No employment contract for an indefinite period after automatic renewal of an employment contract for a definite period

Year of publication

2010


Edition number

180


Reference

The Court of Appeal of Arnhem, 5 January 2010, www.rechtspraak.nl, ljn: BM2005


Decision

Between an employer and an employee there is a conflict whether an employment contract for a definite period was legally terminated on 30 April 2009, respectively whether an employment contract for an indefinite period was created, because the employment contract stated that the employer would offer an employment contract for an indefinite period, if two conditions in the employment contract were complied with. When a conflict arises between the parties about that condition, the employee institutes interlocutory proceedings and the Court of Appeal has to rule in those proceedings.

The Court of Appeal rules provisionally that the condition in the employment contract leads to a conditional obligation for the employer to offer an employment contract for an indefinite period, but also that the employer has to act energetically to create such a contract. The Court of Appeal finds no such energetic action.

The law states that an employment contract for an indefinite period that was automatically renewed results in the creation of another employment contract for an indefinite period for the same term, but for no more than one year, and that only a third renewal creates an employment contract for an indefinite period. Therefore, according to the Court of Appeal, the employee cannot be followed in his statement that automatic renewal means the creation of an employment contract for an indefinite period.


Comments

Although the interlocutory proceedings ended well for the employer, there is still a danger. If one follows the reasoning of the Court of Appeal further, the employee could now demand that the employer acts energetically as yet by offering an employment contract for an indefinite period. The only issue would then be whether the two conditions in the employment contract have been complied with.

In employment contracts for a definite period conditions are often included, generally at the request of the employee, about the renewal of that employment contract after expiry of the agreed term. That is understandable because the employee has an interest in knowing whether or not he has to look for another job. Our advice is to only include the obligation to consult on this in a timely manner. A promise that the employee can be employed for an indefinite period after the agreed term, if he performs well, can be viewed by the Court as a provisional right to an employment contract for an indefinite period, so the Court only has to determine if that condition has been complied with. However, the employer probably thought that he was the only one who could assess whether the employee performed well.



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