International employment contracts and Dutch law
An international employment contract is one that has connections to more than one country - for example, because the employer is based in one country and the employee works in another, or because the employee is posted temporarily abroad. In the Netherlands, such contracts are common given the country's open economy, large multinational sector, and significant expat population.
The starting point for any international employment contract is the question of applicable law: which country's employment law governs the relationship? Under the Rome I Regulation, parties may choose the applicable law, but mandatory Dutch provisions continue to apply if the employee habitually works in the Netherlands. This means that even a contract expressly governed by New York or UK law must respect Dutch rules on dismissal, notice periods, and the transition payment.
Key clauses in international employment contracts under Dutch law
International employment contracts typically contain several specific clauses that domestic contracts do not. These include: a choice-of-law clause (subject to the Rome I limitations), a jurisdiction clause (subject to Brussels I Recast limits), provisions dealing with the 30% tax ruling, relocation allowances, international school fee reimbursements, repatriation provisions, and specific termination provisions tailored to the international context.
Non-compete clauses (concurrentiebeding) in international employment contracts deserve particular attention. Under Article 7:653 of the Dutch Civil Code, a non-compete clause must be in writing and must be agreed with the employee. In a fixed-term contract, a non-compete clause is only valid if the employer can demonstrate compelling business reasons (zwaarwegende bedrijfsbelangen). Courts scrutinise non-compete clauses carefully in international settings, particularly when they purport to restrict the employee's activities across multiple jurisdictions.
Practical advice under Dutch employment law
Employers drafting international employment contracts for Dutch-based employees should ensure compliance with Dutch mandatory law even if a foreign governing law is chosen. Employees signing such contracts should seek advice from an employment lawyer in the Netherlands to understand which Dutch protections apply to them and how the contract interacts with local law. In case of termination, the interaction between the chosen governing law and Dutch mandatory provisions is particularly important for calculating severance entitlements.
Dutch courts consistently apply the mandatory overriding provisions of Dutch law to employees habitually working in the Netherlands regardless of any foreign choice-of-law clause in the contract, in accordance with Article 8(1) of Rome I. This means that even a contract governed by New York or English law must respect the Dutch rules on the transition payment (Article 7:673 of the Dutch Civil Code), the prohibition on dismissal during illness, and the statutory notice periods under Article 7:672 of the Dutch Civil Code. Non-compete clauses in international contracts are scrutinised carefully by Dutch courts, and under Article 7:653 of the Dutch Civil Code a clause in a fixed-term contract is only valid if the employer can demonstrate compelling business reasons.