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Provisions on succession of fixed-term employment contracts and the successive term of employment

Provisions on succession of fixed-term employment contracts and the successive term of employment

Paragraph 1 of Article 668a of Book 7 of the Dutch Civil Code regulates the circumstances under which an employment contract for a fixed term is converted into an employment contract for an indefinite period. A consequence of this conversion is that the contract no longer ends by operation of law, but that this contract must be terminated by the employee or the employer with all the corresponding consequences in the form of an applicable period of notice of termination and/or the liability to pay severance pay. In short, conversion exists if parties have concluded more than three employment contracts for a fixed term within a 36-month period or if the temporary employment contracts exceed a term of 36 months.

The provisions on succession of fixed-term employment contracts are also applicable in the event of a successive term of employment:

Paragraph 1 applies by analogy to employment contracts succeeding one another between an employee and various employers that must reasonably be considered to be each others’ successors in respect of the work performed.

The aforesaid provision was written for the situation in which an employee – both as a temporary agency worker and as an employee under contract – performs the same or practically the same work for the same company. In addition, it has previously been decided that the provision is also applicable in the event of insolvency and therefore also has meaning in the event of a relaunch of an insolvent enterprise or an acquisition of a part of insolvent assets by a third party. It is evident from the examples as referred to above that an “interwovenness” exists between the employers. The successive employer is, after all, in the first situation – with a temporary agency worker – already the material employer and in the second situation a case of succession exists.

The question is what applies if there is no interwovenness between both employers, but that the same activities are being engaged in and, consequently, the same activities occur.

According to the letter of the law, you could say that the interwovenness is solely demanded in respect of the work. It is evident from two rulings of 11 May 2012 and 25 May 2012 that the Supreme Court views this differently. Specifically, the Supreme Court considers as follows:

This means that the requirement that the new employer must reasonably be considered in respect of the performed work to be the successor of the previous employer is generally met if on the one hand the new employment contract demands essentially the same skills and responsibilities as the previous contract, and on the other hand ties exist between the new employer and the previous employer to such an extent that the insight obtained by the latter on the basis of his personal experiences with the employee into his capacities and suitability must in reasonableness indeed be attributed to the new employer.

The Supreme Court has also applied a similar criterion to the use of a trial period clause in the event an employee is going to perform the same work for another employer who must reasonably be considered as the successor of the previous employer.

Put bluntly, it follows from the rulings that the provisions on succession of fixed-term employment contracts are not applicable in the event the previous employer and the new employer have nothing to do with each other aside from the fact that they are each other’s competitors. For the applicability of the provisions on succession of fixed-term employment contracts, ties must exist between both employers such that the successive employer has already been able to gain some knowledge of the employee, so that this obtained insight must be attributed to him.

Geeke Hissink

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