EUR

Currency, Euro

17.4 million

Population

913.87 billion

GDP

42nd RANKED

Ease of Doing Business

Dutch

Language

MONTHLY

Payroll Cycle
HOW CAN EOR HELP YOU

Grow your team in the Netherlands

Benefits of hiring in the Netherlands

As one of the most stable economies in the European Union, the Dutch economy is the sixth-largest in Europe. The Netherlands may be smaller in size compared to other European countries; however, its economy is one of the fastest growing.

The Dutch government helps businesses grow by simplifying bureaucracy, offering tax breaks, and continuously updating public policy for businesses. The Netherlands’ largely English-speaking population, excellent connections to other European markets, and robust digital infrastructure make it a prime location for businesses looking to expand internationally.

The Netherlands is constantly finding new ways to attract highly skilled migrants and entrepreneurs. The country has transformed itself from a hub of farmers, sailors, and merchants into a global financial center and start-up capital.

Dutch workers lead most other countries in business and tech skills. Beyond tech, the Dutch government invests heavily in national companies. In January 2020, the government introduced a massive €1.7 billion fund to attract European investors.

The Netherlands has been named the ninth-most innovative country in the world, according to Bloomberg’s 2021 Innovation Index.

The Netherlands is constantly finding new ways to attract highly skilled migrants and entrepreneurs. The country has transformed itself from a hub of farmers, sailors, and merchants into a global financial center and start-up capital.

Challenges of hiring in the Netherlands

Despite strong government support for trade and large numbers of regional trade agreements, companies must anticipate complex business structures that involve trade unions, government agencies, and industrial associations. Relying on an employer of record in the Netherlands ensures you follow all rules and regulations despite operating in complex business structures.

Although the Netherlands remains one of the world’s top markets for growing tech firms, according to Velocity Global’s 2020 State of Global Expansion Report™, it fell from first place to 16th place in one year; a drop in inward investment contributed to its lower ranking. Businesses’ pessimism about the broader European market may reflect lower confidence in the Netherlands’ economic conditions.

Due to the Dutch market’s size, accessibility, and competitive nature, importers usually choose an exclusive distributorship. Exporters often adapt their products and documentation for the Dutch market.

Despite strong government support for trade and large numbers of regional trade agreements, companies must anticipate complex business structures that involve trade unions, government agencies, and industrial associations.

Cultural nuances of doing business in the Netherlands

It is unusual to address individuals by their professional titles in the Netherlands. Generally, first names are used during the first encounter and thereafter.

 

In general, the Dutch are typically conservative as far as physical gesturing is concerned. The Dutch value and keep a larger personal space around them compared to residents of other European countries.

 

A handshake is the usual form of greeting in the Netherlands, accompanied by a cordial greeting such as “Good afternoon.” Posing a rhetorical question like, “How are you?” may cause confusion.

 

The Dutch value punctuality and process. Clse adherence to time schedules is vital when doing business in the Netherlands.

 

Inspired by what they call the Polder Model, the slow decision-making process that characterizes the Netherlands’ political system, all voices are heard and considered in business decisions.

 

Following an established protocol is critical to building and maintaining business relationships in the Netherlands. As a group, the Dutch are suspicious of exaggerations and large gestures of emotion. Business communication for the Dutch tends to be direct but with as few gestures as possible. Dutch behavior is moderate in both voice and body language.

 

Dutch business culture has a well-defined and observed organization, with closely defined responsibilities and distinctions between roles and departments. An organized team atmosphere is expected in the workplace.

Following an established protocol is critical to building and maintaining business relationships in the Netherlands. As a group, the Dutch are suspicious of exaggerations and large gestures of emotion.

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ONBOARDING

Hiring in the Netherlands

When employing an individual in the Netherlands, the terms of employment are usually agreed to in writing. However, it is not legally required. Some arrangements between employer and employee are legally required in a written agreement.

  • Employment agreements in the Netherlands

    Pursuant to Article 7:655 of the Dutch Civil Code, the employer must inform the employee in writing of the following within one month of starting employment:

    • Name and residence of the parties
    • Place where the work will be carried out
    • Position and a description
    • Starting date
    • If the employment contract is for a fixed period of time, the time period
    • Leave entitlements
    • Salary and payment arrangements
    • Customary working hours per day or per week
    • Pension rights, if applicable
    • Collective labor agreements, if applicable
    • Non-competition clause, if applicable
    • Notice period for termination
  • Probationary period in the Netherlands

    In the Netherlands, probationary periods are fairly common but not required. Dutch law allows a probationary period for a maximum of two months for permanent contracts. For fixed-term contracts, a maximum of one month’s probation is allowed. Probationary periods must be consented with a written agreement, not a verbal agreement. During the probationary period, the employer may terminate the employment contract without notice.

PAYROLL

Easily navigate payroll laws, contributions, and requirements in the Netherlands

May 1

Tax due date in the Netherlands

The submission deadline for taxes in the Netherlands is May 1 each year.

MONTHLY

Payroll cycle in the Netherlands

The payroll cycle in the Netherlands is generally a monthly cycle, with wages paid at the end of each month. 

48 HRS/WK

Average working hours in the Netherlands

The maximum length of a working week is 60 hours, and the average is 48 hours. However, salaries are generally based on a 40-hour working week.

  • Minimum wages and salaries in the Netherlands

    The national minimum wage in the Netherlands changes twice annually, on January 1 and again on July 1, to reflect collectively agreed-upon wage averages. As of July 1, 2022, the minimum wage is as follows:

    • 21 years old and older: €1,756.20 per month
    • 20 years old: €1,404.95 per month
    • 19 years old: €1,053.70 per month
    • 18 years old: €878.10 per month
    • 17 years old: €693.70 per month
    • 16 years old: €605.90 per month
    • 15 years old: €526.85 per month
  • Bonus payments in the Netherlands

    Both contractual and discretionary bonuses are possible in the Netherlands. However, there are no legal requirements related to an employer being obliged to pay bonuses. The granting of a bonus depends on the employee’s industry, level, and type of position.

TAXES

Tax and social security in the Netherlands

Individuals living and working in the Netherlands are taxable on their worldwide income, regardless of residency status. Non-residents can qualify for the 30% tax ruling, where 30% of their salary can be paid out as tax-free compensation for costs. The employee can benefit from treatment as a non-resident for tax purposes. Consequently, the employee is only taxed on Dutch-source income.

Tax thresholds in the Netherlands

In the Netherlands, tax changes are made every new year. As of 2022, the income tax rates are:

  • 37.07% for income up to EUR69,398
  • 49.5% for income over EUR69,398

Social security contributions are payable on employees’ gross annual earnings. The employer withholds the employees’ share from the gross salary, and the employer’s share comes on top of the gross salary. The national pension and national health insurance have a 27.65% contribution, the national unemployment insurance has a 2.94% or 7.94% contribution depending on the employment contract, disability insurance has an 8.55% contribution, and childcare has a 5% contribution.

Health insurance in the Netherlands

The Dutch national health system provides health coverage, which ensures anyone who lives, works, and pays taxes in the Netherlands will have their medical expenses covered from the day they start working. The central government’s basic health insurance package includes an annual deductible of €385, and the personal contribution for medicines remains a maximum of €250. This system covers workers in case of injury, illness, maternity, paternity, disability, and death. An employee’s family can also benefit from this coverage. The medical expenses which are covered in full or in part include:

  • Medical and paramedical expenses
  • Prescription medication expenses
  • Hospital expenses

Pension in the Netherlands

In the Netherlands, the statutory retirement age is 66 years and seven months. In 2023, it will be 66 years and 10 months, and in 2024 and 2025, it will be 67 years. From 2026 onwards, the statutory retirement age will only be increased if life expectancy continues to rise. After being insured for 50 years, employees are eligible to receive their full government pension (Algemene Ouderdomswet, AOW). The AOW is paid monthly, and the amount is adjusted twice a year in line with wage inflation. Employees can also be insured for a supplementary pension in the Netherlands, called the second pillar pension. Around 90% of employers have a supplementary pension plan which gives retired employees an additional payment on top of their AOW.

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LEAVE

Leave entitlements in the Netherlands

  • Annual leave in the Netherlands

    The statutory number of paid leave hours per year is at least four times the number of weekly working hours. By this calculation, a full-time employee is entitled to a minimum of 20 days of paid leave per year, excluding public holidays. Employees are free to negotiate more paid leave per year. Collective labor agreements may specify additional leave provisions.

  • Paternal and maternity leave in the Netherlands

    Employees with children aged up to eight may take unpaid leave in the Netherlands. This leave is a maximum of 26 times the number of hours worked per week. Employees can take this leave as soon as they begin working for an employer. Employers are not required to pay an employee’s salary during parental leave in the Netherlands unless this is agreed upon in the collective labor agreement or employee contract.

    Pregnant employees are entitled to six weeks of pregnancy leave before the due date and 10 weeks of maternity leave after childbirth. If the baby is born before the pregnancy leave, the 16 weeks of leave begins the day after birth. In the case of multiples, an employee is eligible for at least 20 weeks' leave. 

    For maternity benefit pay, employers apply to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV). The UWV pays the maternity benefit to the employers so they can continue paying the employees’ regular wages during their leave. Self-employed professionals are eligible for pregnancy leave, maternity leave, and maternity benefit pay.

    If the partner of an employee gives birth, the partner is eligible for one week of leave after birth. This paid leave can be taken any time in the first four weeks after the child’s birth. During this leave, employers must pay 100% of the employee’s wages. Partners are eligible for an extended partner leave for five weeks in the first six months after the child’s birth. Employees who take this extended partner leave are able to claim 70% of their salary from the UWV.

    Employees who adopt or foster a child are eligible for six weeks of adoption or foster leave. The employees are eligible for an adoption or foster care allowance, which is 100% of their wages. The leave applies to both parents, if applicable.

    Short-term care leave can be taken to provide essential care to someone who is ill or otherwise in need. The leave is twice the number of hours worked per week in 12 months. During this leave, employers pay 70% of the employee’s wages. If this is less than the minimum wage, employers pay the minimum wage.

    If a child, partner, or parent of an employee is seriously ill and requires care, the employee can request long-term care leave. Employees are entitled to a maximum of six times the number of hours they work per week in 12 months. During this leave, employers are not required to continue paying the employee’s wages.

    Emergency leave and short absence leave are intended for unforeseen personal circumstances, where an employee must immediately take time away from work. Employees can take this leave for as long as necessary to solve an urgent private problem, which can take a few hours to a few days. During this leave, employers continue to pay 100% of employee wages.

    Learn more in our guide to maternity and paternity leave in the Netherlands.

  • Sick leave in the Netherlands

    During an employee’s illness, the employer must pay at least 70% of the employee’s most recently earned wages. Employers are obliged to do this for a maximum period of two years. In the first year of illness, if the amount of sick pay is less than the minimum wage, employers must supplement it to meet the minimum wage requirement. In the second year of illness, the employer is not required to supplement the sick pay to meet the minimum wage requirement.

  • Regional and national holidays in the Netherlands

    The Netherlands has the following 11 public holidays, which are not included in the minimum paid leave entitlement. However, employers generally give their employees all of the Netherlands’ public holidays off work. These 11 national holidays in the Netherlands are:

    • New Year’s Day (January 1)
    • Good Friday (April, the specific day fluctuates each year)
    • Easter Sunday (April, the specific day fluctuates each year)
    • Easter Monday (April, the specific day fluctuates each year)
    • King’s Day (April, the specific day fluctuates each year)
    • Liberation Day (May 5)
    • Ascension Day (May, the specific day fluctuates each year)
    • Whit Sunday (May or June, the specific day fluctuates each year)
    • Whit Monday (May or June, the specific day fluctuates each year)
    • Christmas Day (December 25)
    • Boxing Day (December 26)
Benefits

Employment benefits in the Netherlands

To be covered by the Dutch Social Security system and be insured under its national insurance plans, individuals must work or live in the Netherlands. The Netherlands has an elaborate social security and health insurance system that covers all life risks for residents. Employed residents and their families are fully eligible for the Netherlands’ comprehensive social security system, which includes:

  • Health, maternity, paternity, disability, and death insurance
  • Occupational accident and illness insurance
  • Government pension contributions
  • Family allowances
  • Unemployment benefits
TERMINATION

Termination and notice period in the Netherlands

Dutch law provides for the following statutory notice periods by the employer for the following lengths of service:

  • Less than five years: one month
  • From five years up to 10 years: two months
  • From 10 years up to 15 years: three months
  • 15 years or longer: 4 months

The employee must give a notice period of one month. If applicable, a collective labor agreement can contain different rules regarding the notice period. During the probationary period, the employer may terminate the employment contract without notice.

There is no statutory severance pay in the Netherlands.

FAQ

  • What is an employer of record in the Netherlands?

    An employer of record (EOR) in the Netherlands is a third-party organization that becomes the full legal employer of your in-country workforce. The EOR compliantly handles employer-related responsibilities like onboarding, pay, and benefits while enabling you to continue managing the day-to-day operations of your team.

  • How does an employer of record in the Netherlands help hire talent?

    An EOR enables you to hire in the Netherlands without going through the complexities and restrictions of setting up a legal entity. As an EOR, Velocity Global acts as the legal employer, hiring your new team members through local and compliant employment contracts—you get back the time and flexibility to focus on your growing business.

  • Can an employer of record run payroll in the Netherlands?

    When you work with Velocity Global’s EOR solution in the Netherlands, our experts compliantly handle all payroll and benefits for each of your team members in the country.

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