Fixed-term or indefinite employment contract?

Because, as an SME or start-up, you don't always have an HR department that knows the employment law options and risks, Jeroen Hofland will provide practical tips that will come in handy when hiring new employees in a series of short blogs in the coming period. 

Here part 1: 

Fixed-term or indefinite employment contract?

One of the most important choices to be made is whether to give someone a temporary contract, or a permanent contract right away. Often, people start with a temporary contract and then decide whether someone can stay indefinitely.

Some advantages of a temporary (fixed-term) contract are:

  • You have time to form a picture of the employee, without being tied to that employee right away;
  • If someone does not perform well or does not fit into the team, you can simply decide not to extend the contract (please note the "obligation to give notice": the obligation to let your employee know in time whether or not the contract will be extended.
  • More information on this will follow in a separate blog in this series);
  • In case of illness/incapacity you only have to continue paying wages until the end date (in case of a permanent contract you have to continue paying wages for 104 weeks in case of illness).
  • However, there are also good reasons to give someone a permanent contract right away:

You can agree on a longer probationary period (up to a maximum of two months). Within that probationary period, you can even terminate the employment contract any day without cause. Later in this series we'll zoom in further on the probationary period;
You pay a lower WW premium for employees with a permanent contract. This quickly saves €100 premium per employee per month);
In short: there is something to be said for both options. However, it is important not to just make a choice, but to carefully weigh the pros and cons.

In the coming weeks I will elaborate on the points of interest when concluding an employment contract. Next time I will zoom in on the possibilities and points for attention when including a probationary period clause.  

Questions? Send Jeroen Hofland a message!

Published: 30 December 2022 in
Please contact Jeroen (J.J.) Hofland
Fixed-term or indefinite employment contract?