Employment

The Chain Rule: When a Fixed-Term Contract Becomes Permanent

Updated: 14 August 2026 Employer Contracts Employment Law

Dutch employers use fixed-term contracts for flexibility, and the law sets a boundary on how long that flexibility lasts. Under the chain rule (ketenregeling), a succession of fixed-term contracts converts into a permanent one by operation of law — on its own, with the signing of any document left out of it, and frequently unnoticed until it matters.

The rule

A chain of fixed-term contracts becomes permanent once either boundary is passed:

a fourth consecutive contract is entered into, or
the chain exceeds three years in total duration.

Contracts count as consecutive where the gap between them is six months or less. A gap longer than six months breaks the chain, and counting restarts from zero.

The conversion happens automatically. The fourth contract, whatever it says on its face, is a permanent employment from its first day — which means it ends only through the formal dismissal routes.

What counts in the chain

Three points decide more cases than the arithmetic does.

The role stays out of it. A change of job title, duties or hours leaves the chain intact. Same employer, same employee, gap of six months or less: the links count.

Successive employership reaches across companies. Where an employee moves between employers who are effectively each other’s successors — a group company, a business transfer, or a temporary agency posting followed by direct employment — earlier contracts count in the chain. Employers who hire someone who worked for them through an agency start further along than they expect.

A collective labour agreement can vary the rule. Some agreements permit more contracts or a longer total period for defined sectors and roles, particularly in seasonal work: when a collective agreement binds you.

The notification duty

For a fixed-term contract of six months or longer, the employer notifies the employee in writing one month before the end date whether the contract will be renewed and on what terms. Missing the deadline costs one month’s salary; notifying late costs the proportion of the month by which it was late.

The obligation is easy to satisfy and easy to forget, and it applies even where renewal is obvious to everyone. A calendar entry at signature is the whole solution.

What ending a fixed-term contract costs

A fixed-term contract ends on its agreed date by itself, with permission from an authority left out of it. Where the employer chooses against renewal, a transition payment is due — from the first working day, calculated pro rata. Employers using successive terms for flexibility therefore carry that cost at the end of each one.

Ending a fixed-term contract before its agreed date requires the same routes as a permanent contract, unless the contract contains an interim notice clause. Including that clause at drafting is the difference between a one-month exit and a court procedure.

Planning the sequence

The pattern that works for a first Dutch hire: a contract of seven months to a year with a one-month probationary period and an interim notice clause, evaluated well before the end date, with the notification sent on time. That sequence gives a genuine assessment period, keeps the exit routes open, and leaves room in the chain for a second term before the permanent decision arrives.

Notice periods and probation covers the mechanics, and hiring your first employee the surrounding steps.

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Frequently Asked Questions

When does a Dutch fixed-term contract become permanent? +

On a fourth consecutive contract, or once the chain exceeds three years in total. Contracts count as consecutive where the gap between them is six months or less.

How do I break the chain? +

A gap of more than six months between contracts resets the count. Shorter gaps leave the chain intact, whatever changes in the role.

Does agency work count toward the chain? +

Where the employers are effectively each other's successors, earlier contracts count. Hiring someone directly after they worked for you through an agency therefore starts further along the chain than employers expect.

What is the notification duty? +

For a fixed-term contract of six months or longer, the employer states in writing one month before the end date whether it will be renewed and on what terms. Missing it costs one month's salary; being late costs the proportion.

Can I end a fixed-term contract early? +

Only where the contract contains an interim notice clause; lacking one, the same routes as a permanent contract apply. Including the clause at drafting is a small step with a large effect.

Sources Belastingdienst · KVK · wetten.overheid.nl Last updated: 14 August 2026