Dutch employers make frequent use of the opportunity to offer employees one or more contracts for a definite period. The Flexibility and Security Act [Wet flexibiliteit en zekerheid or ‘Flexwet’], which entered into force on 1 January 1999, has no doubt given labour law in the Netherlands flexibility, but it has simultaneously set boundaries thereto. For instance, consecutive contracts for a definite period with intervals of not more than three months may not exceed the term of 36 months. It is also not permitted by law to enter into more than three contracts for a definite period in succession. Parties may derogate from this stipulation at the expense of the employee only in a collective bargaining agreement.
Tacit renewal?
A contract for a definite period ends by operation of law. When the end date nears, the question arises as to whether the employment contract will or will not be renewed. A possible situation is that the employer desires to renew the employment contract, but merely for a shorter period of time than before due to the fact that, for instance, specific work still has to be completed. But what should the employer do if the employee does not agree to a shorter period of time? If the employee continues to perform his work, will the contract, pursuant to Article 668 of Book 7 of the Dutch Civil Code, tacitly be renewed for the same period of time and under the same employment conditions? This specific situation arose in a case that was assessed by the Dutch Supreme Court last October.
In this case, an employee was working on the basis of an employment contract with a term of one year. Prior to the expiry of the end date, the employer made a written offer to renew the employee’s contract for two months. The employee did not sign the offer, but carried on working after the end date as usual. Two weeks prior to the expiry of the two-month renewal offered by the employer, the employer informed the employee that the employment contact would end by operation of law after those two months. The employee adopted the position that the employment contract had tacitly been renewed without any opposition for the same period of one year. In that context, the employee demanded continued payment of salary up to the day on which the employment contract would have ended by operation of law.
Both the sub-district court and the Court of Appeal were of the opinion that the employment contract had not been continued without opposition, as it was clear that the employer only intended to continue the employment contract for a two-month period. The Supreme Court sided with the previous two courts in considering that ‘in a case like this one, it comes down to whether the employee could have assumed on the basis of the employer’s behaviour that the employment contract had tacitly been renewed after the expiry of the period of time for which this had been entered into.’ In this case there was no misunderstanding about the employer desiring to renew the employment contract for a period of only two months.
This ruling makes it clear that if it is obvious that the employer desires to renew an employment contract for a shorter period of time, the employee may not invoke tacit renewal without opposition for the same period of time and under the same conditions.
It is, however, required that the desire of the employer is clearly and unambiguously established. It cannot be that the employee has any doubts about the employer’s desire. In other words, it is important for the employer to give the employee clarity in such a situation. That clarity can be given by means of a letter in which the term of the temporary renewal is stated exactly, announcing that the employment contract will end by operation of law after the expiry of this renewal – the foregoing, of course, on the condition that a temporary renewal is still possible. This renewal may not result in a fourth employment contract or the term of 36 months being exceeded.
Reanate Peijs-Schoester
