Employment Law

Dutch Employment Contracts

The Netherlands has extensive employment laws and your business may also be affected by EU regulations, so it is vital to understand your specific situation and the relevant laws before starting operations.

We strongly recommend drafting a formal written employment contract when recruiting in the Netherlands. These contracts should clearly detail all necessary information about the role and employment agreement, such as salary/wages, benefits and rights, and termination provisions. Any reference to compensation shall be in Euros.

If you negotiate with a union as part of your employment, be sure to include any agreed terms in your contract.

Working with our Dutch PEO, Remoly's team of local experts can provide assistance in drafting strong employment contracts that comply with local regulations.

Fixed Term

Indefinite

Dutch Working Hours

Working hours in the Netherlands are capped at 12 hours per day and 60 hours per week. However, the normal working week is only about 40 hours. In some cases, this time may be longer if the employee agrees.

Holiday Policy

Netherlands Vacation

In the Netherlands, employees are legally entitled to at least 20 days of paid leave. Some may negotiate for more days, and many employers choose to offer more days as part of their benefits package.

Dutch Sick Leave

Workers in the Netherlands are entitled to up to two years of paid sick leave, borne by the employer. In the first year, employees receive at least 90% of their salary, and in the second year, the rate is at least 80% (within predetermined limits). Employers may choose to offer additional benefits as part of a benefits package.

Parental Leave in the Netherlands

Mothers are legally entitled to at least 16 weeks of paid leave, 6 weeks before and 10 weeks after childbirth. Male parents are entitled to two days of paid leave and three days of unpaid leave.

Parents can take additional unpaid parental leave until their child is eight years old. They are all entitled to bear this expense individually and it is limited to 2600% of their normal weekly working hours. Often, parents cut back on their working hours for a few months before returning to work full-time.

Dutch Taxes

The Netherlands has a wide range of social welfare programs for the public, which are partly funded by employees and their employers. Generally speaking, employers can expect to pay just over 20% of wages in these social contributions.

The Dutch corporate tax rate is 19%, rising to 25% for companies with taxable income exceeding €200,000. These ratios are expected to decline in 2021.

The country has a progressive income tax system, with rates ranging from 9.7% to 49.5% depending on income level.

Dutch Health Insurance

The Dutch healthcare system is quite complex. Although people are automatically insured, most people also need to arrange private health insurance to cover short-term health care needs. However, the insurance system is highly regulated and much cheaper than in countries such as the United States, where monthly costs are around €100.

The health care system is partly funded by employer and employee contributions.

Dismissal and Redundancy in the Netherlands

Termination procedures in the Netherlands are complex and can be difficult for foreign organizations to navigate. In short, employers have several options:

• The employment relationship is terminated by mutual consent of the employer and employee.
• Submit the case to UWV (Employees Insurance Agency)
• File the case in state court.
• emergency dismissal

The aim of most employers is to terminate the contract by mutual consent as this is the easiest and fastest route in most circumstances.

Sometimes, severance pay may be required. For example, if an employee has worked for the company for two years, he or she will receive one-sixth of the monthly salary for each half-year of service in the first ten years. Those with more than ten years of service can receive a quarter of their monthly salary for every six months of work. Older employees (over the age of 50) may be entitled to higher severance packages. The limit is generally €75,000, but the court may award additional payments if the dismissal is considered unfair.

Due to the complexity of Dutch termination and severance laws and the potential for significant expenses, it is important to fully understand the relevant laws when expanding into the Netherlands.

For companies expanding overseas for the first time, dealing with employee layoffs and dealing with severance packages can be complicated. Remoly's Dutch PEOs can reduce risk for foreign companies and provide guidance along the way.

Salary and Benefits

Dutch Compensation Law

As of July 2020, the minimum wage for workers over the age of 21 is €1,680 per month. Minimum wages can be lower for younger workers.

Welfare Management in the Netherlands

As a foreign company, organizing the Dutch benefits system for your employees can be a long and difficult process. You should be prepared to spend a lot of time setting up the system and keeping it compliant, which may cause delays in the hiring process.

Alternatively, you can use a payroll outsourcing company to handle your Dutch payroll. At Horizon, our Dutch payroll experts can set up and manage your benefits system for you, allowing you to focus on successful expansion.