How to hire and pay employees in 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, vacation pay is an additional 8% on top of the employee’s gross salary and 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.
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Labor laws 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.
Minimum wage
For those who are at least 21 years of age, the current minimum wage is 13.27 EUR per hour. As of January 1, 2024, there is no longer a weekly or monthly minimum wage, just an hourly minimum wage. The minimum wage is different for those under the age of 21. The national minimum wage is adjusted every six months, in January and July.
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.
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 15.4% of an employee’s gross salary.
IP protection and 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.
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Benefits and leave in
The Netherlands
Vacation time
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.
Employees are entitled to a once-yearly holiday allowance that equals 8% of their annual salary.
Sick leave
Employees are entitled to paid sick leave for up to 104 weeks, or until the termination of their employment contract, whichever happens first.
The employee must notify the employer immediately, on the first day of sickness. Employees may self-certify and don’t need to produce a sick note.
For the first 52 weeks of sick leave, the employer must pay the employee 70% of their salary, or the minimum wage if 70% of the employee’s salary is less than the minimum wage.
Maternity and paternity leave
Maternity leave: Employees are entitled to up to 16 weeks of paid maternity and pregnancy leave, 10 of which (“maternity leave”) must be after the birth of the baby. The start of the leave must be taken between six to four weeks before the due date of the baby (“pregnancy leave”).
Paternity leave: Paternity leave in the Netherlands is called “birth leave.” Under birth leave, partners are entitled to leave within the first four weeks of their partners giving birth. The amount of leave is equal to one week’s working time, so five days in the case of full-time employees. This leave can be taken in part, or even spread out over the four-week period.
Parental leave
All employees are entitled to unpaid parental leave for every child under eight years old. Parental leave is paid for the first nine weeks if taken before the child turns one, and is paid by the Employee Insurance Agency (UWV) at 70% of the maximum daily wage.
The rest of the leave is unpaid at a maximum of twenty-six times the weekly working hours of the employee.
Holidays
There are 11 national holidays in the Netherlands:
- New Year’s Day (January 1)
- Good Friday (variable)
- Easter Sunday and Monday (variable)
- King’s Birthday (April 27)
- Ascension Day (variable)
- Whit Sunday and Monday (variable)
- Christmas Day (December 25)
- Boxing Day (December 26)
- Liberation Day (May 5 every five years)
Employers are not required to give paid or unpaid leave on national holidays, but this is generally agreed upon in employment agreements and collective bargaining agreements.
Employer tax
In the Netherlands, all employers must pay the following taxes:
- Employer pension plan: 15.4% 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 in
The Netherlands
Allowable terminations and their required procedures are very narrow in the Netherlands.
Terminations not requiring government intervention:
- The probation period is still running
- Summary dismissal (severe reasons, such as fraud, theft, deception, refusal to work without good reason, or threatening or hurting someone else)
- The non-renewal of a fixed-term contract at the end of the fixed period
- Insolvency, or an overriding business interest
The notice of termination for a permanent position cannot be given by the employer unless it has passed a test through the Employment Tribunal. The statutory notice period depends on the length of the employee’s service with the employer:
- Less than five years of service: one month’s notice
- Five to less than ten years of service: two months’ notice
- Ten to less than 15 years of service: three months’ notice
- 15 years of service or more: four months’ notice
Severance pay (also known in the Netherlands as the “transition payment”) depends on the length of service of an employee. The amount is calculated at one-third of the employee’s monthly income per year worked for the employer. It is capped at €84,000 or one year’s gross salary, whichever is greater.
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.
Disclaimer: The information provided in this resource is for general educational purposes only and shall not be construed as legal advice. While Oyster strives to provide current and accurate information, Oyster makes no warranties or representations as to the correctness of the content provided and accepts no liability or responsibility for any errors or omissions in the content provided. By using this resource you acknowledge and agree that you do so at your own risk. The content of this resource is subject to change without notice.
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