Every small business owner knows this moment: a temporary contract is nearing its end, the numbers are tight, the workload uneven, and you’re still weighing whether someone truly fits. Meanwhile, the employee is listening closely, to every sentence, every nuance. A recent ruling from the Arnhem-Leeuwarden Court of Appeal brings that everyday tension into sharp focus, and it matters more than you might think for your cash flow, your risk exposure, and your admin peace of mind.
The case was simple on the surface. A senior employee on a one-year contract expected an extension. There had been positive words, encouragement, even laughter in a progress meeting. When the contract was not renewed, the employee claimed a “billijke vergoeding” (a fair compensation) on the basis that the employer had effectively promised continuation. The lower court agreed, briefly. The appeal court did not.
What the judges made clear is something many entrepreneurs intuitively feel but don’t always articulate: a temporary contract ends by default. An extension is not automatic, and encouragement is not a guarantee. Even phrases like “I’m positive about extension” or “we’ll decide soon” are not binding if they are clearly tied to performance and future assessment. For small employers, this matters because a vague sentence, spoken in good faith, can quickly turn into legal risk if expectations harden into assumptions.
The ruling also addressed two issues that often worry small businesses. First, performance. The court confirmed that employers have broad discretion in judging whether someone functions “well enough” for continuation, much broader than in dismissal cases. Second, discrimination. Comparing a senior employee’s cost to that of a junior colleague is not age discrimination if the real issue is task level and value for money. That distinction is crucial for micro-companies where every salary must justify itself.
There was one uncomfortable detail in the case: the employee secretly recorded conversations. The court treated those recordings with caution, noting the imbalance created when one party knows and the other does not. For employers, the lesson is not paranoia, but consistency. What you say informally should align with what you would be comfortable seeing written down later.
So what does this mean in practice? It means tightening the link between words and decisions. If continuation depends on development, say so clearly, and repeat it. Put it in writing, even briefly. Avoid letting optimism sound like certainty. And if you sense doubts, don’t postpone them until the last moment; silence creates more risk than clarity ever will.
The good news is that this ruling offers calm reassurance. You are not expected to predict the future or promise stability you cannot guarantee. You are expected to be reasonable, transparent, and consistent. Small adjustments in how you communicate around temporary contracts can protect trust on both sides, and spare your business a costly detour through the courts.