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Employing in Netherlands

The Netherlands is one of the top three countries in which our clients choose to base their employees. Why so popular…?

As our own business development manager can attest from a recent trip, everyone speaks English (and much of the wider workforce is multi-lingual). Having such a prevalence of fluent speakers of the world’s language of business is extremely attractive, especially for US businesses seeking a suitable landing place for their expansion into Europe.

Sandwiched between European superpower Germany, the de facto capital of the EU Belgium and the marine transport links of the North Sea, the Netherlands is geographically well placed to do business across Europe.

Richer than Germany and the United Kingdom (the other countries featuring in our top three expansion targets) by GDP per capita, the Netherlands has a consistently growing economy. As a result, many multinational businesses with household names have established their presence there. Will your business be the next to thrive in the kingdom of the low countries?

An employer of record, sometimes known as an international PEO can help you quickly hire and onboard workers in the Netherlands – often with just two weeks’ notice. Establishing your own local entity without risk and saving costs, this type of service makes an EOR in the Netherlands worth checking out!

PEO Netherlands

An overview of employing in the Netherlands

Salary Information

Euros (€)

It’s not uncommon for salaries to be paid around the 25th of each month. Here at TopSource Worldwide, salaries are paid on or by the last working day of the month.

Statutory minimum wage rules apply in the Netherlands. These are adjusted by the government bi-annually on 1 January and 1 July.

There’s no specific requirement to include a bonus in the contract.

Other Information

Employers must be registered with an ‘Arbodienst’ provider, a company which helps re-integrate employees who are sick back into the workplace. They also seek to support employers to reduce illness-related absence, minimise work-related risks and ensure a healthy and motivated workforce.

TopSource Worldwide is affiliated with ArboNed for such services.

The Dutch social security system consists of national insurance, employee insurance and medical insurance.

The national insurance scheme comprises of state pension (AOW), surviving dependents (ANW) and exceptional medical expenses (AWBZ).

National insurance contributions and salaries tax are withheld by the employer from an employee’s salary and then paid to the Dutch Tax and Customs Administration.

Employees are to take out their own private health insurance as per the Health Insurance Act (Zorgverzekeringswet). The insured individual pays a premium to the insurance company which is determined by the insurer. The Health Insurance Act (ZVW) provides an income-related contribution to be paid by the insured person: the higher the salary, the higher the contribution.

Individuals can choose to take out supplementary insurance to cover anything not included in their health scheme. There’s a mandatory excess of €385 (correct for 2021) to be paid for claiming on the scheme despite having to pay a standard premium.

Employers costs in the Netherlands

Social security system

The Dutch social security system consists of national insurance, employee insurance and medical insurance.

The national insurance scheme comprises of state pension (AOW), surviving dependents (ANW) and exceptional medical expenses (AWBZ).

National insurance contributions and salaries tax are withheld by the employer from an employee’s salary and then paid to the Dutch Tax and Customs Administration.

Healthcare

Employees are to take out their own private health insurance as per the Health Insurance Act (Zorgverzekeringswet). The insured individual pays a premium to the insurance company which is determined by the insurer. The Health Insurance Act (ZVW) provides an income-related contribution to be paid by the insured person: the higher the salary, the higher the contribution.

Individuals can choose to take out supplementary insurance to cover anything not included in their health scheme. There’s a mandatory excess of €385 (correct for 2021) to be paid for claiming on the scheme despite having to pay a standard premium.

An overview of the main statutory benefits

Pension

TopSource Worldwide doesn’t have an occupational pension scheme in the Netherlands. We can facilitate voluntary employers’ contributions to be paid directly to the employee, who is responsible as to where the funds are invested.

Probationary period

The maximum probationary period under Dutch law is two months for indefinite contracts or contracts of at least two years, otherwise only one month’s probation is allowed. Contracts shorter than six months don’t allow for a probation period.

It’s possible to terminate the employee’s contract during the probationary period with immediate effect should they not be meeting the required standards of performance; however, protocols must be observed — TopSource Worldwide can advise clients on this.

There’s no specific action required to inform employees they have passed the probationary period.

Working hours

Full-time employment is usually 36–40 hours per week. The Working Hours Act (ATB) sets the maximum working hours per week to 60; however, an employee must not work the maximum number of hours every week.

• Per week during a four-week period: on average 55 hours per week
• Per week during a 16-week period: on average 48 hours per week

If an employee works for more than five and a half hours, they’re entitled to at least 30 minutes of break time. This may be split into two 15-minute breaks.

If an employee works for more than 10 hours, they must have at least 45 minutes of break time. This may be split into several breaks, each of which must be at least 15 minutes.

Dutch law does not provide a legislative regulation for overtime. Overtime hours can be accrued as compensation hours that can be added to leave entitlement. This should be agreed in the contract of employment.

  • A vacation allowance equal to 8% of the gross salary earned from 1 June to 31 May is paid in June each year.
  • Vacation allowance accrues each month and needs to be paid out when employees exit.
  • The monthly salary cited in the employment contract does not include the 8% vacation allowance.

Notice periods

Notice periods can vary depending on who wants to terminate the employment. If this is the employer, the notice period is always twice as long as when the employee is requesting the notice period. A longer notice period can be agreed upon in the contract.

Interim notice is required in the employment contract to terminate a fixed-term employment contract. This enables the employee to receive unemployment benefits from the time of dismissal.

Employees: the statutory notice period to be provided by an employee is one month. However, it’s possible to agree a shorter or longer notice period with the employee, in which case it must be explicitly stated in the contract of employment. If an employee’s notice period is more than one month, this will have the effect that the employer’s notice period will be at least twice as long. The maximum notice period for an employee is six months.

Employers: where an employee notice period has not been negotiated to be longer than the statutory of one month, the statutory employer notice depends on the length of contract, with a maximum of four months.

Length of service – Notice period
Up to five years – One month
Five to 10 years – Two months
10 to 15 years – Three months
15 years + – Four months

In the event that a fixed-term employment contract ends, the employer must notify the employee in writing one month prior to the end of the employment contract. If the employer fails to do so, the employment contract ends by operation of law, but the employer must pay a penalty of one month’s salary (or the equivalent for each day it’s late). This is formally different from the ‘notice period’.

Holiday & Leave

Sick Leave

By law, employees in the Netherlands are entitled to a minimum of 70% of their annual gross salary for up to two years of illness. The 70% payment must not be lower than the statutory minimum wage. Employers must define the terms of wage payment in the event of sickness in the employment contract and may choose to cover 100% of the employee’s salary for the first six months of sick leave.

After two years, if all reintegration efforts for the employee have been met through the services of an ‘Arbodienst’ provider (see statutory insurance), UWV will take over the payments. UWV (Uitvoeringsinstituut Werknemersverzekeringen) stands for Employee Insurance Agency, an independent administrative body which performs these services on behalf of the Ministry of Social Affairs and Employment. The employer can than request termination of the employment. Travelling and expense allowances may not be paid during a long period of sickness.

It’s mandatory for an employee to report any sickness to their employer; however, a sick note is not required.

Pregnant employees are entitled to pregnancy and maternity leave for at least 16 weeks.

Since January 2019, a partner is entitled to five days in paid leave. In addition, since 2020, the employee can take additional parental leave which is paid out at 70% and will be reimbursed by UWV. The additional parental leave is five weeks and can be taken within six months after the date of birth. An employee is also entitled to 26 times their number of working hours per week in unpaid parental leave which can be taken at discretion of the employer.

An employee is entitled to six weeks of leave over a period of 26 weeks. This may be taken as consecutive weeks or spread out. During this time, an employee continues to accrue vacation days. An employer may not ask an employee to compensate this leave with holiday.

An employer may not refuse a reasonable request for emergency leave of absence. This can be a few hours and at most a few days. During the emergency leave, an employee is entitled to their normal wages.

Employees in the Netherlands are entitled to apply for short or long-term care leave provided that the care is necessary, and the employee is the only person able to provide this care. This is paid out at 70% of their annual salary. An employer may only refuse this leave if this causes serious problems for the company.

  • Saturday 1 January – New Year’s Day (Nieuwjaarsdag)
  • Friday 15 April – Good Friday (Goede vrijdag)
  • Monday 18 April – Easter Monday (Eerste en tweede paasdag)
  • Wednesday 27 April – King’s Day (Koningsdag)
  • Thursday 5 May – Liberation Day (Bevrijdingsdag)
  • Thursday 26 May – Ascension Day (Hemelvaartsdag )
  • Sunday 5 June – Whit Sunday (Eerste en tweede pinksterdag)
  • Monday 6 June – Whit Monday (Eerste en tweede pinksterdag)
  • Sunday 25 December – Christmas Day
  • Monday 26 December – Boxing Day

Please note:

  • The law does not stipulate legal holiday entitlement on public holidays and should be outlined in the contract of employment.
  • *King’s Day is marked as an official national holiday on an annual basis.
  • **Liberation Day is marked as an official national holiday every five years (next in 2025).

Keen to engage an EOR in the Netherlands? At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey

To find out how we can help your business with our employment solutions, contact us today.

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