In the Absence of a Written Statement on the Duration, the Oral Employment Contract was a Contract for an Indefinite Period

An employer sent a written fixed-term employment contract proposal to an employee, but the employee had failed to sign it. When this caused a dispute on whether the employment contract had been entered into for a definite or for an indefinite period, the Sub-district Court assumed that the employment contract had been entered into for an indefinite period, because the employer had failed to comply with the obligation to provide the employee with a written statement of the duration of the employment contract.

On June 10, 2021, a cook started working at a tea house. The employer provided the employee with a proposal for a one-year employment contract. The contract was not signed, however, despite the fact that the employer had asked the employee in a WhatsApp message of August 7, 2021 to bring the employment contract to work and despite the employee’s confirmation to do so of August 8, 2021. By letter of 4 May 2022, the employer informed the employee that the employment contract till 10 June 2022 would not be extended.
The employee then argued that there was no legally valid employment contract and thus, that the termination by the employer was not legally valid either. The employer responded by stating that the employee had verbally accepted the terms of employment and that he had received salary payments and pay slips without any having any comments.
When, as of 10 June 2022, the employer no longer employed the employee the employee requested the Sub-district Court, among other things, continued wage payment and re-employment.
The Sub-district Court now had to decide whether the employment contract was one for a definite period or for an indefinite period and it opted for the latter. In its decision, the Sub-district Court stated that no written employment contract had been provided, that the pay slip did not state the duration of the employment contract and that the employer, in the absence of a written employment contract, had also failed to comply with the legal obligation to provide a written statement on the duration of the employment contract. Especially from the latter consideration, the Sub-district Court deduced that an employer has greater obligation to provide reasons and that, therefore, the employer should have further justified why there was an employment contract for an indefinite period. In the absence of such further justification, the Sub-district Court assumed an employment contract for an indefinite period. The employee had reason to see the employer’s letter as the termination of that employment contract and the Sub-district Court therefore granted the employee's claims.

The employer's obligation to provide a written statement of the most important features of the employment contract has been expanded and tightened as of 1 August 2022. In this case, the law applicable until 1 August 2022 still applied. Whereas, initially, little attention was paid to the obligation to provide such a statement in practice and in case law, it is the second time already that failure to comply with it has consequences.
There are serious doubts, however, about the way in which the Sub-district Court attached consequences to non-compliance with the relevant obligation. The Sub-district Court judge ruled that the consequence of failure to comply with the obligation to provide information was that the employer had an greater obligation to provide information on the existence of a fixed-term employment contract. The law, however, links the failure to comply with the obligation to provide information with the legal consequence of compensation.
In the above case the parties only litigated about the contract duration. The compensation for failure to comply with the obligation to provide information had not been claimed.
In our view, however, this should not have been a reason for the Sub-district Court to assume greater obligation to give reasons for the employer instead. In doing so, the Sub-district Court deviated from the legal provisions on the formation of contracts. According to the law, an agreement shall come into effect upon an offer and its acceptance.
It is established that the employer had offered a fixed-term employment contract.
Since the employee had started working on the basis of that offer, the Sub-district Court should have seen this as acceptance of the offer. The Sub-district Court could have drawn the employee’s attention to the possibility to bring out a claim for compensation for the employer's failure to comply with the obligation to confirm the duration of the employment contract in writing.
Anyway, the decision of the Sub-district Court makes it clear that employers would do well to take the obligation to provide a written statement of the characteristics of the employment contract seriously. We estimate that employers who fail to do so will increasingly experience unexpected financial consequences in the future.