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Capital City
Amsterdam
Currency
Euro
(
€
)
Timezone
GMT +1
Payroll Frequency
monthly
Tax Year
1 January - 31 December
Employer Tax
25.22%-36.15%
Languages
Dutch
Capital City
Amsterdam
Currency
Euro
(
€
)
Timezone
GMT +1
Payroll Frequency
monthly
Tax Year
1 January - 31 December
Employer Tax
25.22%-36.15%
Languages
Dutch
The Dutch economy is stable and among the fastest-growing in Europe; ranking sixth despite being smaller in size than other European countries. According to Bloomberg's 2021 Innovation Index, the Netherlands is the ninth most innovative country globally.
The government actively promotes business growth by simplifying bureaucracy, offering tax incentives, and updating public policies. Employees receive an extra 8% vacation pay on top of their salary, and new expats may qualify for a 30% tax break, making the country attractive to expatriates.
Dutch workers have diverse skills, specifically in business and technology, with a high proficiency in English. The country has embraced highly skilled immigrants, becoming a global financial hub and potential start-up capital.
With a strong infrastructure and reliable internet connectivity, the Netherlands supports high-quality remote work. Its flourishing technology sector makes it a desirable location for businesses in need of technologically-skilled employees.
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.
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:
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.
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.
In the Netherlands, employers must adhere to strict regulations regarding working hours and overtime to ensure compliance and protect employee well-being. Employees aged 18 and over are allowed to work up to 12 hours per day and 60 hours per week, but these are exceptional limits. Over a 16-week period, the average workweek should not exceed 48 hours. Full-time employment typically ranges from 36 to 40 hours per week. Overtime compensation is not mandated by law but should be clearly defined in the employment contract or collective labor agreements (CAOs). Many employers establish rates at either 50% or 100% of the regular pay for overtime work, or time off in lieu.
Employers must also ensure adequate rest periods, including 11 consecutive hours of daily rest and 36 consecutive hours of weekly rest. Night shifts and weekend work are subject to specific rules, and employees are entitled to a break during long shifts.
As of January 1, 2025, the statutory minimum wage in the Netherlands for employees aged 21 and older is €14.06 per hour, amounting to €2,437.06 per month for a typical 40 hour work week.
The Dutch government adjusts the minimum wage biannually, on January 1 and July 1, to reflect economic conditions such as inflation and wage growth. The minimum wage applies to all employees, including full-time and part-time workers, with younger employees receiving a percentage of the adult rate based on their age. Employers must ensure compliance with these regulations to avoid penalties and maintain fair labor practices.
Additionally, specific rules apply to interns, trainees, and expatriates. While internships tied to educational programs may be unpaid, those performing regular work must receive at least the statutory minimum wage. Expats are generally subject to the same minimum wage laws, although highly skilled migrants may have higher salary thresholds. Various factors, such as industry-specific variations and government policies, influence wage levels. Employers should stay updated on these regulations to ensure compliance and fair compensation for their workforce.
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1 January - 31 December is the 12-month accounting period that businesses in The Netherlands use for financial and tax reporting purposes.
The payroll cycle in The Netherlands is usually monthly, with employees being paid at the end of each month.
The minimum wage for employees in The Netherlands is typically 14.06 EUR per hour, amounting to ~2,437.06 EUR per month for a typical 40 hour work week.
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 payroll contributions are generally estimated at an additional 25.22%-36.15% on top of the employee salary in The Netherlands.
In The Netherlands , an employee's social security contributions are included in income tax deductions.
The individual tax rate in the Netherlands is calculated based on progressive rates and can vary from 35.82% to 49.50%.
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.
Employers in the Netherlands must manage various payroll taxes, including wage tax, social security contributions, and employee insurance contributions, all of which are critical for compliance with Dutch regulations. Wage tax is progressive, requiring precise calculations based on employee income, while social security and employee insurance contributions fund essential programs such as pensions and disability benefits.
Timely filing and remittance of these taxes are essential to avoid penalties, with monthly deadlines applying to most tax types. Setting up payroll requires registration with the Dutch Tax and Customs Administration, and employers must stay updated on current rates and rules to ensure accuracy. Using payroll management software can simplify tax calculations, consolidate payroll data, and ensure compliance with Dutch tax regulations, reducing administrative burdens and improving efficiency.
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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.
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.
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:
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.
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:
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.
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:
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.
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.
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.
In the Netherlands, employees are entitled to a minimum of 20 days of paid annual leave per year, separate from public holidays, which are typically unpaid unless stated in contracts. Employers must ensure statutory leave is taken within six months of the following year, and employees receive a holiday allowance of at least 8% of their annual salary.
Other mandatory leave includes sick leave (up to 104 weeks at 70% pay), maternity leave (at least 16 weeks with full salary via social security), and paternity/partner leave (1 week at full pay, plus 5 additional weeks at 70% pay). Parental leave grants 26 times the weekly working hours per child, with 9 weeks being partially paid. Employers must comply with these laws to ensure fair treatment and effective workforce management.
In the Netherlands, employers are legally required to provide several key benefits to employees, including a minimum wage, paid time off, holiday allowance, paid sick leave, and parental leave. To attract and retain top talent, many employers also offer supplemental benefits such as pension plans, additional health insurance, performance bonuses, transportation allowances, and professional development opportunities. Understanding and implementing these benefits, while adhering to legal requirements, are crucial for employers aiming to foster a supportive and competitive work environment.
In the Netherlands, employment termination is strictly regulated, requiring employers to have valid legal grounds and follow proper procedures. Dismissal may be based on economic reasons, underperformance, long-term illness, or serious misconduct. Employers must generally obtain approval from the Employee Insurance Agency (UWV) or the subdistrict court before proceeding with termination, except in cases of mutual agreement. Notice periods range from one to four months, depending on the employee’s length of service, though immediate dismissal is allowed in cases of gross misconduct.
Employees are often entitled to severance pay, known as the transition payment, which equals one-third of their monthly salary per year of service, capped at €94,000 or one year’s salary if higher. Employers must also provide final pay, including wages, bonuses, and compensation for unused leave. Dutch labor law protects employees against unfair dismissal, allowing them to challenge terminations that lack a valid legal basis. Proper documentation, such as termination letters and final payslips, must be provided to ensure compliance with legal obligations.
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:
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:
Statutory severance payment is due when the employment agreement is terminated and is determined based on the following:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Jesse Weisz
Jesse is an experienced R&D Analyst at Playroll, a leading Employer of Record (EOR) provider. With a strong background in data analysis and market research, Jesse specializes in identifying emerging trends and driving innovation in global HR solutions. She is an all-rounder, critical thinker and success-seeker (often inextricably linked to being a late-night tea drinker).
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Standard employment terms in the Netherlands include working hours, leave entitlements, and conditions outlined in employment contracts, governed by Dutch labor laws and collective agreements.
The cost of hiring an employee in the Netherlands includes elements such as salary, social security contributions, and additional benefits. Employers contribute to social security funds, covering healthcare and pensions. Additional costs may include contributions to unemployment insurance and industry-specific pension schemes. Employers should be aware of collective labor agreements (CAOs) impacting overall labor costs within specific sectors.
Compliantly hiring independent contractors in the Netherlands requires adherence to labor laws. Employers should establish a clear contractor agreement outlining the terms and conditions of the engagement. Key factors include the contractor's autonomy, control, and the specific nature of services provided. Ensuring compliance with tax regulations, including contributions to social security, is crucial for proper classification and legal adherence.
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