Looking for an employer of record in the Netherlands? Here’s what you need to know

Finding talent in the Netherlands is just the first step; hiring and paying them is the next complex step due to the evolving local labor and employment laws. 

Typically, global companies use an Employer of Record (EOR) to compliantly engage talent in a new country; however, this model is not applicable in the Netherlands. 

Companies may use a workforce management platform, like Payoneer Workforce Management, to help simplify the process.

Find out more about Payoneer Workforce Management, or keep reading to discover what hiring in the Netherlands involves.

How to hire employees in the Netherlands

There are three options for U.S. companies looking to hire talent in the Netherlands.

1. Set up a local entity: Companies can register a local subsidiary to employ Dutch workers, but this requires significant time and effort.
2. Hire independent contractors or freelancers: Working with independent contractors offers flexibility and minimizes compliance responsibilities, but they’re role shouldn’t resemble an employee-employer relationship, or you risk misclassification.
3. Hire employees: In the Netherlands, you can engage local talent without a local entity, while the workforce management platform offers assistance with onboarding, management, and compliance tasks for you.

Partnering with a workforce management platform in the Netherlands

A workforce management platform provides support for compliance and HR processes, enabling you to engage with Dutch talent compliantly, without setting up a legal entity in the country. 

Typically, a workforce management platform in the Netherlands includes:

• Payroll management 
• Guidance with taxes
• Compliance assistance
• Administration of benefits
• Employee onboarding & offboarding
• Facilitation of devices & equipment
• Guidance on the expat visa process

Partnering with a workforce management platform in the Netherlands helps make it simpler for companies to expand operations quickly or test Dutch markets.

Payoneer Workforce Management’s solutions combine compliance expertise with streamlined HR processes, so that companies can seamlessly engage Dutch talent.

How to onboard employees in the Netherlands

Onboarding is an essential process when you make a new hire. It’s an opportunity to set them up for success, as well as fulfill your legal and regulatory requirements.

Some aspects of onboarding employees in the Netherlands differ from those required in the U.S., although other tasks are identical. 

Here are some of the things you need to think about when onboarding a new employee in the Netherlands.

• Register for taxes: Because companies are responsible for withholding taxes (including income tax), all employers must be registered with the Dutch tax authorities.
• Create a health and safety policy: The Netherlands requires companies to work with a health and safety service or have a company doctor to protect employee welfare and to advise on policies around health & safety and absenteeism.
• Manage social insurance: Employers in the Netherlands can choose to either pay into national social insurance schemes or become a self-insurer for employee insurance. Employers need to fully understand the risks and responsibilities before deciding to self-insure their employees.
• Verify health insurance: You are required to check employees’ mandatory health insurance; employers may offer allowances, but are not required to pay premiums.
• Arrange a pension: Some sectors have designated pension funds, which employers are required to offer. If this is not the case, employers can choose whether to provide a pension scheme or not, though a good pension can help attract the best talent.

You should also provide a thorough orientation, especially for foreign workers, as it builds confidence and allows new hires to hit the ground running. Make sure your new employee has all the devices, equipment, work accounts, and log-in credentials required, too. 

Pay employees in the Netherlands

The tax year in the Netherlands aligns with the calendar year, running from January 1st to December 31st. Most workers in the Netherlands are paid monthly, although weekly or 4-weekly arrangements are possible. Employees should always receive a payslip.

Companies have to pay employees at least the minimum wage and the minimum holiday allowance (8% of their gross annual salary, including overtime, commission, and performance bonuses). 

Many companies also pay a 13th-month salary in December. While this isn’t a legal requirement (unless included in an employment contract), if you offer a 13th-month bonus, it must be offered to all employees and paid pro rata for terminated employees.

You need to deduct wage tax (income tax), social security, pension, and national insurance contributions each pay period from your employee’s gross salary. Health insurance is employee-managed; employers may offer allowances. Employers usually also offer private pension schemes, which must also be deducted.

With these bonuses, deductions, and regulations in the Netherlands, Workforce management platforms can assist with compliance and payroll processes.. This helps you stay compliant with local regulations.

Employment laws in the Netherlands

Anyone employing workers must always comply with all local laws and regulations. In the Netherlands, these are covered by Book 7 of the Civil Code and any clauses included in a Collective Labor Agreement (CAO) via a union.

Important laws to be aware of when hiring in the Netherlands include:

• Working hours: Employees are permitted to work no more than 60 hours per week, and this must not be their regular pattern. Over 16 weeks, they must not average over 48 hours per week.
• Rest periods: Employees must have at least 36 consecutive hours of rest per week and must have at least 11 hours between shifts on different working days.
• Overtime: Employees can be asked to work overtime. Overtime payments are governed by your employment contract or CAO.
• Probation: A probationary period is permitted in the Netherlands for contracts longer than 6 months. Probation must never exceed 2 months.

Minimum wage in the Netherlands

In the Netherlands, the minimum wage applies to all employees over the age of 21, in every role. 

The national minimum wage is EUR 2,100 per month, and this is adjusted every 6 months to account for inflation and the cost of living. 

Companies must pay all employees at least the minimum wage to remain compliant. The Netherlands imposes fines on any company failing to pay its workers at least the minimum wage.

Partnering with a workforce management platform helps streamline the payroll process.

Employment contracts in the Netherlands

Employment contracts in the Netherlands can either be verbal or written, although written contracts offer the most protection for both employers and workers. 

Contracts can be temporary or permanent, though employees must be given a permanent contract after either 3 consecutive temporary contracts or 3 years on a temporary contract.

Employment contracts need to include core information, including:

• Contract type, start date, and duration (if appropriate)
• Nature of the work
• Working hours
• Vacation policies
• Salary, benefits, and any additional bonuses or compensation
• Length of probation
• How the contract can be terminated, including notice periods and severance pay

Leave policy in the Netherlands

The Netherlands sets minimum levels of leave that employers must provide for their employees, including vacation time, public holidays, sick leave, and more.

• Vacation leave: Employees in the Netherlands are entitled to at least 4 weeks of vacation leave. However, some business sectors are covered by existing labor agreements with trade unions and require more vacation leave. 
• Public holidays: There are 10 public holidays in the Netherlands(an additional day off, Liberation Day, once every 5 years), but these are not necessarily paid time off. However, most employers offer these days as additional leave.
• Sick leave: Employers in the Netherlands must pay employees at least 70% of their salary when they call in sick. This can increase to 100% by stipulation in the employment contract.
• Parental leave: Paid parental leave is required in the Netherlands. Maternity leave is paid at full salary for at least 16 weeks. Paternity and adoption leave is 6 weeks at 70% of salary for non-birthing partners or 100% for adoptive parents.

As an employer, it’s essential to understand the different types of leave that employees are entitled to, and which can be reimbursed or offset. 

Using a workforce management platform in the Netherlands helps you manage these policies and requirements with ease.

Work permit in the Netherlands

Foreign nationals looking to work in the Netherlands require a work permit, unless they are citizens of another EU country or Switzerland.

• EU Blue Card: A fast-track visa offered across the EU for highly educated workers.
• Work Permit (TWV): A work permit for workers who will be working in the Netherlands for under 90 days.
• Combined Residence and Work Permit (GVVA): A permit allowing individuals to live and work within the Netherlands for up to 3 years.
• Highly Skilled Migrant Permit: A permit for highly-skilled workers who will be paid higher salaries.

These permits typically cost EUR 405 ($475) and take up to 90 days to be issued, although most applications are resolved sooner.

Applicants must meet salary thresholds and provide documents such as a valid passport, antecedent form, and proof of income.

Background check in the Netherlands

A background check is not a legal requirement when hiring employees in the Netherlands, but it can be necessary in certain sectors or for specific roles.

Common background checks include confirming a candidate’s employment history, a reference check, and verifying education and qualifications. These are usually run after making a conditional job offer.

Background checks need to comply with Dutch law. This includes keeping data per GDPR and other data protection rules, as well as following anti-discrimination guidelines. 

A company cannot ask about sensitive personal characteristics, such as ethnicity or sexual orientation, for example.

Employment termination in the Netherlands

Terminating an employee in the Netherlands can be difficult. 

• If the employee consents, employment can be terminated with severance pay and a notice period. A dismissal or transition payment will usually be required.
• If the employee does not consent to termination, you must request a dismissal permit from the Employee Insurance Agency or the courts.

Notice periods are expected to be between 1 and 4 months, depending on the length of service. The employee also has a notice period, typically of 1 month. 

Employees usually hand in their notice via a written resignation letter, though this is not obligatory.

Company registration in the Netherlands

Companies looking to employ Dutch workers can choose to register their company in the Netherlands. Usually, someone looking to register a company must have Dutch (or EU) citizenship or a residence/work permit and a citizen service number.

Businesses start by registering with the Netherlands Chamber of Commerce (KVK). To do this, they need a Dutch address, a trade name, and to select a business structure. Registering a business in the Netherlands requires an in-person meeting at the KVK.

The rules and regulations around registering a business can be complex and change without warning. Always check the Dutch government website for the most up-to-date information. Or, for greater ease and convenience, consider using a workforce management platform to assist with compliance and HR processes. 

Global PEO in the Netherlands

A PEO is designed to help you with HR and admin tasks for employees you already employ through your local entity.

Global EOR models are used in some countries, but in the Netherlands, companies should use compliant workforce management solutions.

These platforms help manage HR and compliance processes for companies without a local entity. This is invaluable for international companies seeking global talent.

Payoneer Workforce Management services in the Netherlands

Working with a partner like Payoneer Workforce Management helps support global operations and access local talent.

Book a demo to know more.

FAQs

1) What is the role of the Employer of Record in the Netherlands?

Typically, an Employer of Record is a company that employs workers on your behalf without a local entity and takes responsibility for many of the tasks associated with that employment. However, the EOR model is not applicable in the Netherlands, one can use a workforce management platform for assistance with onboarding, payroll, and compliance.

2) What are ATV days in the Netherlands?

ATV in the Netherlands is an abbreviation for arbeidstijdverkorting, which translates as cut working hours. ATV days are additional days of vacation time taken as compensation for working over contracted hours and are equivalent to days in lieu in the U.S.

3) What is the 13th-month salary and holiday allowance in the Netherlands?

All employees in the Netherlands are entitled to a holiday allowance equal to 8% of their gross annual salary. This is typically paid in a lump sum (normally in May). Many employers also offer a 13th-month salary, which is a lump sum payment (usually made in December) equal to 1 month’s gross salary. This is not obligatory, unless stated otherwise in an employment contract.