Employer of Record in Netherlands

Hiring in the Netherlands for the first time can be overwhelming, especially when navigating unfamiliar employment laws. Whether you hire independent contractors, set up a legal entity, or use an EOR service, understanding the local employment landscape is crucial for success.

Companies can hire employees in the Netherlands in the following three ways:

• Setting up a local entity. Entity establishment reduces risk exposure and enables direct hiring, but can be costly and time-consuming – making it less practical for companies seeking quick and flexible solutions for hiring in the Netherlands.
• Partnering with an Employer Of Record. An EOR is a third-party entity that serves as the legal employer of your international workforce which hires, pays, and manages compliance with Dutch labor laws and tax regulations.
• Hiring independent contractors. Hiring contractors gives companies a flexible, affordable alternative to hiring local employees, though it involves unique misclassification risks.

Using an Employer of Record in the Netherlands

An Employer of Record (EOR) acts as the legal employer for workers in the Netherlands, taking on key responsibilities to ensure compliance with local labor laws and regulations. The EOR facilitates the hiring process for businesses that want to employ workers without establishing a legal entity in the country.

The employer of record in the Netherlands is responsible for:

• Employment Compliance: Ensure all employment contracts comply with Dutch labor laws and regulations, including proper classification of employees.
• Payroll Management: Calculate, process, and distribute employee salaries in accordance with Dutch payroll laws, including deductions for taxes and social security contributions.
• Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
• Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Dutch legal requirements.
• Benefits Administration: Provide mandatory employee benefits as required by Dutch labor laws, such as health insurance, pension contributions, and statutory leave.

Businesses can only operate smoothly in the Netherlands if they comply with local labor laws including drafting compliant employment contract agreements and meeting taxation and payroll obligations.

Employment Contract Requirements

In the Netherlands, employment contracts must be provided in writing and should include:

• Identification of both parties
• Start date and duration (for fixed-term contracts)
• Workplace location
• Job description and title
• Salary, benefits, and payment frequency
• Working hours
• Leave entitlements
• Notice periods
• Reference to applicable collective agreements

Onboarding Process

Onboarding in the Netherlands typically involves registration with the Dutch tax authorities, social security, and, for non-EU employees, obtaining the appropriate work permit or residence permit. The process is streamlined for EU/EEA nationals.

Working Hours in the Netherlands

The standard workweek in the Netherlands is 36-40 hours. Overtime is regulated and must be compensated according to the employment contract or collective agreement.

Probation Period in the Netherlands

Probation periods are allowed but may not exceed two months for permanent contracts and one month for fixed-term contracts shorter than two years.

Overtime regulations in the Netherlands are typically governed by collective agreements or individual contracts. Overtime pay is not mandated by law but is common in practice, often at 125-150% of the regular wage. Maximum working hours are 12 per day and 60 per week, but the average over four weeks must not exceed 55 hours per week.

As of January 2024, the statutory minimum wage in the Netherlands for employees aged 21 and over is €1,995 gross per month. Minimum wage rates are updated twice a year (January and July) and vary by age and working hours.

Growing your team in the Netherlands is exciting, but it comes with challenges. Local labor laws are nuanced, and hiring without the right legal structure or processes can lead to misclassification, non-compliance penalties, or disputes. An Employer of Record removes that risk by acting as the legal employer on your behalf, taking full responsibility for compliance, contracts, payroll, and employee benefits.

Why work with an Employer of Record Solution?

• Expertise in Dutch labor law and compliance
• Coverage for employment across the EU
• Employee portal and dedicated support
• Reliable, cost-effective services with no annual commitments

Fiscal Year in the Netherlands

The fiscal year in the Netherlands runs from 1 January to 31 December.

Payroll Cycle in the Netherlands

Payroll is typically processed monthly, with employees paid by the last day of the month.

Bonus Payments in the Netherlands

It is common for employees to receive a "holiday allowance" of 8% of annual salary, paid in May or June. Some sectors also provide a 13th-month bonus.

Employer Tax Contributions

Employer payroll contributions are generally estimated at 21.7% on top of the employee salary. This includes social security, unemployment, disability, and other statutory contributions.

Employee Payroll Tax Contributions

Employee payroll contributions are progressive and can total up to 37.1% of gross salary, including income tax and social security. The exact rate depends on income level.

Non-EU/EEA employees require a work permit or residence permit to work in the Netherlands. The most common types are the Highly Skilled Migrant Permit, EU Blue Card, and Intra-Corporate Transfer Permit. Employers must sponsor the application and ensure compliance with Dutch immigration law.

Mandatory Leave Entitlement in the Netherlands

Full-time employees are entitled to a minimum of 20 days of paid annual leave per year, based on a 5-day workweek. Many employers offer more generous leave policies.

Public Holidays In the Netherlands

The Netherlands observes the following public holidays:

Paid Time Off in the Netherlands

Employees are entitled to paid sick leave, maternity/paternity leave, and parental leave as per Dutch law. Sick leave is paid at a minimum of 70% of salary for up to two years.

Maternity Leave In the Netherlands

Mothers are entitled to at least 16 weeks of paid maternity leave, with benefits paid by the Employee Insurance Agency (UWV).

Paternity Leave In the Netherlands

Fathers/partners are entitled to 1 week of paid paternity leave (100% salary) and up to 5 weeks of additional leave (70% salary) within 6 months of birth.

Parental Leave In the Netherlands

Each parent is entitled to 26 times their weekly working hours in unpaid parental leave per child, with partial paid leave available for children under 1 year old.

In the Netherlands, failing to provide the correct employee benefits can have serious consequences. Mistakes in benefits administration may result in fines and harm your reputation as an employer. An Employer of Record ensures statutory benefits and leave are handled correctly, every time, and provides comprehensive options for extra perks to reward your team.

Beyond just avoiding legal issues, a well-managed benefits program builds trust with your employees. An EOR ensures benefits are set up quickly during onboarding, updated when employee status changes, and fully compliant with national regulations. They also manage communication with employees, so there's no confusion around what's offered and how to access it. This combination of legal compliance and positive employee experience is hard to replicate without local infrastructure. With an EOR, you can offer peace of mind to your team (and to yourself) knowing that your benefits program in the Netherlands is running as it should.

Termination Process in the Netherlands

Employment can be terminated by mutual agreement, expiration of a fixed-term contract, or dismissal for cause. Dismissal requires approval from the Employee Insurance Agency (UWV) or a court, except in cases of summary dismissal for gross misconduct.

Notice Period in the Netherlands

The statutory notice period for employers is 1 month for up to 5 years of service, 2 months for 5-10 years, 3 months for 10-15 years, and 4 months for over 15 years. Employees must give 1 month's notice.

Severance in the Netherlands

Employees dismissed by the employer are generally entitled to a statutory transition payment (severance), calculated as 1/3 of a monthly salary per year of service.