In an increasingly volatile globe, economically, politically, and socially, as well as in the aftermath of the global COVID-19 outbreak, our next EOR country – Netherlands – has established itself as a stable country.
The Netherlands has one of the world’s most open economies and is a leader in technology and innovation. It benefits from superior infrastructure – notably Europe’s largest port – a competitive business climate, and a highly educated workforce. The Dutch tax system includes a number of incentives designed to encourage innovation and entrepreneurial activity, and the Netherlands, as an internationally oriented country, is home to a large number of highly educated foreign workers.
Despite its diminutive size, the Netherlands offers a range of advantages to prospective investors and expansion-minded business owners. The country is a prominent player in the European market due to its sixth-largest economy and well-developed infrastructure.
The country is geographically located and provides access to the region’s key markets, including Europe, Africa, and the Middle East. Despite the country’s attractive benefits of a fair business climate and strategic location, enterprises considering development in the region face unique hurdles. The regulatory, tax, and legal systems in the country can be complex for newcomers, which is why having local help on the ground is critical.
Employment in the Netherlands
In the Netherlands, employment law is not governed by a single statute. It is governed by the provisions of the Dutch Civil Code, the Collective Labor Agreement, the company’s internal laws, and the company’s individual employment contract.
The protection of employees’ rights and the provision of safe working conditions are of the utmost significance to the Dutch Ministry of Social Affairs and Employment. Businesses can always leverage collective bargaining agreements and temp agencies to meet their more flexible worker requirements. This is a significant reason why businesses looking to expand in the Netherlands should seek out reputable and trustworthy professional services that are familiar with the legal framework governing employment rules.
Minimum wages and salaries:
In the Netherlands, the minimum wage for all workers over the age of 21 is 1,653.60 euro per month + holiday allowance (8 percent of gross annual salary), 381.60 euro per week, or 76.32 euro per day. Bear in mind that the national minimum wage is adjusted twice a year, on January 1 and July 1, to reflect collectively agreed upon salary norms.
Contracts lasting more than six months may contain probationary periods of up to two months, but not more than two months.
In the Netherlands, both contractual and discretionary bonuses are permissible.
Employers must provide notice of termination to all contractual employees. Certain fixed-term employees must also receive notice.
Specific notice periods vary according to the duration of the employment contract, with a maximum of four months.
Notice periods are not required during an employee’s probation/trial phase or in cases of egregious misconduct resulting in dismissal.
Dutch law requires employees to serve a one-month notice period, while individual contracts may provide for longer or shorter notice periods.
Employer termination without cause may result in additional remuneration equal to the employee’s potential earnings during the perceived notice period.
Paid Time Off & Benefits
Pregnant mothers receive 4 to 6 months of pregnancy leave prior to the birth of the kid and a minimum of ten weeks of leave following the birth of the child. If a mother takes less than six weeks of leave prior to giving birth, she receives the remaining amount (up to two weeks) following the birth of her kid.
If a child is born after the scheduled due date, maternity leave begins after that day and may go longer than 16 weeks.
Employers make an application on behalf of their employees to the Employee Insurance Agency.
Employees with children aged 8 or younger are eligible for unpaid parental leave on the day they begin working for an employer.
If an employee’s partner becomes pregnant, the employee is entitled to one week of partner/paternity leave following the birth of the child. Partners may take 100% employer-paid leave at any time during the first 4 weeks following the birth of the kid.
Beginning July 1, 2020, partners may take up to 5 weeks of unpaid leave during the first six months following the birth of their kid. Employees may be eligible for benefits up to 70% of their pay through the Employment Insurance Agency.
Each employee is entitled to paid annual leave. The statutory minimum number of leave hours is four times the weekly number of working hours. Employees who work five days per week, for example, receive twenty days per year.
Additional leave provisions may be included in collective bargaining agreements.
Employers must cover at least 70% of an employee’s wages while on sick leave. Two years is the maximum period of sick leave.
If this sum is less than the national minimum wage, the employer must provide additional pay to bring the total to the national minimum wage for the first year of sick leave, but not for the second year.
Personal Income Tax
An individual taxable income is based on the aggregate income. If income is not higher than 35,472.00 euro – tax is 9.42%. If in range from 35,472.00 to 69,398.00 – it’s 37.07%. When above – 49.50%.
Social Security Contributions
Employer-paid social security contributions for insurance include unemployment insurance (2.94% or 7.94% depending on contract length), occupational disability insurance (8.55%), and childcare allowance (5%).
Average workweek hours:
Over a 16-week period, the average workweek cannot exceed 48 hours. The regular working hours in the Netherlands are 40 hours. They can be increased to 48 hours under the condition that those will be the normal working hours.
The maximum number of hours worked every four-week period is 55. Collective bargaining agreements, on the other hand, may specify various working hours. Regardless of collective bargaining agreements, employees are not permitted to work more than 60 hours per week, as the country has particular workweek regulations limiting overtime. For general payroll calculations use our payroll cost calculator.
Holders of an EU Passport are authorized to travel and work in The Netherlands without restriction. There is a minimum salary required for all work permit applications of euro 57,024 pa. (as of 2021).
Hiring in the Netherlands is a solution for most companies that are expanding internationally because it is a great place to do business with a great infrastructure and the availability of a diverse talent pool. The government has also established legal frameworks in order to promote an increasing number of businesses to hire in the Netherlands and to establish their operations in the country. Establishing a branch office or subsidiary in the Netherlands in order to hire a workforce takes time, money, and effort. The Netherlands’ labor law is extremely protective of workers, necessitating close attention to detail and an awareness of local best practices. Acvian makes expanding into the Netherlands simple and effortless. We can assist you with hiring your preferred candidate, managing human resources and calculating payroll (check out our payroll estimator for 100+ countries), and ensuring compliance with local legislation, all without the expense of establishing a foreign branch office or subsidiary. Our International PEO and Global Employer of Record solutions in the Netherlands give you peace of mind so you can focus on running your business.