The Chain Arrangement (Ketenregeling) in the Netherlands: What You Need to Know
What is the Chain Arrangement?
The Chain Arrangement determines how many temporary contracts an employer can offer an employee before it automatically transitions into a permanent contract. According to current legislation, an employer can offer up to three consecutive temporary contracts within a period of 36 months (three years). If a fourth contract is offered within those three years, or if the total duration of the contracts exceeds three years, the employment automatically becomes permanent.
However, there is a minimum interruption period of six months between contracts. For instance, if an employee has had two one-year temporary contracts and there is a gap of more than six months between the second and third contract, the chain resets. This means the employer can start anew with offering three temporary contracts within three years.
Examples
Exceptions
While the Chain Arrangement is relatively straightforward, there are several important exceptions. These exceptions make the law more flexible for certain sectors and groups, including:
Employees under 18 years old
For employees under 18 years old who work an average of 12 hours per week or less, the chain arrangement only starts once they turn 18. This means that contracts signed before that time do not count toward the chain.
Specific professions or situations
For certain professions, such as substitute teachers or seasonal work in industries like hospitality, the collective labor agreement (CAO) may allow deviations from the standard chain arrangement. This offers employers and employees in these sectors more flexibility.
Longer interruption periods possible
Some collective agreements allow for a longer interruption period between contracts, exceeding six months. This is common in sectors with a lot of seasonal work.
Always Manage Contract Extensions Correctly
Example Exception
Collective Agreements: Always Leading
In the Netherlands, the collective labor agreement (CAO) is a binding document that outlines additional agreements between employers and employees within a specific sector. This means the CAO always takes precedence over the Chain Arrangement if the terms in the CAO are more favorable for the employee. For instance, a CAO may allow more than three temporary contracts or extend the 36-month period. Therefore, it is crucial for employers to thoroughly understand and adhere to their sector's CAO.
The Importance of the Chain Arrangement
The Chain Arrangement was created to provide employees with more security. The goal is to offer employees a permanent contract after a certain period of temporary contracts. This protects employees from uncertainties and prevents them from working in a temporary position for years. At the same time, it offers employers sufficient flexibility to offer temporary contracts when necessary.
Especially in sectors with high staff turnover and where temporary work is common, such as in retail, entertainment, and hospitality, it is important to understand and apply the Chain Arrangement correctly.
