Successive term of employment: what are the criteria?
In a recent Supreme Court judgement, the Dutch Court of Appeal was reprimanded because in a dispute between an employee and employer it had not examined whether there was a successive term of employment. The fact is that the employee first worked through an employment agency, and then directly for the employer. What does the concept successive term of employment exactly mean in Dutch employment law and why is the distinction so important? Dutch employment lawyer Sander Schouten discusses the case.
Disagreement: employment agreement or contract?
A music teacher had worked for the client Het Leerorkest for four years on the basis of a temporary employment contract. From June 2011, he worked for Het Leerorkest without the intervention of the employment agency on the basis of a Contract for Services. This agreement was concluded for a specified period. After the expiry of this period, Het Leerorkest decided not to renew the agreement with the music teacher. The music teacher took the view that there was an employment agreement and that Het Leerorkest could not simply terminate the agreement or that at least it should have been terminated with due observance of the applicable rules.
Client or successive employer?
The dispute was submitted to the Subdistrict Court, the Court of Appeal, and ultimately to the Supreme Court. This case comprised two questions of law. First, there was the question as to whether there was an employment agreement. And if so, whether De Leerschool could be considered as the successor of the temporary employment agency. This judgement is relevant to the question as to how the employment agreement with the music teacher was terminated: by operation of law (in the case of a contract for a specified period) or in compliance with the statutory notice periods (contract for an indefinite period).
Dutch contracts for a specified period terminate by operation of law
Dutch law provides that a contract for a specified period terminates by operation of law (Article 7:667 paragraph 1 DCC). However, an exception applies to the situation in which an employment agreement concluded for an indefinite employment is subsequently, or after an interval of max. 6 months, is followed by an employment agreement for a specified period. In that case, notice is still required, even if the last employment agreement had been concluded for a specified period (7:667 paragraph 4 DCC).
Successive term of employment in Dutch employment law
This is when the element of the successive term of employment comes into play. The fact is that according to the law, there is also a possibility of successive employment agreements if the employee has been successively employed by different employers who, regardless of whether there is an understanding of the capacity and capability of the employee, can reasonably be considered as each other’s successors in respect of the work performed (7:667 paragraph 5 DCC). This is a successive term of employment.
Criteria for successive term of employment
According to settled case-law, as a rule, for a successive term of employment to apply, the following criteria should be met:
1. The continued or subsequent agreement essentially requires the same skills and responsibilities as the previous agreement;
2. The bonds between the new employer and the former employer are such that the understanding gained by the latter, on the basis of his experiences with the employee, of his qualities and suitability could reasonably also be attributed to the new employer.
Supreme Court: Court of Appeal must reassess legal action
The Supreme Court considered in the first place that the commission contract between the music teacher and De Leerschool should be regarded as an employment agreement. Previously, the music teacher had entered a contract for an indefinite period with the temporary employment agency. This contract was subsequently followed by two contracts for a specified period with Het Leerorkest. The Court of Appeal wrongly failed to examine whether in this case, Het Leerorkest can be regarded as the successive employer. The Supreme Court set aside the Court of Appeal’s judgement and referred the case back for reassessment.