8 June 2021

5 pitfalls when drawing up an employment contract (part 2)

By Seliz Demirci

In this series I discuss five pitfalls for employers when drawing up an employment contract.

In the first part, I discussed the probationary period and the notice period. Part two deals with the early termination clause, the obligation to provide information and the non-competition clause.

3 – Interim termination clause

Pitfall 3: you forget the early termination clause. You may not just terminate a fixed-term agreement prematurely. This is indeed possible if that right is included in the employment contract for both the employer and the employee.

Is this agreement missing and do you want to terminate the employment contract before the end date? The termination is then irregular, in other words: not according to the rules. The consequence? The employment contract has ended, but you must still pay the salary over the remaining term of the employment contract.

Fortunately, this rule is not as strict as that for the probationary period or the notice period and solutions can be found.

4 – Obligation to provide information

Because short contracts read better, too little information is sometimes included.

The employment contract must specify a number of matters, including:

  1. names and addresses of the parties
  2. the workplace
  3. the function
  4. the starting date
  5. whether an indefinite contract has been entered into
  6. whether the agreement is a temporary employment or payroll agreement
  7. whether there is an on-call agreement
  8. in case of a fixed-term agreement: the duration thereof
  9. the holidays
  10. the notice period
  11. the wages and when payment thereof will occur
  12.  the working hours
  13. pension or no pension
  14. whether or not there is a collective labour agreement
  15. which personal data are processed, for what purpose and on the basis of which processing ground.

If you forget to include complete or correct information, you will be liable for any damage caused as a result. Therefore, check the content of the agreement carefully.

5 – Non-competition

You want to protect your business when an employee leaves. Therefore you would like to include a competition ban. If you simply copy and paste a provision into the employment contract that you think is good, then you will often find that the agreement will not offer the protection that you wanted.

A non-competition clause in a fixed term agreement is in principle not valid. If you have a compelling business interest in such a ban, you may be able to agree on it – but the conditions are strict. A clause borrowed from another agreement will not comply with these conditions and will be invalid. Customisation is then required.

The pitfall of a non-competition clause in an agreement for an indefinite period is overly broad wording. The judge will be more inclined to put an end to a non-competition clause that is valid years after the end of the employment contract, that applies to the whole of the Netherlands and far beyond, and in which the employee is prohibited from working for competitors and relations, or just about anyone else.

Make your interest concrete, then the chances are greater that the ban will survive.

Do you have a question about drawing up an employment contract? Please do not hesitate to contact me.

Seliz Demirci

Seliz Demirci

Lawyer

Within the Employment & Pension law section, Seliz advises national and international employers and employees on various employment law issues.

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