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General Guidelines

At-will employment termination is not a recognised concept in the Netherlands. Employment relationships can only end after prior approval from relevant employment offices. If the employment is ending by mutual agreement, it does not require authorisation. However, some form of documentation is useful to prove compliance with elements of the collective agreement, such as the notice period or the pay of outstanding wages.

The following scenarios permit an employer to end an indefinite employment agreement:

To obtain permission to dismiss an employee, the employer will need to file a petition with the court or the Employee Insurance Agency (UWV), and prove they took the above actions and that the termination is still necessary.

Once UWV grants permission, the employer may notify the employee about the termination the following workday and observe the notice period.

Employee dismissal is not possible for Termination, except under the following circumstances:

For dismissals that either do not have the employee's consent, a dismissal permit from UWV or are in breach of a dismissal prohibition, employees may ask the court to annul it or to award a reasonable compensation. An employee is also entitled to appeal a UWV or court termination permit.

To put an employee on garden leave, both the employer and employee need to agree. Dismissed employees are entitled to any unused holiday, holiday allowance, pro-rate bonus payments (if applicable) and severance pay. Final salary payments for leavers need to be made on the next pay date at the latest.

Termination by mutual consent

Termination by mutual consent requires a written settlement agreement, stating the reason for termination. The employee can withdraw their acceptance of it within two weeks (or three weeks when the employer did not inform the employee about that period). The employee needs the agreement to be able to collect unemployment benefits.

Procedure guidelines

Inadequate performance as a reasonable ground

Before an employee can be dismissed for inadequate performance, the employer must show thoroughly documented proof that they have given the employee:

To obtain permission to dismiss an employee, the employer will need to file a petition with the court or the Employee Insurance Agency (UWV) and prove that they took the above actions and that termination is still necessary.

Once the UWV grants permission, the employer can notify the employee about the termination, the following workday and observe the notice period.

Unfair Dismissal in Netherlands

Employee termination protection

Protected employees cannot be dismissed under the following circumstances:

There can be exemptions from this statutory protection if the employer can prove the termination is either not related to the employee illness or they are closing the business.

Redundancy Pay & Entitlement in Netherlands

Employers need to clarify the reasons for making a position redundant due to reorganisation, whether that is part of a mass redundancy or not. They also need to show they considered alternative measures to redundancy, making it the ultimate remedy.

After the employer has decided where redundancies and how many positions will lapse, they should use legal principles when selecting which roles will be terminated, starting with the "reflection principle." Under this principle, the employer must first categorise all interchangeable positions. Then they must divide the employees within a category into the following age groups: 15 to 25 years, 25 to 35 years, 35 to 45 years, 45 to 55 years and 55 years and older.

Subsequently, the employer must apply the last-in-first-out principle to every age group. The employee who entered into the service of the employer last should be dismissed first. This does not apply when a unique position is made redundant or when an entire category of interchangeable roles disappears.

Once the employer determines the role that they will make redundant, they must explain what will happen to the current responsibilities of this employee. They must be able to prove that it is not possible to reassign the employee within the company in another suitable position.

Collective redundancy

Mass redundancy occurs when a company dismisses 20 or more employees within one UWV district in three months. Before an employer makes an employee redundant, they must notify, consult and listen to the relevant trade union, work council or employee representative committee (if any) based on the Collective Dismissal Act. They should explain why there is a sufficient cause for dismissal and provide explanatory documents. There is a one-month waiting period after that, which allows the company to negotiate a social plan and formally ask the works council for advice. This period does not apply, however, if the trade unions have declared that there is sufficient cause for dismissal.

Afterwards, the employer must also obtain a dismissal permit from the UWV as described above, if parties do not reach a settlement agreement for the termination. If they do not give permission, the employer cannot end employment contracts.

If, however, the UWV approves, employers should notify employees within the applicable notice period (minus the duration of the UWV proceedings, as long as one month remains).

Resignation Procedure in the Netherlands

Employees have a right to terminate their employment, and no formal rules have to be followed; however, sending a resignation letter is encouraged. If the employment agreement doesn't specify a notice period, the one-month statutory minimum applies. The notice can be shortened or lengthened in writing, but it can never be longer than six months.

Other End of Employment Guidelines

Notice period

Employers dismissing an employee should give notice by the end of the month unless otherwise indicated in the employment agreement.

The notice period depends on the duration of employment as follows:

For urgent causes or during trial periods, employers can dismiss employees without notice.

Employees need to give one month notice period when resigning. If a longer notice period is required of them, it must be indicated in the contract. The employer's notice has to be at least double the employee's. 

Employers and employees can agree to provide the employee with pay in lieu of serving their notice period.

Severance

In the Netherlands, severance is defined as a 'transition budget' to ease the search and transition to a new role. Employees are entitled to it if either the employer initiated the termination, or in the case of a fixed-term contract, decided not to extend it. The only exception is if they did so due to seriously culpable employee actions. 

This severance pay is a 1/3 of the gross monthly salary for every year of service. In 2020 it's capped at €83,000 gross or the employee's full year's salary, whichever is higher.

If the parties reach an agreement to terminate the employment contract amicably, the employee is not entitled to severance pay. Employees are often not inclined to sign an amicable settlement if the offer reflected in it is less favourable than what they would get without it. Consequently, the agreement will almost always include severance for a higher amount than the transition payment.

If the employer terminated the employment agreement in a damaging to the employee way, the employee could make a "fair payment" claim (billijke vergoeding). There is no standard formula for calculating the compensation, and instead, it's evaluated based on the severity of the damages. If it turns out that the employer isn't at fault, then severance will be calculated through the standard formula based on years of service.

Unemployment funds

To qualify for unemployment benefits employees must satisfy the following conditions:

People receiving a government benefit due to illness or disability cannot apply for the unemployment benefit.

The benefit is 75% of the individual's last daily day (capped at €227.78 gross daily or €4,845.47 gross monthly), during the first two months and 70% after that. If the individual worked 26 of the 36 preceding weeks, they are entitled to the basic 3-month benefit package. Extended benefits depend on how many years the individual has worked.

Holiday Leave in Netherlands

Full-time employees are entitled to at least 20 days of holiday. Holiday allowance is 8% of the gross salary and is usually paid in May, based on the wage from June the previous year. The employer must maintain the employee's salary while they are away on holiday.

If an employee becomes ill during statutory annual leave, they are allowed to take time off at another point, even if this means they have to carry it over to the following year.

Public holidays

There are eight public holidays, but the Dutch law does not require the employers to grant them to employees or to pay for additional work on those days. Contracts should state which public holidays are given as time off. There's no substitution if a holiday falls on a weekend.

Netherlands Public Holiday Calendar 2022

DATEWEEK DAYHOLIDAY
1/1/2022SaturdayNew Year's Day
15/4/2022FridayGood Friday
17/4/2022SundayEaster Sunday
18/4/2022MondayEaster Monday
27/4/2022WednesdayKing's Day
5/5/2022ThursdayLiberation Day*
26/5/2022ThursdayAscension Day
5/6/2022SundayWhit Sunday
6/6/2022MondayWhit Monday
25/12/2022SundayChristmas Day
26/12/2022MondaySecond Day of Christmas

*Liberation Day is only a national holiday every 5 years (2020, 2025, etc).

Types of Leave in Netherlands

Sick leave

Ill employees are entitled to at least 70% of their wages for up to two years, covered by the employer. It is common for employers to cover up to 100% of the employee's salary in the first year of sickness. In addition, CLAs may introduce further requirements about continuing salary pay during an illness.

The Occupational Health and Safety Service must be notified of an employee's absence due to illness. The employer cannot determine whether the employee's sickness truly makes them incapable of performing work activities. Instead, they will need to rely on the assessment of the Occupational Health and Safety Service. If the employer or the employee do not agree to the evaluation, they can apply for an expert opinion from the UWV or a second opinion with another company doctor.

UWV too needs to be notified of an employee's absence due to illness, beyond 42 weeks. Both sides have certain reintegration obligations that follow from the Gatekeeper Improvement Act. If the employer fails to fulfil theirs, the UWV may impose a sanction on them.

Maternity leave

Maternity leave is 16 weeks, including 4-6 weeks before the baby is due. Maternity pay is 100% of standard wage (capped at €214.28 a day) during the 16 weeks, paid either directly to the employee by the Social Security office or reimbursed to the employer. Multiple babies increase the leave by four weeks.

Employees are entitled to a sickness benefit equal to their pay if they become ill as a result of the pregnancy before the leave starts. The same benefit applies if the employee is unable to return to work after the maternity leave. If the newborn requires long-term hospitalization, the maternity leave can be extended by ten weeks maximum.

After the first six weeks of maternity leave, the employee can request to split the remaining time off. She can take it within 30 consecutive weeks, and her request must be granted unless there are substantial business or service interests to justify a rejection.

The employee's holiday allowance continues to build up during the leave, and the employer is not allowed to ask them to take up holidays during that time.

Paternity leave

Fathers and same-sex partners who are full-time employees are entitled to five days paid paternity leave, taken within four weeks of the child's birth. Part-time employees are entitled to one working week of paternity leave.

Employees are also entitled to five weeks of unpaid leave in the first six months after birth and can claim benefits from the Employment Insurance Agency (UWV) for up to 70% of their salary.

Adoption leave

Both parents are entitled to six weeks of paid adoption leave, regardless of the age of the child. They can take the leave up to four weeks before the adoption and 26 weeks after.

There is no extention to the leave if the employee adopts more than one child. 

Parental leave

All parents can take unpaid parental leave for each child under the age of eight. The leave is calculated based on the weekly hours the employee has multiplied by 26. Employers must grant parental leave as soon as an employee starts with the company.

Emergency leave

The emergency leave is intended for unforeseen personal circumstances, such as taking care of a sick family member or in the event of a death in the family. It allows the employee to take time off without any notice, and employers must always accept reasonable requests. Employers are required to continue paying the employee's salary during an emergency leave.

Short personal leave

While not statutory, short paid leaves for events such as a wedding, moving house, GP visits or other family obligations are common. They are not laid down in Dutch law and instead are usually covered by CLAs, handbooks or employment contracts.

Carer's leave

Short-Term

Employees are entitled to two weeks of short-term leave every 12 months. They should be paid at least 70% of their salary during the leave or the minimum wage in case it falls under it. 

Short-term care is intended for:

Long-Term

If a child, partner or parent of the employee is seriously ill and requires care, the employee can request long-term care leave. During this period of leave, employers do not have to continue paying the employee's salary.

Long-term care leave can be granted for the duration of six times the employee's weekly working hours during a consecutive period of 12 months.

Work-related injury

Similarly to the sick leave mentioned above, employees are entitled to two years paid leave if injured while working.

If an employee gets injured on the job, the employer must report the accident immediately to an SZW inspector. Employers pay into the workers' compensation system, which is governed by the Work and Income According to Labour Capacity Act.

Employers must record all reported accidents as well as those that resulted in three sick leave days or more. They have to include information on the nature of the accident and its date and make all this information available to employees.

General Employee Pay Regulations in Netherlands

Minimum wage 

€1,635.60 gross per month for employees who are at least 22 years old (January 2020). The minimum wage is reviewed twice a year, on 1 January and 1 July.

Frequency

Varies and can be weekly, four-weekly, or monthly.

Payday

Most employers pay employees between the 23rd- 25th of the month.

General

Standard hours

Monday to Friday from 9:00 am to 5:00 or 6:00 pm, with a 30-minute unpaid lunch break and two 15 minute breaks. The average working week is between 36 to 40 hours, 7 to 8 hours daily.

Maximum hours

An employee cannot work for more than 12 hours per shift, capping the weekly working hours at 60.

Note: this should be an exception rather than a regular practice. Dutch legislation offers the following guidelines in the long term:

Opt-out option

High-level employees and managerial staff are generally exempt from the work hours requirement. Their yearly wages should equal or exceed three times the Dutch statutory minimum wage.

Overtime compensation

Law does not regulate overtime, so employment contracts or collective bargaining agreements establish the rates - usually either 50% or 100% of pay or time off). For higher personnel, overtime is typically deemed to be part of their salary.

Employees will not receive overtime compensation if they work without an order from their supervisor, if the overtime is less than one hour after their standard working time or if they have been classified in salary scale 11 or higher. The employee must record overtime hours.

Sunday working

Employees do not have to work on Sundays unless they have agreed to do so with their employer. Sunday work is permitted only incidentally if it is required and must be paid at a 100% rate.

Break rights

Employees working 5.5 hours are entitled to a 30-minute break at least which can be slipt into two 15 minutes breaks. Employees working more than 10 hours must have at least 45 minutes of break time, which can be split into several intervals of 15 minutes.

Employees are also entitled to 11 hours break between shifts (once a week, the break can be eight hours if the nature of the work or the business circumstances requires it) and a minimum of 36 consecutive hours of non-work per week.

A longer workweek is only possible if the employee has at least 72 consecutive hours break in 14 days. The rest can be split into two periods of 32 hours each.

Night workers

The following limitations apply to night work:

Time Tracking Obligations

Employers should keep a record of the hours employees work, their rest times, vacation days and sick leave as well as their working pattern, and employees have access to this record. Employees are responsible for recording their overtime.

There are no requirements as to how employers should track these, but they should allow the Labour Inspectorate to determine whether they have complied with the Working Hours Act. Employers should store records of employee hours and attendance for at least 52 weeks. This obligation does not apply to an employee who earns at least three times the statutory minimum wage. Penalties for noncompliance vary between €100 and €45,000 per employee are usually preceded by a warning. 

Working from Home Policy in Netherlands

Work from home

According to the Flexible Work Act (Wet flexibel werken), employees who have been with the company for at least six months can request to work from home.

The employee must give at least two months notice, and the employer must offer their answer back no later than one month before the proposed date. If the employer fails to respond, the request must be granted. The employer can refuse the request but must consider it and substantiate the refusal in writing.

Employees can submit such a request once a year. After the employer has approved the request to work from home, they will need a significant business reason (for example continuous underperformance of the employee) to revoke it.

Health & safety at home

The employer must ensure the health and safety of employees working from home. The corresponding rules and employer obligations are outlined in three separate pieces of legislation: 

The organisation responsible for enforcing the legislation is Inspectorate SZW (Ministerie van Sociale Zaken en Werkgelegenheid). If an employer violates this legislation, they may be fined. An employer could also be held liable for damages to the employee if, for example, they suffer from a repetitive stress injury.

Workspace Guidelines in Netherlands

If an employee asks to work from home, the employer is only responsible for providing adequate information and advice. If, however, it was the employer who requested the employee to work from home, they carry a much bigger responsibility. This includes the design of the workstation, the working method, as well as the tools necessary. The employer must ensure that the employee has an ergonomic chair and a desk at home as well as proper lighting.

Their responsibility also requires a visit to the employee's home to assess whether their workspace complies with the regulations. That could be done either by the employer or a health and safety expert. Alternatively, the employee can send photos or videos of their environment. The employer will have to cover any costs to make the workspace ergonomically sound and safe.

If the employer wants to monitor the employee in some way, they have to create a policy that is available to everyone.

Working conditions policy

Employers should put in place a general working conditions policy that includes points on how employment-related psychosocial pressure will be limited or prevented altogether. When working from home, experiencing excessive work pressure is a real threat which employers should work to avoid. This includes informing employees on health and safety risks and ways to limit them.

When creating and implementing these policies, the employer should consult with the works council or staff representation body. For smaller organisations that do not yet have a works council, the employer should consult with employees individually.

Terms & Conditions of Employment in Netherlands

Probation period

The probation period can be a maximum of two months for open-ended or 2-year contracts and one month for less than 2-year fixed-term contracts.

Post-contractual duty of care

Separate from the non-competition restraint, an employee carries a post-contractual duty of care. This means they cannot systematically solicit the former employer's employees or customers by using business information they received during the former employment relationship. Furthermore, they may not violate their former employer's trust (i.e. keep trade secrets confidential), or make misleading or derogatory remarks about the former employer or its business. The employee's new employer may also be liable if they knowingly benefited from or encouraged the employee's breach of their duty.

Duty of notification

Employment agreements lasting more than six months must state whether they will be terminated or extended upon the end date, and if so, on what conditions. The employer must notify the employee at least a month before the end date of the agreement. If the employer fails to do so, they have to compensate the employee for each working day delay. The maximum compensation is a month's gross salary. 

Regardless of whether the employee has been notified or not, the employment agreement will end by operation of law. The duty of notification does not apply if:

General Employee Rights in Netherlands

Employment agreement

The employer must provide the employee with a written statement setting out specific terms of the employment along with an employment agreement, which can be verbal or written in any language as long as both parties fully understand the terms. The employee can request a Dutch translation of the employment agreement, which the employer must provide. The written statement must contain:

An employment agreement may be in the form of a contract signed by both parties, an exchange of letters, or a simple document. A non-competition clause can only be agreed upon in writing, or otherwise will be deemed null and void. References to a non-competition clause in a CLA or in an internal handbook is not binding to the employee. Employees on fix-term contracts cannot agree on a non-competition clause (unless the employer can prove that doing so is necessary). The employee can ask for the restrictive claim to be cancelled or mitigated.

Employees must receive their employment agreement within one month of starting, and should include the following terms and conditions:

The employer may only amend the employment conditions unilaterally if it has reserved the right to do so in the unilateral amendment clause (included in the employment contract or personnel handbook) and has a substantial reason that overrides the employees' interests. It is complicated to amend employment conditions unilaterally, and existing cases show that Dutch courts exercise great restraint in allowing a unilateral amendment of employment conditions, especially if the change is to employment conditions such as salary.

Flexible and part-time working

Under the Flexible Working Act, employers must allow employees to work part-time or to work flexible hours. The employer can only turn down such a request if there are strong and objective reasons not to permit it.

After six months of employment, employees can request an adjustment of their working hours and workplace (i.e., work from home). If the employer denies this request, the employee can file a new one after a year. Only employers with ten or more employees fall under the scope of the Flexible Working Act.

Payslip

Employers must provide a payslip to their employees, which can be online.

Equal opportunity & pay

The equal treatment legislation prohibits employers from discriminating employees based on gender during recruitment, vocational training or guidance given to employees. The aim is to eradicate any wage differences (including salary, allowances and reimbursement of expenses) between employees doing the same work purely based on their opposing genders. This applies to both individual employment contracts and CLAs. Any provisions that seek to depart from the principle of equal pay are void.

An employee's potential claim against the employer arises the moment their wages are due. The employee is entitled to the difference between the salaries for up to five years in arrears. On top of that, employers may also have to pay a penalty.

Health & Safety

Employees are entitled to a safe and healthy work environment under the Working Conditions Act (ARBO). In work environments with high potential for injury, the employer must provide protective wear free of charge. Employees can claim compensation from the employer for any damage they have experienced such as an injury or psychological stress. The exceptions are if the employer can prove that either they fulfilled their obligations under Dutch legislation or that the employee’s damage is their own doing.

The employer must keep an inventory in writing and evaluate the risks of the work involved for the employees. This risk-inventory and evaluation must contain a description of the dangers, the risk-restrictive measures and the threats for special category employees. Furthermore, the employer is obligated to take out employee accident insurance that insures employees against accidents on the work floor and during their commute to work (including those employees who use their car for business purposes)—view self-assessment risk tool.

Home Offices

Employers have less responsibility for the working conditions of employees who work from home or different locations (mitigated working conditions). However, employers are obliged to give information and support to location-independent employees.

Employers are required to provide an ergonomic workspace to employees working from home unless that places unreasonable demands on the employer. An example would be if the employee only works from home occasionally or for a brief period. The employer bears the cost of the equipment and setup required to create a decent workplace, including monitor, office chair and keyboard. There are tax benefits available, making it possible for employers to provide equipment tax-free.

Employee Protections in Netherlands

Whistleblower protection

Employees benefit from whistleblower protection in companies with 50 or more employees. Smaller companies that do not have whistleblower procedure in place may notify a supervisor, inspectorate or the House for Whistleblowers.

According to the Whistleblowing Act, an employee can disclose any reasonable suspicion of abuse by their employer or at another company and impacts public interest. Whistleblowers, who did the right thing by reporting misconduct and acted in good faith, cannot be disadvantaged in their legal position.

Companies with 50 or more employees are required to establish a whistleblowing procedure which outlines the following aspects:

Sexual harassment protection

Employers must have a policy on sexual harassment at the workplace as part of their obligation to provide a safe work environment and prevent employees from suffering damage while performing their working activities.

Protection from discrimination

The Dutch anti-discrimination law covers all aspects of the employment relationship including hiring, terms and conditions of employment, promotion, training and dismissal. Under the Dutch Constitution, all individuals within the Netherlands must be treated equally in comparable cases. Under the equal treatment legislation, discrimination on the grounds of religion, political view, life principles, race, gender, pregnancy, civil status, sexual orientation, disability, nationality, age, type of contract and working hours is prohibited. Employers must have in place a policy to prevent discrimination and any psycho-social burden.

Discrimination includes: 

Employers who do not comply with the Working Conditions Act risk getting a compensation claim from the employee and may be fined. The employee can claim that the employer has violated their duty of due care, and they have incurred damage as a result. Furthermore, the employee who feels discriminated against may address the Netherlands Institute for Human Rights and/or initiate court proceedings to claim damages.

Protection against dismissal

See End of Employment section for a more detailed description.

Employees are protected from dismissal following a business transfer, pregnancy, illness, maternity and parental leave, marriage, membership in a trade union or works council, leave based on the Work and Care Act 2001 and not consenting to work on Sundays.

Furthermore, a dismissal following an organisational change such as discontinuation of business activities requires the employer to observe genuine objectivity in selecting employees for redundancy. It is not possible to choose employees for subjective reasons.   

Personal information protection

Under the GDPR rules, employers are subject to restrictions when retrieving and disclosing employee data.

Protection in case of business transfer

If an employer with 50 or more employees considers transferring all or part of the business, they must first seek advice from the works council.

Employees are automatically transferred and protected from dismissal under a business undertaking. For the Transfer of Undertaking Law to apply, the transferred business must retain its identity.In order for a business transfer to qualify as such, the main activity of the company must remain the same and a transfer of stock alone does not qualify.Employees can only be dismissed for financial, technical or organisational reasons during a business transfer. However, the dismissal procedure will require the employer to observe genuine objectivity in selecting employees for redundancy.

Transferred employees retain their continuous employment period, their existing employment terms and conditions (except old age, disability and survivors' benefits under occupational pension schemes), their right to parental leave, extended notice periods, and severance pay. Separate arrangements apply to pensions.

An employee who agrees to other terms and conditions of employment (even if comparable to the current ones) before or during the transfer can successfully claim that the amendment is invalid. They can claim their former terms and conditions as of the transfer date, or a one-off payment for the differences between the packages. Furthermore, the employee can request a court to terminate the employment contract. In case the new terms and conditions are substantially detrimental to the employee, the court will hold the employer liable and will order them to grant a severance payment.

Employees who are being transferred can refuse it and will be treated as having resigned. If they exercise this right, they will not be entitled to severance compensation. Consequently, they will have no remedy against either employer, except under two circumstances:

In these circumstances, employees will be regarded as dismissed and may be entitled to severance payment(s).

Required Employee Benefits in Netherlands

Unpaid time off

Employees are commonly entitled to unpaid time off when moving house, or for weddings, funerals and GP visits, which however is not mandatory. 

Redundancy payment

See End of Employment section for more details.

Employers must compensate employees when terminating their permanent employment contracts or any temporary contract that has lasted for 24 months or more. The compensation is:

The compensation is capped at either €75,000 or a full year's salary if the employee earns more than this amount. If the employer and the employee decide to terminate the contract by mutual consent, the employee can negotiate a severance payment with the employer.

Unemployment funds

See End of Employment section for more details.

Employees who lose their jobs for any reason other than their own doing are eligible for unemployment benefits (WW). The amount is roughly 70% of the employee's previous salary.

To receive the basic unemployment benefits that last three months, the employee must have worked in 26 of the 36 preceding weeks before becoming unemployed. Depending on how many years the employee has worked, they may receive benefits beyond the three months.

Sick leave and work injury leave

During an employee's illness, the employer must pay at least 70% of the employee's most recent gross base salary, for up to 104 weeks.

If an employee gets injured on the job, the employer must report the accident immediately to an SZW inspector. Employers pay into the workers' compensation system, which is governed by the Work and Income According to Labour Capacity Act.

Employers must record all reported accidents as well as those that resulted in three sick leave days or more. They have to include information on the nature of the accident and its date and make all this information available to employees.

Job Security

Setup of a Works council

The employer must set up a work council if employing 50 or more people within the Netherlands. They must then seek the advice of the works council in cases of transfer of the company control, termination of or significant change of company activities, major investments, merger or takeover.

If the employer disregards the advice the works council gives them, they can file a complaint against the employer's decision. Furthermore, the works council can contribute to establishing, amending or cancelling various company arrangements about work hours, vacation, job evaluation, remuneration systems, working conditions, privacy, sick leave. The works council is entitled to regular information from the employer and can make proposals to them.

Mandatory Employee Benefits in Netherlands

Health insurance

All individuals living in the Netherlands have to participate in the health insurance scheme (zorgverzekering). For individuals who are employed, the employer will pay part of the insurance - 6.7% on income up to a maximum of €57,232, with a maximum of €3,835 to the Dutch Tax authority. The employee pays the nominal fee by taking out private health insurance. Employees pay around €95-120 a month, depending on the insurance package they choose.

Pension

From 1 January 2021, all employees on the payroll are entitled to an “adequate” pension arrangements.

Employees must provide a detailed and accurate employment history to their employers to ensure that they have the correct Pension Plan.

Vacation days

Employees working on full-time are entitled to 20 paid vacation days.

Non-Mandatory Employee Benefits in Netherlands

Most common non-mandatory benefits in The Netherlands.

Additional annual leave

The statutory holiday entitlement is 20 working days, but in practice, employers give an extra 5-10 days to the employees.

Paid relocation service

Some companies offer free relocation services to employees willing to move to the Netherlands for a job, while others may provide temporary accommodation.

Extended paternity leave

Some companies offer two weeks of paid paternity leave instead of only one week as required by law.

Commuter allowance or bike

Employers often cover the employees commute to and from work or offer employees a bike (regular or electric) for the commute.

Career development allowance

Many tech companies give employees a training budget to stay on top of their industry. Generally, the training budget equals to 5% of the employee's salary and includes five paid training days.

Private pension fund

It is common for employers to contribute to employee's pension scheme through a collective pension scheme (some sectors or professions have a mandatory pension scheme). The employer usually contributes 8% to the pension fund, while the employee contributes 4%. 

New employees are automatically offered the same plan as everyone else unless they agree on something else with the employer.

Flexible & remote work

Even though there's no law requiring employers to allow employees to work remotely or from home, many companies are starting to offer it.

Flexible working hours are common in the tech industry, and some companies even offer employees the possibility to work abroad for extended periods as long as they keep their Dutch tax residency.

Increased sick leave

It is common for companies to top up employee's sick leave in the Netherlands. For the first year of illness, employers pay 100% (70% on the second year) of the employee's base salary accounting for the indemnities that were paid out by the Dutch social security authorities (WIA). After two years, a disability pension is payable by insurance covering 10% of workers salary up to the WIA ceiling and 70% of workers salary above it.

Company trips

Some tech companies organise yearly retreats for the employees, usually a trip outside of the Netherlands.

Hardware

Most tech companies offer employees their choice of brand-new computer.

Wellness

Some companies offer different wellness benefits to employees: from gym membership to fitness programs and massages.

Visa sponsorship

Some tech companies offer sponsorship to non-EU residents willing to relocate to the Netherlands for work, including the employee's family.

Dutch language courses

Some companies offer employees free Dutch classes for better cultural immersion.

Bonus & profit-sharing

Employers often pay out bonuses or commissions to employees and offer them to be part of profit-sharing schemes. Such compensation, however, is not mandatory unless required by the applicable CLA. The employer and employee may agree on an annual bonus or commission, which is usually equal to a month's salary.

Company car & fuel allowance

While not so common in the tech industry, offering executives a company car and fuel allowance is a benefit some employers in the Netherlands extend.

Meal allowance

Some companies offer catered canteens to employees or a daily allowance of €10.

Employer Contributions in Netherlands

National insurance premium

The employer's social security contribution is 12.86% of the employee's salary. The social security breakdown for 2020 is:

*Government employers pay UFO instead of AWF – 0.78%.

The maximum annual salary cap for the employer contributions is €55,927 (2019). 

Employee insurance

Employee insurance contributions are capped at a max salary of €57,232 (2020), with the contribution rate depending on the employer's industry. On average, the yearly contribution, fully paid by the employer, is €6,576 for an employee on a permanent employment contract.

The employee insurance schemes are compulsory for every employee and consist of:

*Employers pay a low unemployment benefit (WW) contribution for employees with a fixed-term contract and a high unemployment benefit (WW) contribution for employees with a flexible contract.

Healthcare insurance

Employers are required to contribute 6.70% (for 2020), capped at €57,232 a year of the employee's base salary towards the Healthcare Insurance Act (Zorgverzekeringswet). This contribution is calculated over the employee's base salary and then paid to the Dutch Tax Department. All allowances for medical and other insurance are taxable benefits.

Employee Contributions in Netherlands

When establishing whether an individual is considered a resident in the Netherlands, the following facts are looked at:

An expatriate is generally considered a resident of the Netherlands if:

Residents are taxed on their worldwide income. In some cases, the government treats nonresident individuals with Dutch income as limited national taxpayers, which entitles them to some tax credits.

Income tax

Income is taxed at progressive rates.

Dutch Income Tax 2020

TAXABLE INCOMETAX RATE
€0 - €20,3849%
€20,385 - €34,81710.45%
€34,817 - €68,507.0038.1%
Over €68,50751.75%

Married Couples

If both spouses are resident taxpayers, they are taxed separately for their business income, employment income, pension income, and other periodic payments. Spouses and, under certain conditions, individuals living as a joint household automatically qualify as fiscal partners. This means that they can allocate their taxable income from a principal residence to either or both.

National insurance premium

Also called Premiums Social Security, the National Insurance Premium applies to all residents in the Netherlands, regardless of their nationality. It covers old age, death, long-term disability, certain medical expenses and child benefits. The total premium for national insurance is 27.65%, which is divided in:

*The obligation to pay AOW contributions ends at the age of 67.

Contributions are levied on the income of up to €34,712 and the tax is capped at €9,598 per year. Employee national insurance contributions are not deductible from the taxable income.

Dutch health insurance

All Dutch residents, as well as employees who are subject to Dutch wage tax, are covered by the Dutch Health Insurance Act (Zorgverzekeringswet). and need to have a statutory health insurance policy. The employee contribution is approximately €1,421, which includes the "own risk" payment of €385, all paid to the health insurance company annually.

For employees, the contribution consists of 5.45% of their salary, capped at €57,232 (2020).

Benefit-in-kind

Within an employment relationship, all benefits in kind are, in principle, considered as taxable income. Such benefits include accommodation allowances, private use of the company car, employee stock options, home-leave allowances, and pre and post-assignment bonuses. Employer-paid reimbursement of relocation costs relating to the acceptance of a new employment and employer contributions toward approved pension schemes are not taxable. Other refunds and benefits in kind also are not taxable, and the employer has an annual budget for tax-free reimbursements.

Certain expenses the employer covers, such as food, drink, and entertainment, are only partly deductible. The non-deductible amount is 0.4% of the employee's gross salary or no less than €4,600 per year. Alternatively, the employer can deduct 73.5% of the actual expenses.

Expat tax regime

Expats in the Netherlands are taxed only on 70% of their income to mitigate the higher cost of living in the Netherlands (if certain conditions are met). The tax regime can be granted for a maximum of 5 years, and the employer and employee must jointly request the application of the rule from the Dutch Tax Office. To qualify, the foreign employee must:

The primary purpose of the expat reimbursement is to cover all the extra costs someone moving to the Netherlands would experience. That makes those costs not tax-deductible unless they are higher than the 30% reimbursement.

Expats should apply for the 30% ruling within four months of starting their Dutch employment. If they miss that deadline, the ruling will not apply retroactively from the start of the job, but rather from the month following the application. The 30% ruling will be granted only if the employee is included in the Dutch wage tax administration. 

When applying for the 30% ruling, the company needs to meet the following criteria:

Tax-Free Allowance in Netherlands

Cycle to work allowance

The Dutch government offers employees who cycle to work a tax-free mileage allowance of €0.19 per km.

Childcare assistance

The government pays for part of the childcare costs to the employee as a way of encouraging parents to work full-time. The higher the income, the lower the contribution from the tax office will be.

Each family with at least one child under the age of 18, including adopted and stepchildren, can receive the AKW child allowance. The allowance is paid per quarter and is as follows:

In addition to the Dutch child allowance, there is an additional child benefit dependent on income for low salary households. Children that do not live at home because of sickness, handicap or to follow a study program may be eligible to request double family benefits.

Parents of children born inside the Netherlands will automatically receive a form, while expats with children born outside of the Netherlands should contact the SVB to request an application form and family allowance number.

Work-related cost scheme

The employer may reimburse expenses tax-free, up to a fixed percentage of the total fiscal wages of the employee (the work-related costs budget). The work-related costs budget is 1.7% for the first €400,000 of the total fiscal wages, and 1.2% for the remaining amount of the taxable wage bill. In case the work-related costs budget is exceeded, the employer needs to pay wage tax in the form of a final levy of 80% on the amount in excess of the budget.

No wage/intermediary costs

Reimbursements of costs that do not form a (taxable) wage benefit for the employee, because they are directly related to the business of the employer. The reimbursement of these costs will not be included in the work-related costs budget. This also includes benefits and provisions that do not qualify as wage based on the wage tax law (Wet op de loonbelasting 1964), e.g. employers’ contributions to approved/qualifying employee pension plans.

Mandatory taxable wage

Benefits or provisions, not included in the work-related cost scheme, that are obligatorily taxed on an employee level, such as the company car and taxable reimbursements.

Specific exemptions

The amount of a number of specific reimbursements or provisions will not fall within the work-related costs budget, e.g. travel expenses (up to EUR 0.19 per business kilometer with a private car), removal expenses, and extraterritorial expenses. Please note that the 30% ruling (expatriate tax regime) remains applicable for the reimbursements of extraterritorial expenses.

Zero valuations

These reimbursements and provisions formally fall within the work-related costs budget, but are assessed to zero. Example include work clothing or refreshments at work. Zero valuations are applicable solely to wages in kind, usually in the form of provisions, and not to monetary reimbursements. These zero valuations avoid the situation in which provisions at the workplace would be debited from the discretionary scope and do not fill the work-related costs budget. Employers who provide this continue to be the owner.

The reimbursements or provisions that fall under the work-related costs budget. When an individual who is liable to paying tax in the Netherlands, but does not have an employer withholding it can deduct work-related costs on their Dutch PIT return.

Alimony

Residents are entitled to claim deductions mainly relating to their personal or family circumstances, including maintenance payments to a former spouse.

Charitable contributions

Residents are entitled to claim deductions relating to charitable donations (deductions for certain expenses are capped or subject to thresholds).

Education expenses

Residents are entitled to claim deductions for educational expenses (deductions for certain costs are capped or subject to thresholds).

Medical and disability expenses

Dutch residents can claim deductions that relate to personal or family health circumstances. These include expenses related to sickness or disability, as well as expenses incurred during weekends, spend with disabled close relatives (deductions for certain costs are capped or subject to thresholds).

Mortgage interest expenses

Mortgage interest repayments for financing, renovation, or maintenance of the primary residence may be deducted. The amount of the deduction is dependent on the employee's income. 0.60% (2020) of the value of the property is used to calculate the deduction. The rate for properties valued above €1.09 million is 2.35%.

Overview

CURRENCY
€ The Euro
WORKING HOURS
36-40hrs / week
PUBLIC/BANK HOLIDAYS
8 days per year
CAPITAL
Amsterdam
LANGUAGE
Dutch
REMOTE WORKERS
1.25 million
MINIMUM MONTHLY SALARY
€1,725
TAX YEAR
1st Jan - 31st Dec
DATE FORMAT
DD / MM / YYYY
MISCLASSIFICATION PENALTIES
Penalties include outstanding holiday payments, salary entitlements during sickness and pension dines by the Tax Authorities for not complying with the obligation to withold income tax and the national insurance contributions.
FUN FACT
The Netherlands has the highest number of part-time workers in the EU (4 out of 10 employees).
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