Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in the Netherlands might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labor contracts for employees in Italy including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Holland, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
Our guide will explain what benefits and employee compensation are guaranteed, and what can be modified, for any employer who wishes to expand their business into the Netherlands.
What Compensation Laws exist in the Netherlands?
In the Netherlands, a wide-ranging and daunting framework of employment laws and regulations guarantee employees enjoy protection throughout their working life and into retirement. Legislation covers such as minimum wages, social insurance, redundancy, termination, and severance, working hours, vacation leave, maternity, and paternity benefits and more. Statutory and mandatory minimums cannot be undercut by collective or trade union agreements, although these can improve entitlements for employees.
Drawing up contracts is complex enough, but in the Netherlands, it is vital to fulfil responsibilities to your employees over benefits, compensation, and minimum requirements. Do not take the risk of ignoring them. Compensation and benefits include:
- National Minimum Wage: Minimum wages paid to full-time employees over the age of 21 increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The new weekly rate is €392.55 (US$460) and €78.51 (US$92) per day.
- Working Hours: These are between 36 and 40 hours weekly, or seven to eight hours per day usually between 6am and 6pm, five days a week. The maximum number of hours is 60 per week with a maximum of 12 hours per shift.
- Sick Pay: Benefits apply for the first two years of incapacity to work, paid either by the employer or via the Employee Insurance Agency (UWV) at a minimum 70% of salary, overtime, and other remuneration.
- Paid Vacations: Full-time employees have four weeks annually. Holiday allowance is 8% of total gross salary, paid in May or over 12 months at the employer’s discretion.
- Maternity Leave: The allowance is four to six weeks pre-natal and 10 weeks’ post-natal. Employers apply to the Employee Insurance Agency (UWV) for the maternity benefit for their employees, who receive their 100% daily salary capped at €223.41 (US$261).
- Health Care: All Dutch residents must be covered for basic public health insurance (ZVW). Private healthcare is funded both by contributions from employees, starting at around €100 (US$117) annually, and from employers paying an amount that depends on employees’ salaries.
- Notice Periods: Minimum periods of notice must be given both when a company releases staff or an employee terminates their employment. Employees on a permanent contract must always be given notice. Dutch law provides for the following terms of notice: Fewer than five years’ service – 1 month; more than five years, fewer than 10 years – two months; more than 10 years, fewer than 15 years – three months; 15 years’ service or more– four months. If the employee’s notice period is more than one month, the employer’s reciprocal notice period must be twice as much up to a maximum of six months.
- Redundancy, Termination and Severance: Regulations for dismissals are strictly applied in the Netherlands. Employers must have a valid reason for terminating employment. If dismissals are mutually agreed the employer must make a written statement of the terms. If the employer terminates employment and the employee agrees with the reason in writing, they receive a transition payment. This is similar to a severance payment and applies if the employee has been in position for a minimum of two years. However, employees have a 14-day ‘reconsideration period’ to revoke their agreement and do not need to give a reason. If termination is not mutual, the employer needs approval from the Employee Insurance Agency (UWV).
Social Insurance in the Netherlands
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 schemes (Volksverzekeringen)
- Employees insurance schemes (Werknemersverzekeringen)
Newly arrived workers must attend 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 need only to take their 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.
To learn more about the social security benefits system, check out the Access webpage.
Statutory Employer Costs in the Netherlands
Employer Payroll Taxes
- 2.70% or 7.70% - Unemployment Insurance (WW)
- 7.03% - Health Insurance
- 0.5% - Child Care Premium
- 10.23% or 15.23% - Total Employment Cost
Unemployment Insurance depends according to type of contract. The lower rate is applicable to employees with a contract of indefinite duration, whilst the higher rate applies to employees with a temporary contract.
Other statutory employer costs include:
- National Minimum Wage: The minimum wages paid to employees over the age of 21 in full-time employment increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The new weekly rate is €392.55 (US$460) and €78.51 (US$92) per day.
- Corporate Tax: The standard rate is 25% with 16.5% applying to the first €200,000 (US$234,500) of taxable income for Small and Medium Enterprises (SMEs), and 9% to some categories of intellectual property. Resident companies are taxed on their worldwide income, whether private or public limited companies. Foreign companies are considered resident if incorporated under foreign law but managed in the Netherlands.
What Benefits are guaranteed in the Netherlands?
International companies expanding into the Netherlands must consider 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:
- Public Holidays: There are 10 official Public Holidays in the Netherlands, although no legal provision says employees have to be given the day off. This will be covered by contract or collective agreements.
- National Minimum Wage: Minimum wages paid to employees over the age of 21 in full-time employment increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The weekly rate is €392.55 (US$460) and €78.51 (US$92) per day.
- Working Hours: The Working Hours Act and the Working Hours Decree regulate working hours between 36 and 40 hours a working week, or seven to eight hours per day scheduled between 6am and 6pm, five days a week. The maximum number of hours is 60 per week with a maximum of 12 hours per shift.
- Sick Pay: Benefits apply for the first two years of incapacity to work, paid either by the employer or via the Employee Insurance Agency (UWV). Sick pay is a minimum 70% of salary, including overtime payments and other personal benefits.
- Paid Vacations: Full-time employees receive at least four weeks paid holiday annually. Holiday allowance is 8% of total gross salary, paid in May or over 12 months at the employer’s discretion.
- Maternity Leave: The allowance is four to six weeks pre-natal and 10 weeks after the birth. Employers apply to the Employee Insurance Agency (UWV) for the maternity benefit for their employee, who receives their 100% daily salary capped at €223.41 (US$261).
What Restrictions apply to Benefits and Compensation in the Netherlands?
Unemployment Benefit: To apply for benefits to the Employee Insurance Agency (UWV) under the Unemployment Insurance Act (WW) individuals must meet certain requirements, which include:
- Must have worked for 26 weeks out of the 36 weeks before their last day of employment
- If individuals work for less than 26 weeks in the Netherlands but have worked in the 36-week period in EU or EAA countries, this may be considered
- Applicants must show proof of job applications and be under 65 years old
- Applicants must not be receiving sickness, incapacity, or disability benefit while unable to work
- Those meeting the minimum requirement receive benefit for three months; those on full benefit must accept any job offer after six months
- Individuals receive 75% of salary for first two months and 70% from then
- Applicants must submit ‘pregnancy form’ to employer at least three weeks before wanting to start leave
- Must have been employed for at least one year before leave is due to start
Netherlands Health Insurance and Other Benefits
The Dutch healthcare system is rated the best in Europe and as high as third globally, providing major benefits to those who use them. It boasts top medical specialists, strong infrastructure, and the freedom to decide where to buy healthcare and where to access services. Dutch healthcare is either public or private, and services are provided by private health suppliers.
There are two types of Health Insurance that are offered in the Netherlands:
- 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 apply for and take out insurance within four months of arrival could result in fines and being billed retrospectively for uninsured months. Beforehand, individuals must obtain their Citizen Service Number (Burgerservicenemmer or BSN) from their municipal authority or the Dutch Tax and Custom Administration (Belastingdienst).
Other conditions also apply to health insurance access:
- 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 buy basic insurance
- Non-EU citizens need a residence permit if staying for over three months and must then obtain public or private health insurance
Other benefits cover maternity leave, sickness, and unemployment subject to meeting certain requirements.
Benefit from our advice!
Health, retirement, maternity benefits, holidays, working hours and termination agreements are among the benefits guaranteed for Netherlands’ workforce. Legally protected compensation and benefits are an essential factor in ensuring contracts comply with Netherlands’ various labor regulations and Collective Labor Agreements. Bradford Jacobs ensures compliance with these crucial requirements to avoid delays in becoming operational.