I'm sorry, but what you say makes no sense at all.
As an example, here in Portugal, if the work law applyed to the football players, then any player could easily move out of a club, they would just need to send a notice to the employer (club) 1 month before going away.
As a rule of thumb, the regular work laws do not apply to football contracts, not in Portugal, not in the Netherlands and not in any other country. If it did, then it would be a mess due to the illegal underage workers. Is it legal in Netherlands to have underage workers?
But this automatic extension thing is in the labour agreement that is specifally there for professional football players, so your comparison with regular work laws in Portugal, the Netherlands or any other country isn't relevant. In my opinion, the only question here is if it true that PSV didn't receive Labyad's written notice. If it is, Labyad and Sporting will have a problem because he signed a contract at Sporting while still being contracted to PSV. If PSV did receive the written notice and it's a lie/bluff that they didn't, then nothing will happen and Labyad will be yours for free and at least we won't see that AWESOME player ever again.