Hire employees in Netherlands

For companies looking to hire remote talent, the Netherlands should be very high on the list of possible recruitment markets. Not only have the Netherlands turned into a sheer hub for international tech talent over the last few years, leaving the country’s technology sector with a spectacular growth rate, but the small constitutional monarchy also scores well in international rankings when it comes to its well-educated, skilled workforce.

This is due to the high standards of the Dutch academic education system and vocational training schemes as well as to the country’s life-long learning attitude. Another advantage of hiring in the Netherlands is the overall good command of English. In fact, with English having the status of a co-official language, there are very few nations in Europe which feature such a high proficiency in English across all social classes and age groups as the Netherlands.

Employment contracts in the Netherlands do not have to be in writing in order to be legally valid. However, it is best practice among employers to provide their employees with a written employment contract specifying the terms of employment.

Dutch law generally distinguishes between permanent employment contracts and temporary employment contracts. In fact, it is common practice for companies to first hire new employees on the basis of a fixed-term contract lasting for six months or a year before offering them an indefinite contract.

Written employment contracts should include at least the following information and have to be provided to the new employee within the first month of employment:

• Identification of both parties

• Date of commencement (and employment duration for temporary contracts)

• Workplace

• Job description such as group of profession

• Base salary as well as other compensation or benefits

• Working hours

• Probation period (if applicable)

• Total number of holidays

• Notice periods for employment termination

• Pension scheme (if applicable)

• Non-competition clause (if applicable)

• Reference to collective agreements

Probation Period

The probation period must be clearly stated in the employment contract. For fixed-term contracts exceeding two years as well as for indefinite contracts, the employee’s probation period is generally limited to two months. For shorter contracts, it is shortened to one month.

Working Hours and Breaks

A standard working week in the Netherlands comprises between 36 and 40 hours per week which equals seven to eight hours per day over a five-day week. In some industries, four-day weeks may be possible.The Dutch Working Hours Act rules that an employee’s regular weekly working time must not exceed 45 hours, with nine hours being the daily limit.

In accordance with the Working Hours Act, employers need to observe the following regulations on breaks and rest periods:

• at least eleven hours of consecutive rest every 24 hours

• at least 36 hours of consecutive rest every seven days if the employee works a five-day week

• at least 72 hours of consecutive rest every 14 days if the employee works a six-day week

• at least 30 minutes of break after five and a half consecutive hours of work

• at least 45 minutes of break if the employee is on duty for more than ten consecutive hours

Overtime

As there is no legal regulation on overtime payment in the Netherlands, employers and employees have to agree on an appropriate pay rate when negotiating the terms of employment.

In no case are employees allowed to work more than twelve hours within one day or more than 60 hours within one single week.

Payments are usually issued once a month.

Minimum Wage

Minimum wages in the Netherlands depend on the employee’s age. Dutch legislation generally distinguishes between workers under 21 and workers who are 21 years old or older. The statutory minimum wage is usually adjusted twice a year, i.e on 1 January and 1 July.

Statutory minimum wage rates as of January 2022:

• employees aged 21 or older: EUR 1,725.00 per month, i.e. EUR 398.10 per week and EUR 79.62 per day

• employees aged between 15 and 20: monthly amounts range from EUR 517.50 (for those aged 15) to EUR 1,380.00 (for those aged 20), i.e. weekly pay ranges from EUR 119.45 to EUR 318.50 and daily pay rates range from EUR 23.89 to EUR 63.70

Sick Pay

Employees who are not able to go to work because of sickness or injury are entitled to 70% of their usual wages – at least the equivalent of the minimum wage. Sick leave is limited to two years during which the employer is not allowed to dismiss the absent employee unless a collective agreement provides for it or permission is given by the Employee Insurance Agency (UWV).

Bonuses

Dutch labour law does not stipulate the payment of a 13th salary. However, employees are entitled to an annual bonus of (at least) 8% of their annual earnings. This so-called holiday pay is usually issued between May and June.

As of January 2022, employees and employers in the Netherlands are subject to the following tax and social security contribution rates:

Taxes

Employers

25.8%

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• 25.8% corporate tax rate (15% on income below EUR 395,000)

• 21% VAT (standard rate)

Employees

up to 49.5%

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individual income tax rates:

• up to EUR 35,472: 9.42%

• up to EUR 69,398: 37.07%

• over EUR 69,398: 49.5%

Social security

Employers

around 22%

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Total employer contribution rate for salaries up to EUR 59,706 is around 22%, which includes:

• Unemployment Insurance (WW): 2.7% or 7.7% depending on contract type and industry

• Work and Income Insurance (WIA) & Invalidity Insurance (WAO): 5.49% or 7.05% plus variable contribution

• Health Insurance (ZVW): 6.7%

• Surcharge: 0.5%

Employees

27.65%

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Total employee contribution rate on annual earnings up to EUR 35,472 is 27.65%, out of which:

• National Old Age Pension (AOW): 17.9%

• Long-term Care (WLZ): 9.65%

• National Survivor Benefits (ANW): 0.1%

Please note that the social security contributions indicated above do not necessarily reflect the actual employment costs. These may differ depending on the employment contract and due to other factors (e.g. 13th and 14th salary, health insurance allowances, accrual for severance pay, etc.).

Annual Leave

In the Netherlands, employees usually receive a minimum of four weeks of paid annual leave – i.e. 20 days if the employee’s working week comprises five days. Many collective agreements even provide for more paid vacation days. Depending on the industry, annual leave entitlements range from 20 to 32 days.

The Netherlands count nine public holidays but unlike in other countries, employees are not automatically entitled to extra days off. If there is no collective agreement in place regulating work on a public holiday, employers can request their employees to work on public holidays without providing any additional compensation.

Maternity Leave and Paternity Leave

Maternity leave in the Netherlands is 16 weeks and must start between four and six weeks before the birth. During maternity leave, female employees receive the equivalent of their full wages paid by the Employee Insurance Agency.

Paternity leave is limited to one week and must be taken within the first four weeks after the baby is born. During this time, the father receives full pay. In addition, partners of pregnant women have the right to take up to five weeks of leave within the first six months after birth. Although this leave is considered to be unpaid, employees can claim the equivalent of up to 70% of their usual wages from the Employee Insurance Agency.

Parental Leave

According to Dutch labour law, employees with children under eight can take unpaid parental leave up to a duration of 26 weeks. In most cases, however, this leave must be taken in form of part-time work. A new law will enter into force in August 2022 under which 9 weeks of parental leave will be paid at a rate of 50% of the employee’s normal daily wages.

Additional Leave and Benefits

The 2010 Work and Care Act defines the following additional leave entitlements:

• six weeks of unpaid adoption leave which must be granted to both parents

• two weeks of short-term care leave (per year) which must be given to employees who have children, partners or close family members who suffer from serious illness – remuneration during this leave is 70% of the employee’s usual wages but not less than the minimum wage

• six weeks of unpaid long-term care leave (per year)

• emergency leave of up to a few days in case of unforeseen events, paid at normal rates

Depending on the industry, collective labour agreements may provide for special leave such as marriage or funeral leave.

In addition to employment termination by mutual agreement, by default – i.e. in case of a fixed-term contract – or by resignation, Dutch labour law also provides for employee dismissal due to gross misconduct, company-related reasons as well as for long-term absence from work due to illness. However, the last two cases require the permission of the Dutch Employee Insurance Agency.

When dismissing an employee, employers have to give notice to the employee at least one month prior to the actual termination date. If no collective agreement is in place, the following statutory notice periods apply:

Unless stated otherwise in the employment contract, employees also have to observe a notice period of one month. No prior notice must be given by the employer in case of summary dismissal or during probation.

Since July 2015, employers are obligated to provide terminated employees with so-called transition payments which applies if:

• the employee’s length of service exceeds a period of 24 months

• and the termination is due to redundancy

There is no transition payment for employees who are dismissed because of misconduct. In all other cases, transition payment is calculated as follows:

• one third of the employee’s monthly salary for each year of service for the first ten years

• half the employee’s monthly salary for each year of service exceeding ten years