Compensation for failure to give notice (fixed-term contracts)

Published by:

Netherlands Enterprise Agency, RVO

2 min read

For employees with a fixed-term contract of at least 6 months, a notice period (aanzegtermijn) applies. You must give temporary employees written notice at least 1 month before their contract of employment ends. This way, your employees will know if their contract will be renewed or not and under what terms.

If you fail to give notice (on time), your employee is entitled to compensation. If you explicitly state there is no option for renewal of the fixed-term contract when hiring an employee, you are not required to give notice.

Failure or too late: compensation

The amount of compensation (in Dutch) you are required to pay depends on both the type of contract and to what extent you have exceeded the notice period:

If you fail to give the proper notice at all, compensation amounts to 1 monthly gross salary.
If you are too late, compensation will be proportional to the amount of time you are late. If, for instance, your giving notice is 1 week too late, your employee is entitled to compensation of 1 gross weekly salary.

Your employee's gross salary depends on their contract, and compensation must always be based on their most recent contract. Your employee may claim the compensation up to 2 months after their contract has ended.

Gross monthly salary fixed-hours contract

Does your employee have a fixed-hours contract, for example 40 hours per week?

You calculate the gross monthly salary by multiplying their gross hourly rate by the number of hours worked each month under their most recent contract of employment.
Does your employee receive any extra wages, such as commissions or piecework pay? Then you add both gross salaries together.

Gross monthly salary 'on call' contracts or 'min-max' contracts

To calculate the gross monthly salary of employees that have 'on call' or 'min-max' contracts, you must take their average working hours per month. You calculate this average on the basis of the last 12 months, or less if the duration of the contract was less. This is the calculation period.

You add up all hours they have worked for you during this time.
Then you divide this total by the number of months (so 12 months or less).
You then calculate the gross monthly salary by multiplying the gross hourly rate by the average number of hours worked each month.
To this you add any extra wages, such as commissions or piecework pay.

Please note: For a min-max contract the average number of working hours is never less than the minimum amount of hours you and your employee agreed upon.

Gross monthly salary commission or piece work

To calculate the average gross monthly salary of employees that receive commissions or are paid for piece work, you add together all their earnings from their most recent contract. You calculate this average over a period of their most recent 12 months, or less if the duration of the contract was less and divide it by the number of months. The result is the gross monthly salary. If your employer receives a monthly salary as well, you add these two figures together.

Compensation in case of an employee's absence

If your employee was absent due to leave, strike or illness for 1 or more full months, you do not have to take this time into account when calculating their average gross monthly salary. If the employee worked for you for more than 12 months, you should replace the month(s) of absence with the same amount of time preceding the last 12 months in your calculation.