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Hiring in Netherlands? Read on to find out the employment norms (like taxes, payroll and benefits) and EOR (Employer on Record) norms in Netherlands.
Employment Norms in Netherlands
The Netherlands (also known as Holland) is a country in northwest Europe that attracts top talent for its employee-friendly norms. Proximity to other business destinations across Europe makes it a great place for business expansion. The various employment norms in the Netherlands can be complex for new employers. EOR services help companies with employee payrolls, benefits, taxes and more, ensuring legal compliance.
General Information:
- The currency of the Netherlands is Euro (EUR).
- Amsterdam is the capital of the Netherlands.
- Dutch is the official language of the Netherlands.
- As of 2021, the of the Netherlands was reported to be USD 1.01 trillion.
Employment norms are set in the Dutch Civil Code. In addition to this, collective bargaining agreements and individual employment agreements also regulate certain employment terms.
Table of Contents
- Agreements
- Onboarding Process
- Visa
- Minimum Wage
- Payroll Cycle
- Annual Bonus
- Health Benefits
- Working Hours and Overtime
- Leaves
- Social Security
- Taxes for Employers
- Taxes for Employees
- Probation
- Termination
- Severance Pay
- Employees or Contractors
- Final Words
AgreementsOnboarding ProcessVisaMinimum WagePayroll CycleAnnual BonusHealth BenefitsWorking Hours and OvertimeLeavesSocial SecurityTaxes for EmployersTaxes for EmployeesProbationTerminationSeverance PayEmployees or ContractorsFinal Words
Agreements
- Contracts and agreements can be written or oral. It is always preferable to have all fixed-term and permanent agreements to be in writing.
- Contracts can be fixed-term or indefinite. Fixed-term contracts can be for up to 36 months and can be renewed thrice only.
- The agreements should include duration, notice period, salary details, work details, etc.
- Although the official language of the Netherlands is Dutch, agreements can be in any . A court of law may order translation of the agreement in certain cases if there is a discrepancy.
Onboarding Process
There is no stipulated onboarding process. However, some general onboarding practices in the Netherlands are -
- The employer must provide the employee with a copy of the employment contract or agreement.
- New employees must be enrolled with relevant organizations for tax and benefits.
- The employee must be provided with the workflow of the company and given an understanding of the work expected.
Visa
Work Visa:
- Work permits are required to work in the Netherlands. Applicants must apply for and receive these permits from their home countries itself.
- Work permits are required for all except those from the EU, EEA or Switzerland.
- Residence permits are required for staying for more than 90 days.
- A GVVA permit is required for applicants who need to stay for more than 3 months.
- A TWV permit is required for applicants who need to stay for less than 3 months.
Business Visa:
A short-stay Netherlands Schengen visa is required for business visits. It is valid for up to 90 days. Some of the required documents are -
- Accommodation proof
- Proof of intention to return to home country
- Proof of adequate finances
- Invitation from the company that the applicant intends to visit
- Clean criminal records
- Medical insurance
- Other requisite application documents
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Minimum Wage
The wage in the Netherlands for full-time employees aged 21 and above is -
- EUR 12.40 per hour for a 36-hour workweek.
- EUR 11.75 per hour for a 38-hour workweek.
- EUR 11.16 per hour for a 40-hour workweek.
- The minimum wage differs for those below the age of 21.
The minimum wages are updated twice per year. The above rates were set in January 2023.:
Payroll Cycle
The payroll cycle in the Netherlands is monthly. Employees are typically paid on the last day of the month.
Annual Bonus
Employees in the Netherlands are paid 8% of their annual wage as an annual bonus. This 'holiday pay' or 'vakantiegeld' is offered in May or December. Employees who have worked for less than a year are offered 8% of the pay for the number of months worked.
Health Benefits
- The Dutch standard healthcare insurance is mandatory for all employees.
- A certain percentage of the employees' salaries is regularly contributed to the insurance.
- The insurance covers -
- Consultation
- Treatment at a hospital
- Prescription medicines
- Maternity care
- For additional care such as dental work, additional insurance must be taken. This is not mandatory.
Working Hours and Overtime
- Work hours: Working hours are usually from 36 to 40 hours per week extending over 4 to 5 days per week.
- Break: At least a 30-minute break is required for 5.5 hours of consecutive work.
- Overtime: Employees cannot work for more than 60 hours per week. Overtime pay is decided in the collective agreements.
Leaves
Sick Leave
- Employees are entitled to paid sick leave (70% of wage). The employer is required to pay for the sickness period which can be for a maximum of 104 weeks.
Parental Leave
- Maternity leave: Up to 16 weeks of paid maternity leave can be taken. Enrolled employees must also apply to social security (Employment Insurance Agency) to avail of maternity benefits and allowance.
- Paternity leave: The partner of the birth mother is entitled to a leave of 1 week that can be taken within a week of the birth of the child. Additional 4 weeks of paternity leave can be taken within 6 months after the birth of the child.
Annual Leaves
- Employees in the Netherlands are entitled to 20 vacation days as annual leave.
Public Holidays (for the Calendar year 2023)
- New Year's Day (1 January)
- Good Friday (depending on Collective Labor Agreement) (7 April)
- Easter Sunday (9 April)
- Easter Monday (10 April)
- Ascension Day (18 May)
- King's Day (27 April)
- Whit Monday (29 May)
- Liberation Day (every 5 years) (5 May)
- Christmas Day (25 December)
- Boxing Day (26 December)
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Taxes for Employers
The following are the employer payroll taxes in the Netherlands -
- AOF lag (Disability fund) - 5.49% to 7.05% (depends on the size of the company)
- Heffings ZVW premie (Health insurance) - 6.75%
- Unemployment fund (AWF) - 2.70% to 7.70%
- Return to work fund (Whk) - differs from employer to employer
- Child care premium fund - 0.50%
- Sickness benefits - 0.17% to 2.72%
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Taxes for Employees
Income tax:
The income tax brackets are as follows -
- Up to EUR 69,398 - 37.07%
- Above EUR 69,399 - 49.50%
Social Security tax:
- Pension (AOW) - 17.90%
- Survivor's fund (ANW) - 0.10%
- Long-term care (WLZ) - 9.6%
- Unemployment Fund (AWF) (in certain cases) - up to 2.70%
Probation
The probation period in the Netherlands can be for up to 2 months. Probation periods are usually decided upon in collective agreements.
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Termination
- In the Netherlands, the Employment Insurance Agency (UWV) protects employees from termination due to economic conditions or long-term disability.
- Termination terms are set in the employment agreements and collective agreements.
- The mandatory notice period in the Netherlands is one month. It differs according to the length of service -
- Up to 5 years - 1 month
- 5 to 10 years - 2 months
- 10 to 15 years - 3 months
- More than 15 years - 4 months
Severance Pay
The severance pay or the transition payment is decided upon in the employee agreements.
Employees or Contractors
- Employees and contractors are treated as different entities in the Netherlands with different benefits, terms, etc.
- Misclassification of the two would lead to heavy fines for the employer.
Final Words
The Netherlands is one of the most popular destinations for expanding business. The availability of highly skilled employees makes it a lucrative business destination. EOR services assist employers in employee management, allowing businesses to focus on their goals.
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