A fixed-term employment contract terminates automatically by operation of law. The contract ends on the date on which the fixed term expires. The employer does not have to give notice to terminate, provided the contract is drafted correctly. The employer must however notify the employee. GMW lawyers in The Hague explain this ‘notification duty’ below.
The notification duty means that the employer must notify the employee at the latest one month before the contractually agreed end date of a temporary employment contract, whether or not the employment contract will be extended. Such notification period applies to fixed-term employment contracts entered into for a period of six months or longer but does not apply to project agreements where the end has not been set on a calendar date. In addition, the notification period is a fixed period, namely one month. The obligation entails therefore:
- a written notification (this can be by email) which reaches the employee one month before the end date
- whereby the employer notifies whether the employment contract is renewed
- and if so, under which conditions.
If an employer does not comply with – a part of – this obligation, the employment contract does terminate by operation of law on the pre-agreed date (if work is not carried on or continued). In the event of the nonobservance of the notification period, the employee does have a right to a payment amounting to the salary for each day the employer is late with the notification. The maximum sanction for the breach of the notification period is therefore one month salary and this applies to each (renewed) temporary employment contract. For instance, an employer renews a temporary employment contract twice but each time does not observe the notification period, the sanction is then two times the payment of compensation of one month salary.
The employee must however invoke his right to this payment within two months after the end date of the temporary employment contract otherwise he is too late and his right lapses. The notification period therefore turns it into a “squeaky wheel system” in the sense that the employer does not have to pay anything if the employee does not invoke the absence of the notification. In particular if an employee is offered a successive temporary employment contract but the notification obligation is breached, it is doubtful whether the employee is actually going to use his statutory right to claim the notification penalty from his employer. For the sake of completeness: in addition to this notification obligation, it continues to apply that if at the end of the temporary employment contract an employer has the employee continue to work without new arrangements having been made on a new (temporary) employment contract, the employment contract is tacitly renewed and therefore continues.
Alert in the personnel system
For every temporary employment contract an employer would be wise to insert an alert in the diary one month before the agreed end date to notify the employee. It is possible to include the notification already in the employment contract that the employment contract will not be renewed. This could however lead to legal complications in the situation where the employer nevertheless renews and could come across less sympathetically to the employee who has just been hired.