour agreement? 

A labour agreement (or labour contract) is a document consisting of agreements about the relationship between employer and employee. The agreement obligates the employee  to work certain hours and perform certain activities. As a compensation he or she is entitled to a certain reward. Additional  affairs, such as the duration of the agreements and secondary conditions, are also recorded in the labour agreement. 

What is recorded in the labour agreement?

Within a month after the employee has started working, the following matters will need to be agreed upon: 

  • name and residence of the employee and employer;
  • places where the work will be conducted; 
  • function; 
  • start date of employment;
  • duration of the contract;
  • amount of working hours; 
  • salary and holiday allowances and when these will be paid; 
  • number of holiday days; 
  • notice period.

When there is a matter of a probation period, the employer must record the duration in the agreement. It is also desirable to record all the information in regard to the Collective Labour Agreement and pension arrangement. When the employer does not only pay wages, but also pays in kind or shares, this must also be recorded in the labour agreement. 

What are you entitled to as an employee? 

It is important that the agreement is as clear and descriptive as possible when it concerns your rights. Although a labour agreement can also be recorded verbally, it is advisable to insist on a written contract. This way you will know exactly what to expect. In addition to your individual agreement, also check if you have a Collective Labour Agreement. Here you can check whether the agreements you have made with your employer are consistent with your collective labour rights and if there are any additional rights that you want to make use of. When there are things in your labour agreement that are not consistent with your Collective Labour Agreement, your Collective Labour Agreement is binding. 

What is a clause in a labour agreement? 

As an employer, you can record so-called clauses in the contract. These are special conditions that the employee will have to meet. Common examples are the competition clause (you are not allowed to work for a competing company) or the confidentiality clause (you are not allowed to share certain company information with third parties). When a clause is breached, a penalty can be given in return. In order to do that, the clause will need to be contractually recorded. 

Balanced Labour Market

On January 1st 2020, the Balanced Labour Market Law (Wet Arbeidsmarkt in Balans, WAB) is enforced in the Dutch law. This law affects labour contracts and dismissal and had been created to bridge the gap between fixed and flexible contracts. This has advantages for employees with a flexible contract: for example, payroll employees get the same legal positions as employed staff of the company. It is also more appealing now to offer employees a fixed contract because employers are allowed to apply lower unemployment premiums for employees with a contract of indefinite time. There are also different regulations in regard to dismissal in the Balanced Labour Market Law. 

Temporary employment contract

Do you have a temporary employment contract? Then you can choose to end the relationship at the end of the contract. Is the agreement for longer than six months? Then the employer will need to notify the employee at least a month in advance on whether the contract will be extended or not. This way the employee will have the chance to start looking for another job in time. 

Permanent labour agreement

When, as an employee, you have received more than three temporary contracts or have worked consecutively for the same employer for 36 months, you are legally entitled to a permanent contract. According to the chain rule after three temporary contracts in a maximum of three years you will get a permanent contract. Pay attention: until January 1st 2020 (before the WAB goes into force) the maximum duration was two years. 
With a permanent contract, an employee is in employment for an indefinite time. The biggest advantage is that he or she cannot be dismissed without cause. For example when you want a mortgage or other loan a permanent contract is a sign of financial stability. Therefore, you have more financial possibilities and security with a permanent labour contract. 

Further reading

Read more about the WAB and the consequences for employer and employee. Would you like to know more about Collective Labour Agreements? In this article, you can find more information. Or read more about notification and dismissal at our sister company