Employer of Record in the Netherlands

Velocity Global’s Employer of Record solution simplifies hiring a distributed team in the Netherlands. Our Global Work Platform™ and team of experts handle everything from onboarding and compliance to benefits and payroll. Grow your team in the Netherlands with the help of Velocity Global’s Employer of Record.

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.

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.

Cultural nuances and must-knows 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. Close 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.

Minimum wage 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

Probation period in the Netherlands

• In the Netherlands, probation 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 months’ probation is allowed. Probation 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.

Bonus payment 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.

Onboarding 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. 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 arrangementsCustomary working hours per day or per week
  • Pension rights, if applicable
  • Collective labor agreements, if applicable
  • Non-competition clause, if applicable
  • The notice period for 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.

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.

Parental 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 pregnant leave before the due date and 10 weeks maternity leave after childbirth. In total, an employee is eligible for at least 16 weeks of leave. 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 Employee Insurance Agency (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 Employee Insurance Agency (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 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.

Sick leave in the Netherlands

• During an employee’s illness, the employer must pay at least 70% of the employee’s most recent 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 of 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)
  • White Monday (May or June, the specific day fluctuates each year)
  • Christmas Day (December 25)
  • Boxing Day (December 26)

• 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

• 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 has a 27.65% contribution, the national unemployment insurance has a 2.94% or 7.94% contribution depending on the employment contract, disability insurance has a 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.

• Payroll in the Netherlands is simplified and easier to navigate with the help of a Netherlands employer of record.

Tax due dates in the Netherlands

• The Dutch tax year is the calendar year. The time frame for submitting income tax returns begins March 1, with a deadline of April 30.

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. Payroll may be stated in an employment contract, depending on the type of job or position.

Average working hours in the Netherlands

• Under the Working Hours Act of 1995, the maximum length of a shift is 12 hours, the maximum length of a working week is 60 hours, and the average working week is 48 hours. However, salaries are generally based on a 40-hour working week.

Overtime in the Netherlands

• There is no specific Dutch legislation on compensation for working overtime. Employment contracts and collective labor agreements regulate overtime, which is usually either 50% or 100% of pay or paid leave. Where no collective labor agreement applies, the employer and employee must agree on overtime.