Hiring temporary agency workers is a common practice in the Netherlands. But what happens when an agency worker moves to a new employer, or when he or she is hired directly by the client where work was previously performed through an employment agency? In this article, we discuss what happens to the employment contract and the rights of the agency worker with successor employers, and what this means for both employers and employees.

What is a successor employer?

A successor employer is a new employer for whom the employee continues to perform the same or similar work. This can happen, for example, when an agency worker switches to another staffing agency that carries out the same assignment, or when the agency worker joins the client itself as an employee. In such cases, the new employer is, legally speaking, the successor of the previous employer.

Transfer of undertaking versus successor employer status

It is important to distinguish between a transfer of undertaking and successor employer status without an acquisition.

In the event of a transfer of undertaking—think, for example, of a business acquisition or merger under the rules of the Civil Code—employees automatically transfer to the new employer. All terms and conditions of employment, such as contract duration and accrued rights, are preserved. The length of service with the old employer fully counts with the new employer, as if there had been no interruption.

But even when there is no formal transfer of undertaking, an employee can still have to deal with a successor employer. This occurs when a new employer continues the work, for example within the same group, or when different employers, one after another, have the same employee perform virtually the same tasks. In those cases, the previously accrued length of service often counts, and comparable rights are accrued, even if the legal entity changes.

In short: in a formal transfer of undertaking it is legally required that everything transfers, whereas in successor employership without an acquisition the assessment looks at the factual content of the work and the reasonableness of considering the new employer a successor.

The importance of how the previous contract ended

The way the temporary agency worker’s previous employment contract was terminated plays an important role in assessing successor employership. It is examined whether the previous employment ended by mutual consent, by termination by the employer, or by dissolution by the cantonal court judge.

• Mutual consent: If the contract with the previous employer was terminated with the consent of both parties, this affects the new contract. In such a case, notice is often required to end the employment under the new employment agreement. The contract therefore does not automatically end on the agreed end date.
• Termination by the employer or dissolution by the court: Was the previous contract terminated by formal notice (with permission from the UWV) or by dissolution by the cantonal court judge? In that case, this obligation does not apply. The new fixed-term contract can then simply end on the agreed end date.

In short, the way the previous contract ended also determines whether the new employment contract ends automatically or can only be terminated by giving notice. This prevents employers from alternating contracts in stages to circumvent employment law.

What rules apply when moving employees within a corporate group?

Transferring employees within a corporate group often raises the question: when does a new employer qualify as a successor employer? Even if the companies within the corporate group are formally separate, there may still be successor employer status if the employee continues to do (virtually) the same work.

This, for example, occurs when an employee moves from one BV to another within the same corporate group, without the work itself fundamentally changing. The law looks not only at the formal contract, but above all at the factual situation: does the nature of the work remain the same and are the duties largely identical? Then the new employer is often regarded as a successor, with all the consequences for, for example, the employee’s employment history and accrued rights.

Note: it makes little difference that it involves a different legal entity; practice counts in assessing who qualifies as a successor employer.

Under Dutch law, periods of employment with the previous employer are in some cases counted, which can affect the employee’s rights, such as the accumulation of employment agreements and the associated rights. This applies to both fixed-term and open-ended employment contracts.

The role of temporary agency workers with successive employers

When a temporary agency worker enters into employment with an employer for whom he or she has previously worked via a temp agency, the period during which the temporary agency worker worked through the temp agency is often counted when determining the number of contracts and the duration of the employment agreement. This can lead to a permanent contract, depending on the length of the employment periods and the agreements that have been made.

For example, if a temporary agency worker has worked for two years via a temp agency and then enters into employment with the client, this worker may be entitled to a permanent contract. This is because the period as a temporary agency worker counts when calculating the contract term.

Practical scenarios involving successive employers

Suppose an employee first works directly for employer A, then via a temp agency at the same employer, and subsequently directly again for employer A. In such a case, these periods are added together. If the employee continues to work directly for employer A working, there may be a permanent employment contract as soon as the legal requirements are met.

This principle also applies to secondment. An employee who works for a client via a secondment agency and is then hired directly by that client (for the same work) has their period at the secondment agency counted, provided the transition takes place within six months. The way the old contract is terminated can affect the precise rights: in the case of a termination by mutual consent, different rules apply than for a unilateral termination via UWV or the court.

Note interruptions

It is important that if there is a break of more than six months between the different employment relationships, the chain starts anew. This means that the employee then starts again with a ‘first’ employment contract, and earlier periods do not count toward determining the type of contract.

These examples show that the situation regarding successive employers and the right to a permanent contract depends heavily on the duration, nature, and timing of the different employment relationships.

The rules for successive employment contracts

The rules regarding successive employers are laid down in Article 7:668a BW. This law ensures that employers cannot unfairly give multiple temporary contracts without the employee being able to claim a permanent contract. When an employee, after three consecutive temporary contracts or after a period of three years, is still performing the same work, a right to a permanent employment contract arises.

Note the intervals between contracts

It is important that the intervening periods between contracts of the same employee with different employers may not be longer than six months. If the interruption lasts longer than six months, the employment contract is considered a new agreement. In other words: the contracts and working hours with the “previous” employer are not counted when there is a period of more than six months between the old job and the employment with the “new” employer. As a result, the counting of contracts and the accrual of rights for the employee starts over.

This is especially important in determining whether an employee is entitled to a permanent contract, because a longer interruption acts as a reset within the chain rule. Employers and employees would therefore do well to keep a close eye on this time limit.

Are there exceptions to the rules around successive employment?

As with many legal rules, there are a few exceptions to keep in mind. The main rule is that periods at different employers—for example, when working for multiple temp agencies—are added together, as long as the interruptions between those work periods are no longer than six months. But it can be different if that interruption does last longer.

An important exception: if there is more than six months between the end of one contract and the start of a subsequent contract with a successive employer, the counting starts over. This means that earlier contracts and employment periods no longer count toward, for example, the right to a permanent contract or protection against dismissal.

In addition, there are specific situations in which different rules may apply, such as in seasonal work or when collective labor agreements (CAOs) contain other arrangements about this. It is therefore always wise to check whether specific arrangements or CAO provisions apply to your industry or sector.

Protection against dismissal in successive contracts

But what actually happens to protection against dismissal when a permanent employment contract is followed by a temporary contract with a successor employer within a period of six months? In that case, the protection against dismissal remains in force. This means that the new employer cannot simply terminate the temporary contract without a valid reason; again, permission from the UWV or the subdistrict court is required to terminate the employment relationship.

Only when the interruption between the two employment contracts is longer than six months does this protection no longer apply automatically. However, if the employee has a temporary employment contract with a successor employer or the same employer, the protection against dismissal in effect continues. This prevents the statutory protection from being circumvented through a short temporary contract.

Possible reasons for dismissal

There are various ways an employment contract can end, each with its own reasons and conditions. Below you will find the most common grounds for dismissal:

• End by operation of law: A temporary contract ends automatically on the agreed end date, without notice being required.

• Termination by mutual consent: Employer and employee jointly decide to terminate the employment contract. This is usually recorded in a termination agreement, in which arrangements are made about, for example, the end date and any compensation.

• Termination without permission UWV: In specific cases, such as during the probationary period, in case of summary dismissal (for example after theft or serious misconduct), upon reaching the statutory retirement age, in the event of the employer’s bankruptcy, or when the employee resigns, no permission from the UWV required.

• Termination with permission from the UWV: If a dismissal takes place for business-economic reasons or due to long-term incapacity for work after two years of illness, the employer must apply for a dismissal permit from the UWV.

• Termination by the subdistrict court judge: In situations where no permission from the UWV can be obtained, for example due to a disrupted employment relationship, the employee’s underperformance, or other personal circumstances, the employer can ask the subdistrict court judge to terminate the employment contract.

• Resolutive conditions and death: Sometimes a specific resolutive condition is included in the employment contract, such as the loss of a permit. The agreement also automatically ends if the employee dies.

• Other situations: Unemployment, the end of a project, or the implementation of a social plan and outplacement can also play a role in ending an employment relationship.

These different routes show that terminating an employment contract always depends on the circumstances, the agreements made, and the statutory rules.

What does this mean for employers?

Employers must be aware of the rules around successive employment contracts to avoid legal complications. It is important to know that fixed-term contracts with different employers, for the same role or similar work, are aggregated. This means that if an employee has had three fixed-term contracts through a temp agency and then joins the client company, that employee may immediately be entitled to a permanent contract.

What does this mean for temporary agency workers?

For temporary agency workers, it is important to know that their rights do not disappear when they switch from one temp agency to another or when they enter employment with a client company. The years of service accrued can count towards their rights, such as the length of the contract and pay progression.

Social plan and outplacement at the end of an employment relationship

When an employment relationship ends, for example due to reorganization or economic reasons, a social plan and outplacement can play an important role. A social plan is a set of agreements, often made between the employer and trade unions, laying out the arrangements that apply to employees affected by dismissal. These can include financial compensation, guidance toward new work, and agreements on notice periods or redeployment.

Outplacement is a specific provision within a social plan that focuses on guiding employees to other work. This may include coaching, job application training, retraining, and help with finding new vacancies. Many larger companies work with specialized agencies for this, such as Randstad RiseSmart, Lee Hecht Harrison or LHH, who support employees in taking the next step in their careers.

Important points for social plans and outplacement:

• Employees are often entitled to a transition allowance, in addition to any extra compensation agreed in the social plan.
• Outplacement programs are intended to increase the chances of new employment and can range from a few months to a year, depending on what has been agreed.
• In some situations, participation in outplacement is even mandated by the social plan.

In short, the social plan and outplacement are important tools to support employees at the end of their employment and to make their transition to a new job as smooth as possible.

Practical tips for employers and employees

1. Employers: Make sure you are aware of your employees’ employment history, especially if they have previously worked as temporary agency workers. This can affect their rights and the obligations you have as an employer.

2. Employees: If you start working as a temporary agency worker, or if you switch to another employer for the same work, make sure you are aware of your rights. Your previous employment periods may count when determining your contract duration and other employment conditions.

Conclusion

The rules regarding successive employers and temporary agency workers can be complex, but they are intended to protect employees and ensure fairness in the labor market. Whether you are an employer or a temporary agency worker, it is essential to be aware of the relevant legislation to prevent misunderstandings and legal issues.

Do you have questions about the rights of temporary agency workers or successive employers? We are ready to advise you and help you with all your employment law matters.