Employees with permanent contracts: pros and cons

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.

Why a permanent contract?

• If you need continuity or stability in certain tasks or within your business.
• If you have found someone who’s a good fit and you want to keep them on.
• If your customers value seeing familiar faces.
• If you want to be less reliant on temporary staff or agency workers.

Pros of a permanent contract

• 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 of a permanent contract

• 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 tsuch cases, 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 can 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, only restrict if you have a valid reason.
• 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 on which days or within which time periods the employee may be called on to work.