HR Strategy: Short-Term or Long-Term Contracts

By: Togerther Abroad 02-11-2017 1:18 PM
Categories: ** HR daily news, ** HR Strategy,

With the rising competition due to globalization and the necessity to cut down costs in order to get a competitive advantage, a key to a successful business is the ability to find a balance between short-term and long-term employees. This might be essential for surviving, and at the same time, for satisfying employees’ needs.

Even though the Dutch economy is very stable and strong compared to other countries, companies have to be aware of possible changes in the market. Businesses have an obligation to their employees to take into consideration what would happen if a situation changes: can the company have many workers with long-term or permanent contracts, or would the business crash as a result?

Why is it beneficial to give a short-term contract?

Short-term contacts can come in handy especially for small businesses or companies that are dependent on seasonal demand. For example, if the company is selling strawberries, they need extra people during the period of strawberry picking. Having a worker with a permanent contract would mean that they have to pay a salary to him/her for the whole year instead of a few months. Likewise, when there is a need of an extra employee for one project, or to temporarily replace a sick worker, a short-term contract is adequate. In other words, it gives flexibility to the employer.

Furthermore, short-term contracts terminate automatically by law. Short-term employees tend to be lower cost than long-term employees and commonly do not require vacation or sick time leave. And another key advantage, there is more time to assess suitability of an employee before giving a long-term or even permanent contract.

Despite the shortness of the employment, it can also increase the creativity within the company. New people bring new ideas that can lead to an increased competitive advantage and eventually an increase in profit.

But there are also disadvantages, such as:

• It is illegal to terminate a short-term contract unless there was an agreement in the contract that covers certain conditions
• One extension too many can result in an indefinite contract of employment
• Unclear provisions are in agreement at the risk of the employer
• It might be necessary to invest in a new employee’s skill, only to lose it in a short while (which leads to increased cost)
• It can cause brain drain in the company

Legal aspects

There are certain legal aspects concerning hiring a new employee under a short-term contract that are essential to know for an employer:
• It can be extended up to 3 times and only up to 36 months in total
• The intermediate period is shorter than three months
• The nature of the function and level of working conditions are not relevant
• If the limits are exceeded, a permanent contract is automatically established
• If the employee continues working after the expiration date without the employer’s protest, even if it is for a few days, the contact will automatically be lengthened, the so called “tacit continuation”. It is lengthened for the same period of time as the previous contract.

Long-term contracts

In the Netherlands, a long-term contract does not mean it is a permanent one. It can be a contract for longer than 6 months or a year.

When thinking about giving this type of contract, probations need to be considered. While in a short-term contract it is uncommon to have it, in a long-term contract it has to be stated. So, if the employment is longer than 6 months and less than 2 years, the duration is 1 month. The advantage here is that if the employee does not satisfy the expectations he/she can be dismissed without a notice period.

With short-term and long-term employment (if a long-term contract does not exceed 1 year), HR can more easily find the right people for the position in the long run by trying out a few people first.

Long-term employment can slow down the financial growth of the company by having employees that are not necessary for full-time employment.

When should HR switch from short-term to long-term employment?

Based on the analysis above, to switch from a short-term to a long-term contract is beneficial when the employee brings essential knowledge and value to the company. Moreover, it is a good idea to reevaluate the situation if the company is losing too much knowledge or the constant hiring requires too many resources and investment in making new staff knowledgeable.

Overall, only the company itself knowing the market it is in and the business it is doing, can make a strategic decision on which contract is the most profitable. However, there are certain aspects that are beneficial to take into consideration before making a key decision in running the staff. “Staffing decisions should be viewed as an opportunity to improve on the status quo and not just as a requirement of doing business”, says Robert Morello.

Asta Kerkhoven


This article is restricted. You have to be logged in to be able to add further reactions.

For an expat moving to the Netherlands, getting the right direction is very important. It's important that one knows which steps and direction to take. Linda is an exceptionally talent counselor, her advice has helped me land a job within a week of coming to the Netherlands. I am grateful for her mentoring and look forward to a great working relationship in the future.

Dr. Hrishiraj S | Clinical Research & Affairs Manager

Together Abroad provided expert advice on personal branding including developing a top-notch, market-aware CV, highly tailored job applications, and approach strategies with potential employers in the Netherlands. Furthermore, I found them be highly knowledgeable in key related fields such as recruitment strategy, immigration law, contracts, labor agreements, and (un)employment benefits. I would recommend Together Abroad to anyone who needs professional help with transitioning to a new career.

A. Aboufirass | Structural Engeer

Linda is a big mind. She thinks about things that the rest normally overlook. The insight she has about the dutch job market can only be achieved through years of experience and persistence.

Her business savvy is complemented by her mastery of understanding the client's needs and requirements. For my career I could say, she was the “Mary Poppins”, who guided me through thick and thin and helped me to land a career in the Netherlands

S. Bhattacharjee | FP&A Manager

If you are going to enlist the services of a "Career Coach" look no further. The only person you want in your corner is Linda van Orsouw. As an expat, you absolutely want to work with a highly skilled and knowledgeable professional who knows their way around the Dutch career/employment/job market. Linda assisted me in writing and positioning my CV, helped me organize and prioritize my list of opportunities, coached me through mock interviews and was there when I got offered a senior position only 2 months later. When asked I will only refer to Linda and "Togetherabroad".

Mr. C. Joubert
Lead Workplace Strategy Consultant 


New item