Employer of Record in The Netherlands

Businesses can only operate smoothly in The Netherlands if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations. Learn more about the employment laws and regulations in The Netherlands below, to avoid any compliance issues.

Employment Contract Requirements

While written employment contracts are not obligatory for legal validity in the Netherlands, it is advisable for employers to provide essential details about the job to their employees within the initial month. In accordance with Dutch Civil Code, employers are required to communicate the following information to the employee:

• Identification and details of both parties
• Job title and job description
• Starting date (and duration for temporary contracts)
• Base salary and payment terms, including: compensation, benefits, and pension schemes (if applicable)
• Daily or weekly working hours
• Leave entitlements and number of holidays
• Probation period
• Notice for employment termination
• Collective labour agreements
• Non-competition clause (if applicable)

Onboarding Process

We can help you get a new employee started in The Netherlands quickly, with a minimum onboarding time of just 1-2 working days. The timeline starts once the employee submits all required information onto the Playroll platform and completes any necessary local authority registrations.

For non-nationals, the Right to Work assessment (if applicable) may add up to three extra days. Additional time may be needed for follow-ups on this assessment. Please note, payroll cut-off dates can impact the actual start date. Playroll's payroll cut-off date is the 10th of each month unless otherwise specified.

Working Hours in The Netherlands

The standard workweek is 40 hours, usually divided into 8 hours per day (with a maximum of 12 hours) over 5 days (Monday to Friday). Those under 18 are required to work a maximum of 8 hours per day.

Overtime in The Netherlands

Employees doing overtime are required to receive compensation for extra hours taken, as specified by their employment contract, which also outlines the maximum allowable hours for overtime.

Although the Dutch employment law does not indicate a specific overtime payment rate, many employers establish rates at either 50% or 100% of the regular pay for overtime work.

Probation Period in The Netherlands

In the Netherlands, probationary periods are common but not required. They are determined by collective agreements and individual contracts. Dutch law allows for a maximum probationary period of 2 months for permanent contracts and 1 month for fixed-term contracts lasting 6 months to 2 years.

Contracts shorter than 6 months may not include a probationary period. During this time, the employer can terminate the contract without notice.

Fiscal Year in The Netherlands

1 January - 31 December is the 12-month accounting period that businesses in The Netherlands use for financial and tax reporting purposes.

Payroll Cycle in The Netherlands

The payroll cycle in The Netherlands is usually monthly, with employees being paid at the end of each month.

Minimum Wage in The Netherlands

The minimum wage for employees in The Netherlands is typically 13.68 EUR per hour, amounting to ~2,371.20 EUR per month for a typical 40 hour work week.

Bonus Payments in The Netherlands

It is customary practice in the Netherlands to pay the 13th month salary in November or December. This is outlined in the employee's contract or collective agreements.

Employer Tax Contributions

Employer payroll contributions are generally estimated at an additional 23.49%-33.29% on top of the employee salary in The Netherlands.

Employee Payroll Tax Contributions

In The Netherlands , an employee's social security contributions are included in income tax deductions.

Individual Income Tax Contributions

The individual tax rate in the Netherlands is calculated based on progressive rates and can vary from 37.07% to 49.50%.

Pension in The Netherlands

The retirement age in the Netherlands is currently 66 years and 7 months, but is scheduled to increase in upcoming years according to life expectancy. Employees insured for 50 years are eligible to receive full government pension (AOW), which is paid monthly and adjusted twice a year based on wage inflation.

Employees can also choose supplementary pension plans, known as the Second Pillar Pension, with about 90% of employers offering to provide extra financial support alongside AOW.

In the Netherlands, work permits and visas are essential for employers hiring foreign workers. Employers must follow specific processes, submit applications, and meet eligibility criteria to stay compliant. Key work permits include the TWV (Tewerkstellingsvergunning) for short-term work, the GVVA (Combined Residence and Work Permit) for stays over three months, and the Highly Skilled Migrant Visa for qualified professionals. Other options include the EU Blue Card, the Intra-Corporate Transferee (ICT) Permit, and the Orientation Year Visa for recent graduates. Employers must also ensure they meet salary thresholds and provide adequate documentation to the Dutch Immigration and Naturalisation Service (IND).

Failure to comply with work permit regulations can lead to fines and legal issues. Processing times vary, with permits like the TWV taking up to five weeks and the GVVA up to 90 days. Employers must plan ahead, verify authorizations, and track permit validity to ensure smooth hiring and onboarding of foreign talent. Partnering with an Employer of Record (EOR) like Playroll can streamline the process and mitigate compliance risks.

Mandatory Leave Entitlement in The Netherlands

The annual leave entitlement in The Netherlands is 20 days for a full time worker. These can include public holidays on top of that or within those days, which would otherwise be unpaid.

Public Holidays In The Netherlands

The Netherlands has 11 public holidays, which are not part of the minimum paid leave entitlement. Nevertheless, employers typically grant their employees time off on these public holidays. The following are the nationally recognised holidays in the Netherlands:

Paid Time Off in The Netherlands

A full-time employee in the Netherlands receives 20 days of paid annual leave each year, and this can be increased to anything between 25 and 32 days.

Any remaining leave from the previous year must be utilized by the end of June, and the employer is obligated to inform the employee of its expiration, although this requirement applies only to the statutory minimum number of days. Non-statutory leave expires after 5 years.

Maternity Leave In The Netherlands

Pregnant employees are entitled to 16 weeks of paid maternity leave (generally 6 weeks before and 10 weeks after), which includes a compulsory 4-week leave period. The employer covers this leave at 100% of the employee's daily wage. In the case of multiple births, the paid maternity leave is extended to 20 weeks.

If the employee remains unable to work due to pregnancy or childbirth, the maternity leave can be prolonged. Employers initially make the payment and later seek reimbursement through the UWV. Maternity leave typically consists of two periods:

• Prenatal Leave: The employee is required to take 4-6 weeks of leave before the expected due date.
• Postnatal Leave: The remaining 10-12 weeks must be taken after the child's birth, allowing the employee to rest.

Paternity Leave In The Netherlands

The spouse or partner of an employee who recently gave birth gets 1 week of paid 'birth leave' to be taken within the first four weeks after childbirth. This is paid at 100% by the employer. They also have the right to take 'short absence leave' for the actual birth.

Additionally, they can take an Extended Partner Leave for 5 weeks, but it is unpaid. However, they might be eligible to receive compensation of up to 70% of their last earned salary from the UWV.

Sick Leave In The Netherlands

If an employee is unable to work due to illness, the employer must provide compensation of at least 70% of their last earned salary, including holiday allowance, for a duration of 2 years. This is often outlined in employment contracts with details such as:

• The employer will pay 70% or 100% of the employee's full salary (the amount is not capped) for the 1st year of illness
• The employer will pay 70% of the employee's salary (the amount can be capped) during the 2nd year of illness

Parental Leave In The Netherlands

Parents with children under 8 years old are eligible for parental leave of 26 times their weekly working hours. The initial 9 weeks are paid by the UWV at 70% of their usual salary and should be taken within the first year of the child's life. The subsequent 17 weeks are unpaid.

This arrangement can be negotiated and distributed over the 8-year period, with leave allocated for each child.

Adoption Leave

Parents intending to adopt or foster a child are entitled to a maximum of 6 weeks of leave. This leave can be taken in a continuous period or distributed over the initial 26 weeks after the child arrives at their home. A notice of 3 weeks must be given before taking this leave, and during this time, adoption allowance can be applied for through the UWV.

Care Leave

Employees can opt for leave to care for an ailing family member through three provisions: Emergency Leave, a one-day, paid leave for unforeseen urgent matters; Short-term Care Leave, allowing up to double the weekly working time for 2 weeks, with the employer covering 70% of their salary; and Long-term Care Leave, offering up to six times the weekly working time for 6 weeks, albeit unpaid.

Termination Process in The Netherlands

An employer in the Netherlands has the authority to terminate an employment agreement with a valid reason, as specified in both the employment agreement and any collective agreement in place with the employee. However, unilateral termination without involving the Employee Insurance Agency (UWV) is not permissible, particularly in cases related to economic reasons or long-term disabilities. According to Dutch law, valid reasons for termination include:

• Redundancy due to economic circumstances
• Long-term disability (lasting two years)
• Frequent absence due to illness or disability affecting the ability to carry out job duties
• Underperformance
• Misconduct
• Refusal to fulfill contractual duties based on conscientious or religious objections
• A disturbed relationship

Notice Period in The Netherlands

In the Netherlands, when termination occurs through mutual agreement, securing the employee's consent involves following notice periods. These periods take place at the end of the month and are based on the employee's length of service:

• Less than 5 years: 1 month notice
• Between 5-10 years: 2 months notice
• Between 10-15 years: 3 months notice
• More than 15 years: 4 months notice

Severance in The Netherlands

Statutory severance payment is due when the employment agreement is terminated and is determined based on the following:

• 1/3 of salary per year worked. Severance pay is capped at the higher of 94000 EUR and 1 years' salary.
• A transition payment becomes applicable where employer initiates the dismissal, and the employee is not blameworthy.