The Netherlands
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Before hiring
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
EMPLOYER TAXES
UP TO 35%
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
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.
There is no statutory language requirement for contracts in the Netherlands, but the employer must make sure that the employee understands the relevant provisions.
The length of a probation period in the Netherlands depends on the length of the employment contract, but cannot exceed two months.
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 15.7% of an employee’s gross salary.
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 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.
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Paid time off
The legal minimum number of vacation days for an employee in the Netherlands per year is four times the amount of days worked per week. This typically means 20 holidays in the case of a full-time employee working a five-day week. Employers usually give up to 25 days of paid holidays.
When the minimum 20 days of statutory leave has not been used, an employee can carry the days over during the first six months of the following year before they lapse. Any leave in excess of the statutory days, if not consumed, can be carried over for five years.
There are 10 public holidays each year and some can fall on the weekend, but it’s not legally obliged to take Dutch public holidays.
It is customary for employers to pay an extra 8% on top of an employee’s gross salary to fund vacation pay which is given in May.
The minimum sick leave entitlement in the Netherlands is a payment of 70% of their most recent wage level, up to a maximum period of two years.
If you are employed in the Netherlands and you become pregnant, then you are legally entitled to at least 16 weeks paid maternity leave. Expectant mothers start their maternity leave four to six weeks before the due date.
Fathers are granted five work days of paternity leave.
Parents are are also entitled to 9 weeks of partly paid parental leave, paid at 70% of their daily wage, and 17 weeks of unpaid parental leave, for a total of 26 weeks.
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.
Employer tax
In the Netherlands, all employers must pay the following taxes:
- Employer pension plan: 15.7% subject to salary
- 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.
Expats who have been recruited from abroad for a position in the Netherlands may be eligible for the 30% tax ruling. This is a tax break which exists to encourage expats to come and work in the Netherlands.
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 2022, transition payments are capped at €86,000.
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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