Guide to employment, payroll and benefits in

Netherlands

Rivermate offers complete payroll, benefits and compliance services for

Netherlands

01. Overview

Last updated: 

August 19, 2021

Currency
Euro
Capital
Amsterdam
Ease of doing business
76.1
Language
Dutch
Population
17134872
GDP growth
3.16%

02. Grow your team in

Netherlands

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Netherlands

, particularly if you don't have established local relationships. You can hire employees in

Netherlands

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

The Netherlands, also known as Holland, is a country in Western Europe with a small portion in the Caribbean. It is the largest of the Kingdom of the Netherlands' four constituent nations. The Netherlands is divided into twelve provinces in Europe, bordering Germany to the east, Belgium to the south, and the North Sea to the northwest, with maritime boundaries with those countries and the United Kingdom in the North Sea. It is made up of three special municipalities in the Caribbean: Bonaire, Sint Eustatius, and Saba. The official language of the nation is Dutch, with West Frisian serving as a secondary official language in the province of Friesland and English and Papiamento in the Caribbean Netherlands. The five main cities in the Netherlands are Amsterdam, Rotterdam, The Hague, Utrecht, and Eindhoven. Dutch Low Saxon and Limburgish are recognized regional languages, while Sinte Romani and Yiddish are recognized non-territorial languages. The Hague is the seat of the States General, Cabinet, and Supreme Court, while Amsterdam is the country's most populous city and nominal capital. The Port of Rotterdam is Europe's busiest seaport, as well as the busiest outside of China and Singapore. Amsterdam Airport Schiphol is the country's busiest airport and Europe's third busiest. The EU, Eurozone, G10, NATO, OECD, and WTO are all founding members of the nation, as is the Schengen Area and the trilateral Benelux Union. It is home to a number of intergovernmental organizations and international courts, many of which are based in The Hague, nicknamed "the world's legal capital." The Netherlands simply means "lower nations" due to its low elevation and flat topography, with just about 50% of its land rising above 1 m above sea level and about 26% falling below sea level. The majority of the polders, or areas below sea level, are the result of land reclamation that started in the 14th century. The pars pro toto Holland is a term used informally or colloquially to refer to the Netherlands. With a population of 17.4 million people residing in a total area of approximately 41,800 km2 —of which 33,500 km2 is land — the Netherlands is the world's 16th most densely populated country and the European Union's 2nd most densely populated country, with a density of 521 km2. Despite this, due to its fertile soil, mild climate, intensive cultivation, and inventiveness, the Netherlands is the world's second-largest exporter of food and agricultural products by volume. The Netherlands has been a parliamentary constitutional monarchy with a unitary structure since 1848. The nation has a long history of pillarization and social tolerance, having legalized abortion, prostitution, and human euthanasia, as well as a liberal drug policy.

04. Public holidays

05. Types of leave

Paid time off

In the Netherlands, full-time workers (40 hours a week) are legally entitled to a minimum of 20 days (four weeks) of paid vacation per year. This is calculated by multiplying the amount of hours worked each week by four. Many businesses provide more than the required number of days of annual leave, with 24 and even 32 days being common.Employers are required to pay at least 8% of an employee's gross salary as a holiday bonus. In most cases, the bonus is paid in May or June.

Public holidays

There are eight official public holidays in the Netherlands.

Sick days

In the Netherlands, the minimum sick leave allowance is a payout of 70% of their most recent income amount, up to a limit of two years. This is a generous privilege that reflects the social policy of the Netherlands. Some employers would also cover the entire salary.

Maternity leave

Mothers-to-be are entitled to 4-6 weeks of paid leave before giving birth and 10 weeks of paid leave after giving birth.If an employee takes less than 6 weeks of paternity leave before giving birth, the remaining time (up to 2 weeks) can be added to her maternity leave after the baby is born.If the baby is born after the due date, the employee's maternity leave may begin after the actual birth and can last longer than 16 weeks.Employers may apply to the Employee Insurance Agency on behalf of their employees for a maternity allowance (Uitvoeringsinstituut Werknemersverzekeringen, UWV).

Paternity leave

If an employee's wife has a child, the employee is entitled to one week of paternity leave following the birth. The amount of working hours in a week is referred to as paternity leave. This paid leave can be taken at any time within the first four weeks after the child's birth. During this time off, the employer is required to pay the employee 100% of his or her salary.Employees will now be entitled to 5 weeks of unpaid leave in the first 6 months after birth as of July 1, 2020. Employees who take unpaid leave will be entitled to demand up to 70% of their wages from the Employment Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).

Parental leave

Parents with children under the age of eight are eligible for parental leave, which allows them to spend more time with their children. In most cases, parental leave is unpaid; however, certain employers may pay a portion of the salary during this period. Every week, each parent is entitled to 26 hours of vacation.

Other leave

Adoption leave: 6 weeks: Employers may apply to the Employee Insurance Agency on behalf of their employees for an adoption leave payment (Uitvoeringsinstituut Werknemersverzekeringen, UWV).Emergency leave and other short-term absence leave: intended for unexpected personal situations that require an employee to take time off right away, such as making plans for the treatment of a sick family member or a death in the family. You must always approve an emergency leave request if it is appropriate. During this time off, the employee is responsible for continuing to pay the employee's wage.Short-term care leave: A maximum of two times an employee's working hours in a 12-month period: The employer continues to pay 70% of the employee's salary during the leave period. They pay the minimum wage if this is less than the minimum wage.Long-term care leave: A maximum of 6 times an employee's working hours in a 12-month period: The employer is not required to continue paying the employee's wages during this time off.

06. Employment termination

Termination process

In The Netherlands, the employer has generally five ways to terminate the employment agreement: termination by mutual consent or by means of a settlement agreement; termination proceedings before the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV), termination proceedings before the cantonal court, termination with the consent of the employee, or by urgent dismissal.

Notice period

The length of an employer's notice period is determined by the duration of the employment contract, but is limited to four months. There will be a one-month notice period for employment of less than five years. There will be a two-month notice period for employment durations of between five and ten years. There will be a three-month notice period for employment durations of between ten and fifteen years. The notice period is four months for employees who have worked for the company for more than 15 years. An employee's statutory notice period is one month.

Severance pay

Beginning on the first day of employment, an employee is entitled to a severance payment (referred to as a transition payment) in the event of an employer-initiated dismissal. For Dutch employees, the transition allowance is equal to 1/3 of their monthly salary for the first year of service beginning on the first day of work.

Probation period

A trial period's duration is determined by the duration of the employment contract. It may not, however, exceed a two-month period. The employer and employee are both covered by the same period. Temporary employment contracts lasting more than six months but less than two years, as well as temporary employment contracts with no end date, are subject to a one-month probationary period. Permanent employment contracts are subject to a two-month probationary period.

07. Working hours

General

In the Netherlands, a standard workweek is 36 to 40 hours spread over five days. Employees are not permitted to work more than nine hours per day. A shift cannot exceed 12 hours in duration, and an employee's total weekly hours cannot exceed 60. Employees cannot work the maximum number of hours for an extended period of time; an employee cannot work more than 55 hours per week on average over a four-week period, or 48 hours per week for sixteen weeks.

Overtime

Overtime is not regulated by Dutch law; it is typically agreed upon in individual employment contracts and collective bargaining agreements.

08. Minimum wage

General

The minimum wage in the Netherlands for workers 21 and older is 1,684.80 EUR per month as of January 2021. On July 1, 2021, this rate will rise to 1,701.00 EUR. However, the minimum wage rate could change if your employee is covered under a collective bargaining agreement (CBA). To prevent misconceptions, it is best practice to specify the proper minimum pay in a formal employment contract that the employee signs before their first day.


According to Dutch pay rules, every employee in the Netherlands receives an 8% vacation allowance as a bonus. This allowance is accrued monthly, and companies typically pay it out once a year in May.

09. Employee benefits

General

Employers in the Netherlands are obliged to pay 7% (2021) of their gross yearly income up to a maximum of € 58,311 to the Healthcare Insurance Act (ZVW or Zorgverzekeringswet). This payment is computed and paid to the Dutch Tax Department based on the employee's basic wage.

All residents and workers in the Netherlands are legally obliged to arrange for at least the basic healthcare package on their own. The cost of this basic healthcare package ranges from 95 to 125 EUR a month, depending on the employee's "own risk."

The basic health insurance package has a comprehensive framework and covers the majority of necessary medical treatment, medicines, and medical aids that are in accordance with current medical practice. The bundle includes certain physiotherapy and dental care treatments. (2016, Ministry of Health, Welfare, and Sport, “Healthcare in the Netherlands”)

All medical and other insurance allowances are taxable advantages.

In the Netherlands, employers often offer extra perks to their workers. A travel stipend for a leased vehicle or 100% of the cost of train/bus ticket for commuting is a typical perk.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Netherlands

to hire a team takes time, money, and effort. The labor law in

Netherlands

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Netherlands

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Netherlands

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Netherlands

via our Employer of Record / PEO solution.

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