Employment law

What is an employment contract?

When can an agreement be seen as a legal employment contract? Why is it actually important to make this distinction at all? As we will see, the reason lies in the differences of legal consequences. An employment contract is an agreement between an employee and employer, containing working arrangements. Just like other agreements it is concluded by consent, thus through offer and acceptance.

The employment contract is defined in the law and can be found in article 7:610 of the Dutch Civil Code. The following rights and duties of the employer and employee are laid down:

1. The employee binds himself to perform labor
2. The employer binds himself to pay a wage
3. The employee performs the labor in the service of the employer

These three key elements mean:

• Labor: the employee must be bound by performing the labor personally
• Wage: in exchange for the performed labor, wages are due.
• In service of: The employer should exercise a certain degree of authority over the employee.

The employment agreement can be agreed upon for a fixed period of time or an indefinite period of time.

Nowadays, flexible employment relations become more and more important in the context of labor law. Think of call-off contracts, temporary employment contracts and contracts with payroll employees.

In addition to an employment contract there may also be an agreement for provision of services. If one of the elements as described above (labor, wage or in service of) are missing, you will be dealing with an agreement for provision of service. The distinction will not always be clear-cut. A key indicator is what parties at the time of concluding the contract had in mind and the way they implemented the principles as set out in the contract.