Using an employer of record in the Netherlands

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.

Using an Employer of Record (EOR), like Payoneer Workforce Management (WFM), makes this easy.

Find out more about Payoneer WFM, or keep reading to discover how EOR services in the Netherlands can help your business thrive.

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. Work with an employer of record: In the Netherlands, you can engage local talent without a local entity while the EOR handles the hiring, management, and compliance tasks for you.

Partnering with an employer of record in the Netherlands

An Employer of Record exists to help you hire employees around the world without having to set up a legal entity in each country. 

Employer of Record services in the Netherlands include:

• Payroll management 
• Taxes
• Compliance assistance
• Administration of benefits
• Employee onboarding & offboarding
• Facilitation of work permits
• Expat visas 

Partnering with an Employer of Record in the Netherlands makes it easier for companies to hire and support employees, especially when expanding operations quickly or testing Dutch markets.

For companies seeking the best EOR services in the Netherlands, leading providers like Payoneer WFM offer tailored solutions that combine compliance expertise with streamlined HR processes.

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’ healthcare insurance and to pay premiums to the Dutch National Health Care Institute if necessary.
• 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, health insurance, pension, and national insurance contributions each pay period from your employee’s gross salary. Employers usually also offer private pension schemes, which must also be deducted.

With these bonuses, deductions, and regulations in the Netherlands, Employer of Record services are the easiest way to pay employees. This helps you stay compliant and up-to-date 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, including contractors. 

The national minimum wage is EUR 14.06 ($16.50) per hour, and this is adjusted every 6 months to account for inflation and the cost of living. For employees working a 40-hour week, this equates to EUR 2,437.07 ($2,860) per month.

Companies must pay all employees at least the minimum wage to remain compliant. The easiest way to do this is through an EOR. The Netherlands imposes fines on any company failing to pay its workers at least the minimum wage.

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 11 public holidays in the Netherlands, 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 EOR services in the Netherlands lets 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.

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, hire your employees through an EOR. 

PEO in the Netherlands

An EOR in the Netherlands is different from a Professional Employer Organization (PEO). A PEO is designed to help you with HR and admin tasks for employees you already employ through your local entity.

An EOR employs workers on your behalf, allowing you to quickly and easily hire new employees globally without setting up a local entity. They help you stay compliant with local rules without the need for expertise in each country you hire in. This is invaluable for international companies seeking global talent.

Payoneer WFM: Leading employer of record services in the Netherlands

An EOR makes hiring global workers simple. Working with a partner like Payoneer WFM allows your company to have a global presence without building a global HR team.

FAQs about employer of record Netherlands

1) What is the role of the employer of record in the Netherlands?

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. This leaves you free to devote your time and attention to finding outstanding talent and building your business globally.

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.