A Dutch employment contract is generally entered into for a definite or indefinite period of time. Fixed-term employment contracts in The Netherlands are entered into for a precisely defined period of time, such as 6 months, a year or specifically for the duration of a particular project. The end date is then explicitly named in the employment contract. Nevertheless, in practice, it is not so simple: a fixed-term employment contract that ends as soon as a project is completed is not always self-evident. After all, it is not clear exactly to an expat or employer when the employment contract ends. By including a project clause, however, this is possible, provided a number of important conditions are met. In this article Paul Snijders, attorney at law in Amsterdam, The Netherlands, explains how this works.
Project clause and resolutive condition in Dutch employment contracts
In fact, a project clause is a resolutive condition whereby the Dutch employment contract is simply terminated when the project ends. In other words, the duration of the employment contract depends on the duration of the project. This is typically used in industries where it is unclear in advance how long a project will last.
Fixed-term contracts: closed dismissal system in The Netherlands
In the Netherlands, we have a “closed dismissal system”. This means that in principle only the court or the UWV can terminate an employment contract. Is the project clause valid then, as an exception to the limited possibilities in which an employment contract can be terminated? In itself it may be, but the project clause must meet a number of strict conditions.
What are the conditions for a valid project clause in Duch employment law?
In any case, it must be sufficiently clear in the employment contract when the employment contract comes to an end and on what factors this depends. It is crucial here that the end of the employment contract, or the end of a project, must still be clear: “objectively determinable”. This prevents termination of the employment contract from being too dependent on the will of the Dutch employer. If the project clause depends on a subjective interpretation by the employer, it will in principle be invalid, with all its consequences. After all, the employer should not sit in the chair of the UWV or the court in the event of dismissal.
Project clause not admissible: salary, accrued vacation pay and statutory interest
This is illustrated by a judgment of the Amsterdam Court of Appeal dated January 24, 2017 (ECLI:NL:GHAMS:2017:163). In this case, the court held that the agreed project clause, which automatically terminated the employment contract after the last performance of the production, was not permissible. The wording in the project clause was too broadly worded, according to the Amsterdam judge, which allowed the employer to influence itself to cause the project to end; and thus the end of the employment contract.
The clause simply depended on a choice by the employer now that the employer itself terminated the production, and this made it a conscious choice by the workmate to end the musical production. The judge in Amsterdam did not find this valid; this required the employer to pay the salary, accrued vacation pay and statutory interest (still). The judge found this to be an indefinite term contract.
Open-ended employment contract
Another judgment of the Den Bosch Court of Appeal dated February 2, 2021 (ECLI:NL:GHSHE:2021:275) also dealt with the question of whether there was a valid project clause. According to the employer in this case, there was a project clause which meant that the employment contract had automatically ended due to the termination of the project. The Dutch judge  did not go along with this: there was no valid project clause and as a result there was an employment contract for an indefinite period of time, instead of the intended fixed-term employment contract (for the duration of the project).
Risk for expat employees in case of a project clause
The previous judgment does not mean that only the employer should be wary when including a project clause and that an employee can therefore sit back.
In the latter judgment, the court went a step further and there things went completely wrong for the employee: the employer’s communication that the project had ended was interpreted by the court as a termination of the employment contract for an indefinite period. An application to set aside that termination by the lawyer was too late in this case, because the employee had not filed an application to set aside the termination within 2 months. Thus, although the project clause was not valid, the employee was left empty-handed.
Project clause in fixed-term Dutch employment contracts
It can be concluded from the above judgments that the inclusion of a project clause in a Dutch fixed-term employment contracts is permitted under strict conditions, namely only
- If it concerns a project (clause)
- The end of which lies in the future,
- that can be determined objectively
- does not depend on the will of the employer
- of which it is certain that/when the project will end at a given moment.
This can prevent far-reaching consequences for the employer, such as the creation of an indefinite employment contract instead of a signed fixed-term contract.
Contact employment lawyer Amsterdam about project agreements
Looking for commitment and direct, personal contact with an experienced labor law specialist in Amsterdam? Call our specialized attorney employment and dismissal law mr. P.Chr. Snijders for questions and legal advice on Dutch employment law and dismissal on telephone number 020 – 5221999.