Employees with permanent contracts: pros and cons

  • Juliëtte Geers
  • 26 September 2022
  • 1 min
  • Managing and growing
  • Staff

A permanent employment contract does not have a fixed end date. That means you expect that the tasks that the employee performs will continue the next few years, and you want to keep working with the employee. What are the pros and cons of a permanent contract?

A permanent contract only deals with the length of the contract period and not the working hours. For example, you can offer an employee a permanent zero-hour contract.

Trial period

When you hire an employee and give them a permanent contract, the maximum trial period is 2 months. During this period, both the employee and the employer can end the contract at any time, and for any reason.

Pros

  • You decide the hourly rate, as long as it is not lower than the minimum wage.
  • You pay a lower unemployment insurance premium for a permanent employee than for a temporary employee. 
  • Permanent employees give your business a more personal feel and a familiar face, which helps build trust in your company among customers.
  • A permanent employment contract guarantees a consistent quality of your work.
  • A permanent employment contract gives both the employee and the employer security and confidence in the work relationship. That builds extra commitment.
  • Potential employees may find a permanent contract to be more attractive. That improves your position in recruitment and selection of new employees.

Cons

  • An employer may not dismiss an employee with a permanent contract unless there is a good reason. For example, due to the company’s poor economic or financial position, poor performance by the employee, or the position no longer being needed.

A contract can only be broken with the agreement of both parties or with the permission of the Employee Insurance Agency, UWV or the district court. In the last 2 examples, the employer must give a good reason for ending the contract. The employer must also provide a complete file for the case.

Rules for permanent contracts

Take the following rules into consideration.

  • Include all of the required information in the employment contract.
  • When you hire an employee with a permanent contract, you will have to consider a trial period of no more than 2 months. During this period, both the employee and the employer can end the contract at any time, and for any reason.
  • You are responsible for the costs of any training and education required for the work.
  • You may not forbid the employee from performing any sideline activities.
  • The employee may ask you to change the number of hours in the contract, the working times, and the workplace.
  • Does the employee have an on-call contract? Then you are required to say which days or time periods the employee may be called on to work.

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