Table of Contents

Netherlands

Table of Contents

Currency

Euro (EUR)

Payroll Frequency

Monthly

Employer Taxes

18.69% - 23.69%

About Netherlands

The Kingdom of Netherlands is a modern European country, formerly colonized by Spain up till the 16th century. It was an instituting member of both the NATO and EU and contributed to the introduction of the Euro. Bordering Belgium (which was initially part of it), as well as Germany, Netherlands has a land area of over 41,000 square kilometers. It is composed of coastal lowlands and under-sea-level polders, which add to its total agricultural landmass. The area comprising the four large cities of Amsterdam, Rotterdam, The Hague, and Utrecht is the most densely populated.

The Dutch, followed by people from other EU states and Turkey, comprise the largest ethnic groups in the Netherlands, and Christianity is the most practiced religion. Over 91 percent of the country’s population lives in urban areas. The Netherlands has a parliamentary constitutional monarchy with four countries represented, namely Netherlands, Aruba, Curacao, and Sint Maarten. The country has a per capita GDP of $52,799 and a population of 16.8 million people. Agriculture and fishing are its largest exports. Trade-in goods and services make up 83 percent of their GDP.

Employment Relationship

• Permanent Employment

In the Netherlands, a permanent contract is for an indefinite period of time. Notice must be given by employer or employee before the contract can be terminated. Employers pay a lower unemployment insurance contribution for employees with a permanent written agreement and a higher one for employees with a flexible contract. The difference between the high and the low unemployment insurance premium is five percentage points. For all other employment contracts other than permanent employment ones, such as on-call contracts, the higher rate applies. 

• Fixed-Term or Specific-Purpose Contracts

In the Netherlands, a temporary contract is concluded for a fixed period, fixed date, or a specific project. Neither employee nor employer may terminate the contract before the final date unless they have agreed to such an option in advance. A temporary contract can be converted into a permanent contract if the employee has received multiple temporary agreements with the same employer for more than 3 years, under certain conditions. After 36 months or the fourth fixed-term employment contract, the contract is converted into an indefinite employment contract.

• Temporary Employment Contratcs

In the Netherlands, a temporary contract is concluded for a fixed period. Employers and employees agree on the length of the agreement, which automatically ends by operation of law. Temporary contracts can also be made to replace an employee who is ill or on maternity leave. Employers can also hire temporary employees through Temporary Employment Agencies. Such employees are employed directly by the agency but work for and under the supervision of the employer who hires the agency. Neither employee nor employer may terminate the contract before the final date unless they have agreed to such an option in advance. If the contract is for more than six months, it can be terminated only with a notice period. A temporary contract can only be extended a maximum of 3 times within 3 years. Employees with a temporary contract are entitled to the same employment conditions as permanent employees. Employers must keep employees on a temporary contract informed of vacancies for a permanent position. Temporary employees are entitled to 70% of their wages for a period of 2 years if they become sick unless otherwise stipulated by a collective employment agreement.

Probationary Period

In the Netherlands, a probationary period must be agreed to in writing by employer and employee. In case of open-ended employment contracts and fixed-term contracts of 2 years or more, probationary period cannot exceed 2 months. In case of temporary contracts with no specific termination date or fixed-term agreements of two years or less, probationary period cannot exceed 1 month. No probation may be arranged for fixed-term contracts of 6 months or less. Employment contracts can be terminated without notice or reasonable grounds during the probationary period by either party.

Working Hours

In the Netherlands, the weekly working time may not exceed 48 hours, on average, in a 16-week reference period and 55 hours, on average, during a 4-week reference period, including overtime. Employees can work a maximum of 12 hours in a shift and 60 hours in a week. Collective agreements may specify other daily and weekly hours that are still subject to the daily and weekly 12- and 60-hour limits, respectively. A longer workweek is possible as long as a rest period of at least 72 hours is provided every 14 days. The length of a night shift cannot go over 10 hours. Working hours for young employees cannot be longer than 8 hours per shift or 40 hours per week over a 16-week reference period.  Employees can request their employers to work remotely if they meet certain criteria – employed with companies with more than 10 employees and have worked for more than 6 months. The statutory regulation for working from home does not apply to companies with fewer than 10 employees. 

Holidays / PTO

• Statutory Holidays

New Year’s Day (January 1), Easter Monday (date may vary), Ascension Day (date may vary), Whit Monday (date may vary), King’s Day (April 27), Liberation Day (May 5 – celebrated every five years), Christmas Day (December 25).

• Paid Annual Leave

During the first year of employment, the employee is entitled to paid leave of 4 times their workweek (the number of days/hours per week). It means full-time employees earn annual leave of at least 20 days annually (based on a workweek of 5 days). Employment contracts and collective agreements provide additional annual leave. Annual leave can be carried over to the first half of the next year, otherwise, they expire. Employees are entitled to a minimum of 8% of their annual salary as vacation pay in addition to paid vacation entitlement. Vacation pay may be reduced if an employee earns more than three times the annual equivalent of the minimum wage. A collective labor agreement may state that there is no entitlement to holiday pay. They must receive at least 108% of the minimum wage in that case.

• Sick Leave

In the Netherlands, employees are entitled to 2 years of paid sick leave, with 70% of their wages or at least the minimum wage. Temporary employees are also eligible for this benefit. Employees cannot be dismissed during sick leave, except when they do not cooperate with their reintegration plan.

• Maternity Leave

In the Netherlands, female employees are entitled to a minimum of 16 weeks – 6 weeks before birth and 10 weeks after birth. In the case of multiple births, employees are entitled to a total of 20 weeks of leave. In case of termination of pregnancy at 24 weeks or after and stillbirth, employees are entitled to 16-week maternity allowance.If pregnancy ends before that, employees are entitled to sickness benefits. An employee must notify her employer 3 weeks before taking maternity leave and no later than the second day after the delivery. During maternity leave and birth leave, the employee is entitled to Employment Insurance Agency benefit of 100% of the daily wage, without exceeding the maximum daily wage of EUR 264.57 (Euros). An employer cannot dismiss an employee for pregnancy. The employment contract may not be terminated during the term of maternity leave and for 6 weeks after maternity leave.

• Paternity Leave

In the Netherlands, the partner of a woman who gives birth (or multiple births) is entitled to paid paternity leave for the number of hours working per week (5 days on a full-time basis). A collective agreement may provide for longer paid or unpaid paternity leave. This paid leave can be taken any time in the first 4 weeks after the birth of the child. Male employees are also entitled to 5 weeks of unpaid leave in the first 6 months after the birth of their child (the same duration for multiple births). Employees who take unpaid leave can claim benefits from the Employment Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) for up to 70% of their salary, with a ceiling of 70% of the maximum daily wage, EUR 264.57.  The employee must notify the employer at least 4 weeks in advance in writing that he is taking the additional paternity leave, indicating when the leave starts, how many weeks of leave is requested and how is it spread over. Employers have the right to change the leave up to 2 weeks in advance, but only in the case of compelling business or service interests.

Termination of Employment

• Notice Period

The required notice period provided by the employer depends on the length of employee service, as follows: 1 month for less than 5 years of service 2 months for more than 5 but less than 10 years of service 3 months for more than 10 but less than 15 years of service 4 months for 15 or more years of service Employees may terminate an employment contract with 1 month’s notice. The notice period can be increased or decreased if put in writing. However, it cannot exceed 6 months. Fixed-term employees may be required to give notice to terminate their contract before expiry, if it is included in their contract.

• Severance Benefits

In the Netherlands, the employer must provide a transition payment to the employee in the event of a dismissal or the non-renewal of a temporary contract. This regulation applies to both permanent and temporary employees. The employee is also entitled to a transition allowance if they resign due to serious culpable acts or omissions on the employer's part. Employees are entitled to a transition payment in the event of dismissal from the first day of their employment contract. This also applies if they are fired during their probationary period. The amount of transition pay depends on the gross salary and duration of the employee's service. The reimbursement is set at a maximum of EUR 94,000 gross.