What are the rules at present (2019)?
As of 1 July 2015, employers can issue three fixed-term employment contracts over a two-year period. When either the fourth employment contract in the series is signed, or if the maximum period of two years in service is exceeded, the contract then becomes one of indefinite length. Attention: the sequence of contracts only resets to zero if there is at least 6 months between two contracts.
Important! The Catering CAO allows shorter interim periods for seasonal labor based on climate and nature. After short term seasonal labor has been completed, employers can then revert to contract lengths of more than three months.
As of 1st January 2020
As of 1st January 2020, the maximum period will be extended from two to three years. The maximum number of contracts within this period remains three, and the interruption period also remains set at six months. With a collective labor agreement this period can be shortened to three months.
Transition allowance rules are also changing
Until 1 January 2020, an employee is only entitled to a transition allowance after two years of service, whereby the allowance is calculated from the first day of their employment. From 1 January 2020, the transition allowance will be calculated and paid from day one of any contract. This also applies to dismissal during the probationary period and to any fixed-term contract that is not extended by the employer. The contract must be terminated by the employer for these rules to apply. The previous arrangements regarding transition allowance (lower allowance for smaller businesses and extended build-up for older employees) expire with effect from 1 January 2020. The accrual for on-call workers is calculated using the average number of hours worked each month.
If the employment contract is shorter than one month, the total amount of gross salary paid is used as the starting point. Please note: if you have already stated in the employment contract that the agreement will be terminated at the end-date specified in the contract, you will automatically also owe a transition payment, because the contract will therefore be terminated at the request of the employer.
As of 2020, once an employee has been issued with three employment contracts – or after just three years – an employment contract for an indefinite period will apply. The transition payment rules will apply from day one.