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Extending an Employment Contract

Are you satisfied with your employee? then of course you would like to extend his temporary contract. how do you do that? these are the rules regarding contract extension; read about!.
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Temporary agency work, zero-hour contract, secondment, freelancing or annual contract: flexible work has quite a few variants.

An important distinction is made between employees who are employed by your company and employees who are employed by a third party, such as an employment agency or payroll company. The rules on extending employment contracts are generally stricter for the first group than for the second.

Contract extension own employee

Temporary employees employed by your company, for example, work on the basis of an annual contract, a zero-hour contract, a min-max contract or a call contract with a prior agreement. The legal rules for renewing all these contracts are the same.

In principle, it concerns two basic rules: the chain provision and the obligation to notify.

1. Chain provision

You may conclude three temporary employment contracts for an employee in two years. After that you're obliged to offer him a permanent contract. This is also referred to as the chain provision. If you want to circumvent the chain provision, you must insert at least six months between each series of temporary contracts.

This means that you may extend a fixed-term employment contract twice. A condition is that you don't exceed the two-year period with an extension.

If you do, the employment contract will automatically be converted into an open-ended contract. Even if you extend a temporary contract for the third time, your employee will automatically have a permanent contract.

Pay attention

Does your employee have one temporary contract of two years or longer? Then, as a different rule, you can extend the contract for a one-off three-month period before you have to offer it an indefinite contract.

2. Notification obligation

You as an employer have a notification obligation for temporary contracts of six months or longer. This means that you must inform an employee in good time about the extension of his contract. If you don't, you must pay him a fee.

Specifically, the measure means that you must inform an employee in writing at least one month before the end date of his temporary contract (the notice period) . You must indicate whether or not you're extending the contract and, if so, under what conditions. Your employee gets clarity about his job so quickly and can look for other work sooner if there is no new contract in it.

The notification obligation doesn't apply to a temporary contract:

- With a duration of six months or less
- For the duration of a project
- To replace a sick colleague
- In which no end date has been agreed

Pay attention

Many employers think that the obligation to give notice only applies if they don't renew a contract. That isn't true. Even if you do extend, you're obliged to inform your employee in time.

What if you don't meet the notification obligation?

If you fail to comply with your written notification obligation, you must pay the employee a so-called notification fee. The amount of this allowance corresponds to one monthly salary. If you comply with the obligation to notify, but don't adhere to the correct notice period, you'll pay a pro rata fee. If, for example, you're two weeks late in signing up, you must pay a two-week salary as compensation.

Failure to comply with the notification obligation doesn't affect the contract duration. If you don't inform your employee about whether or not to extend his contract, this doesn't mean that he can automatically count on contract extension. He is only entitled to reimbursement.

It becomes different when the employee continues to work after the contract expires and you don't send him away. In that case, there is an implied extension of the temporary employment contract. In this way a temporary employment contract is created for the same duration as the first contract.

Pay attention

You don't have to pay a notice fee if there is a bankruptcy, suspension of payment or debt restructuring.

Tip:

If you already know at the time of entering into the employment contract that there is no extension, put it in the contract. For the law, this is a written notice, so it's arranged immediately.

Contract extension employee employed by third parties

Have you hired temporary employees through an employment agency, payrolling or posting ? In that case, the rules for extending contracts are probably different. Temporary employment agencies, payroll and secondment organizations usually make different arrangements with the companies to which they supply personnel. They often include a so-called temporary employment clause in their agreements.

A temporary employment clause means that both the employer and the employee can terminate the employment contract at any time without consequences. The employer has no obligation to notify and the chain provision doesn't apply. The legally permitted period for a temporary employment clause is 26 weeks, with an extension possibility of up to 78 weeks. Only after the end of those 18 months will you have to deal with the obligation to notify and the chain provision.

Tip:

Every temporary employment, payroll or secondment organization has different rules and agreements. Make sure you're well aware of the agreements that apply to your employees.


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