How to hire and pay EMPLOYEES IN

The Netherlands

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Before hiring

EMPLOYEES IN
The Netherlands

Before hiring employees in the Netherlands, there are some key things you’ll need to know. For one, there's a vacation payment of around 8% on top of an employee’s gross salary which is paid out in May. Although, this payment isn’t mandatory if the employee is paid more than three times minimum wage.

It’s also important to note that as of January 2021 in the Netherlands, it’s legally required for employers to provide an Employer Pension plan which adds around 15% of an employee’s gross salary as additional cost to the employer.

We know keeping track of all this might sound overwhelming—but it doesn’t have to be. A solution like Oyster eliminates the barriers for you. With Oyster, you can automate compliance across 180+ countries, easily managing HR and payroll—all in one, easy-to-use platform. 

Get an overview of what you need to know when hiring in the Netherlands below. 

At a Glance

CURRENCY

EUR

OFFICIAL LANGUAGE

DUTCH

PAYROLL FREQUENCY

MONTHLY

PUBLIC HOLIDAYS

11

(based on region;
see here
)

EMPLOYER TAXES

UP TO 35%

of gross salary

13th / 14th SALARY

8% vacation bonus paid in May

Good to know

  • In the Netherlands, there’s vacation pay of around 8% on top of the employee’s gross salary which is paid out in May. It’s not mandatory if you are paid over three times the minimum wage.
  • As of January 2021, it’s legally required for employers to provide an Employer Pension plan which adds around 15% of gross salary additional cost to the employer.
  • New expats to the Netherlands may be eligible for a 30% tax break which can last for up to five years. This is a historical tax break to attract expats to come and work in the Netherlands.

Employment in

The Netherlands

Working hours and overtime

A standard Dutch working week is 38 hours. The majority of full-time jobs in the Netherlands are between 36-40 hours a week, or seven to eight hours a day, five days a week.

Across a four-week period, an employee may not work more than 55 hours per week, and over a 16-week period an employee may not work more than 48 hours per week.

Overtime is not common in the Netherlands. Compensation for overtime depends on your contract.

Employment contracts

There is no statutory language requirement for contracts in the Netherlands, but the employer must make sure that the employee understands the relevant provisions.

Probationary period

The length of a probation period in the Netherlands depends on the length of the employment contract, but cannot exceed two months. 

Pensions

It’s mandatory for employers of Dutch employees to contribute to the Dutch pension fund. In the current scheme, the employer’s contribution to the pension plan is set at 14.6% of an employee’s gross salary.

Notice period

For employees in the Netherlands, less than five years of employment requires a notice period of one month, between five and 10 years of employment requires two months, between 10 and 15 years of employment requires three months, and 15 years of service or more requires four months notice.

Non-compete agreements

Non-compete agreements must be clear and in writing, and only apply to permanent employment contracts. They are usually a duration of one year, but some agreements can last up to two years. Employers in the Netherlands are not statutorily required to pay compensation to the employee in return to adhering to the agreement.

Employment cost calculator

Holidays

01 Jan

New Year's Day

13 May

Ascension Day

02 Apr

Good Friday

23 May

Whit Sunday

04 Apr

Easter Sunday

24 May

Whit Monday

05 Apr

Easter Monday

25 Dec

Christmas Day

27 Apr

King's Day

26 Dec

2nd Day of Christmas

05 May

Liberation Day

01 Jan

New Year's Day

02 Apr

Good Friday

04 Apr

Easter Sunday

05 Apr

Easter Monday

27 Apr

King's Day

05 May

Liberation Day

13 May

Ascension Day

23 May

Whit Sunday

24 May

Whit Monday

25 Dec

Christmas Day

26 Dec

2nd Day of Christmas

Employer tax

In the Netherlands, all employers must pay the following taxes:

  • Employer pension plan: 14.6%
  • Sickness & Disability Risk Insurance: 3%

The following taxes are capped at €53,700 EUR salary:

  • Unemployment insurance: 2.94% if permanent; 7.94% if temporary.
  • Occupational Disability Insurance: 6.77%
  • Return to Work Fund: 1.24%
  • Health Insurance Act Insurance: 6.70%
  • Childcare Allowance Contribution: 0.50%

Individual tax

Employees in the Netherlands are taxed between 8.90% and 51.95% depending on their income bracket. Employees also pay into a pension and long term care on top of this.

Termination of employment

Employees in the Netherlands can only be dismissed by mutual agreement or for a justified reason authorized by the Employee Insurance Agency (UWV) after the probationary period has passed.

When dismissal is done by mutual consent, severance payments are often required. Typically, the amounts for severance by mutual agreement can be equivalent to 3-6 months of salary or more. If dismissal is mutually agreed upon, the company doesn't need to pay an additional transition payment.

An employer may be required to pay severance payment to the employee if:

  • The employment (indefinite term or temporary) terminates at the initiative of the employer, and
  • The termination is not for serious cause, and
  • The termination does not take place after the retirement age

An employee has 14 days to reconsider the termination agreement. During this time, they can withdraw their consent.

When an employee is given notice of termination by permission from the UWV (the Employee Insurance Agency), a transition payment in the amount of one third of the gross monthly wage per year is paid to the employee. In 2021, transition payments are capped at €84,000.

Start hiring employees in

The Netherlands

Setting up a business entity everywhere you want to hire a new employee isn’t scalable—it takes too long and the legal fees are high. At the same time, understanding and adhering to the local labor laws and employee expectations can be complex and time consuming. And it’s hard to find reliable information on up-to-date employment information for all the countries where you’re considering hiring. Not to mention tracking down invoices and managing employee contracts over email and spreadsheets—that gets messy fast. 

We can’t afford to take risks when it comes to compliance—we need to make sure we follow the local guidelines, especially when it comes to taxes and legalities. 

With Oyster, you can manage HR and payroll, and automate compliance across 180+ countries—all in one, easy-to-use platform.

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