Employee Benefits In The Netherlands

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Employee Benefits In The Netherlands

Employee benefits are comprehensive. They include the national minimum wage, restrictions on the number of working hours, holiday entitlement and vacation bonus, statutory redundancy pay based on years of service and protection over termination of contracts, severance and redundancy pay. There are also statutory provisions for maternity and paternity leave and when employers must institute health insurance for workers.

There is a high degree of workers’ protection in the Netherlands based on complex labor laws, which can prove problematic for companies considering setting up a subsidiary in the country.

Managing benefits and compensation comprises a key element of Human Resources management. Bradford Jacobs’ thorough understanding of these sectors of Dutch employment law ensures all requirements will be met in a trouble-free process.

What Netherlands Compensation Laws Exist?

  • National Minimum Wage – adjusted January 1 and July 1 every year. As of July 2020, for employees over 21, the minimum wage is: €1,680pm or €387.70pw or €77.54pd
  • Notice periods – ranging from one month for up to five years’ service to four months for more than 15 years’ service
  • Redundancy, termination and severance – these are strictly governed by Dutch law
  • Working hours and rest periods
  • Sick leave – during which the employee must be paid a minimum of 70% of their agreed salary and holiday allowance
  • Holiday leave – based on calculation of a minimum four times the hours worked
  • Maternity / paternity leave

In April 2020 the Dutch parliament enacted legislation known as the ‘Compensation Regulation’. This provides for employers to be reimbursed by the government for a transition fee in relation to dismissal of an employee due to continued sick leave after 104 weeks

Social Insurance in the Netherlands

Frequent changes in legislation make it advisable to engage the services of a global PEO / EOR Organization such as Bradford Jacobs to guide employers through the intricacies. While all social security and benefits apply to people living and working in the country, exceptions may apply depending on the contract conditions and the employees’ country of origin.

There are two types of compulsory social insurance for eligible expat workers. They are:

  • National insurance (Volksverzekeringen)
  • Employees insurance schemes (Werknemersverzekeringen)

Contributions vary according to income. Employers paying the larger percentage with the employees’ contribution deducted from their salary. Newly-arrived workers must attend attending the registration office (Dienst Burgerzaken) in the (Gemente) municipality where they live to obtain a BSN number and enroll with the tax and social insurance system.

EU and EEA-nationals require only take ID (passport or national identity card) but non-EEA nationals need a work permit stating they are permitted to work in the EU or EEA.


Statutory Costs in the Netherlands

Employer Payroll Taxes  
2.94% or 7.94% Unemployment Insurance (WW)
6.77% Health Insurance
0.5% Child Care Premium
15.21% Total Employment Cost
Employee Payroll Taxes  
17.90% Old Age Pension (AOW)
0.10% Orphans and Widow/Widower Pension (ANW)
9.65% Long Term Care (WLZ)
27.65% Total Employee Cost

Depending on the employee’s profession and the employment contract, different rates may apply when calculating employee Insurance contributions. The above percentages are average percentages for employee insurances.

  • https://home.kpmg/xx/en/home/insights/2011/12/Netherlands-Other-taxes-and-levies.html
  • https://papayaglobal.com/countrypedia/country/netherlands/

What Benefits are guaranteed in the Netherlands?

The success of the Dutch world-leading pension system means that this can be considered a ‘guaranteed benefit’ for employees. The state pension system (AOW) is administered on a pay-as-you-go basis, with government funds and payroll taxes providing the funding. Everyone who lived and/or worked in the Netherlands between the ages of 15 and 65 is entitled to an AOW pension. Everyone living in the Netherlands, with some exceptions, is insured, and with every year people are insured they build up rights to 2% of the full AOW pension. The full AOW pension is tied to the minimum wage, with married or cohabiting couples each receiving 50% of the minimum wage, while those who live alone are entitled to a pension worth more than 70% of the minimum wage.

International companies expanding into the Netherlands must also take account of key elements of the legally-binding benefits and compensation regulations applying to the employment market. Using an experienced global recruitment PEO and RPO, such as Bradford Jacobs, will ensure remaining compliant with the frequently updated rules. Guaranteed benefits include:

  • National Minimum Wage – adjusted January 1 and July 1 every year. As of July 2020 the gross minimum for employees over 21 is: €1,680pm or €387.70pw or €77.54pd
  • Notice periods – ranging from one month for up to five years’ service to four months for more than 15 years’ service
  • Sick leave – during which the employee must be paid a minimum of 70% of their agreed salary and holiday allowance

What Restrictions exist for Benefits and Compensation in the Netherlands?

Restrictions on the duration of unemployment benefit depend on length of employment. For the first two months, the employee will receive 75% of the monthly unemployment benefit, and 70% thereafter. For 2020, the maximum daily ‘wage’ (dagloon) was set at €219. Employees must have worked at least 26 of the previous 36 weeks to qualify.


Health Insurance, Car Allowance and other Benefits in the Netherlands

The Dutch healthcare system is rated the best in Europe and as high as third globally and is a major benefit. It boasts top medical specialists, strong infrastructure and the freedom to decide where to buy healthcare and where to access services. Services are provided by private health suppliers.

Dutch healthcare is either public or private.

  • ZVW (Zorgverzekeringswet) is the basic insurance for all residents and insurance companies must offer the same to everyone
  • AWBZ (Algemene Wet Bijzondere Ziektekosten), is funded by deductions from the employee’s salary and covers nursing and care

Failure to take out insurance within four months after arrival four months could result in fines and being billed retrospectively uninsured months. Beforehand individuals must obtain the Citizen Service Number (Burgerservicenemmer or BSN) from their municipal authority or the Dutch Tax and Custom Administration (Belastingdienst).

  • The European Health Insurance Card (EHIC) for EU citizens covers emergency treatment and allows for healthcare charges to be refunded
  • Foreigners resident for over a year must by basic insurance
  • Non-EU citizens need a residence permit if staying for over three months and must then obtain public or private health insurance

Car Allowances for Employees in the Netherlands: Most Dutch companies reimburse travel costs either using their car, which has potential tax allowances, or by public transport. Reimbursed mileage is free of tax an social security contributions within certain limits – less than €0.19 per kilometre and not more than 214 days per year

Bonuses in the Netherlands

Bonuses are taxed the same as regular salary. In order to prevent employees from having an extra amount of tax due at the end of the year, the employer will withhold taxes on bonuses at the highest income tax rate. Employers often prefer giving bonuses to salary increases as they can tie them productivity.

Work with Bradford Jacobs

Any company planning expansion into the Netherlands, either through a subsidiary or by migrating staff, faces a mass of complex laws, regulations and strict compliance issues. Compensation and benefits, statutory costs, social insurance payments, health insurance, car allowances, bonuses and expenses are issues that cannot be overlooked for the smooth transition of your operation into the Dutch market. Be on top of these issues by working with Bradford Jacobs