Netherlands Employment Contracts

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Netherlands Employment Contracts

A successful business largely depends on its employees. By creating working contracts that include the right terms and benefits there will be no misconception and the perfect work-life balance can be created. At Bradford Jacobs, this is our aim, and we support companies in over 100 countries with creating compliant and balanced labor contracts.

Our team keeps track of the Dutch laws and regulations on a daily basis to be duly aware of updates that can be implemented in working contracts. By using our PEO and EOR services, we can provide compliant labor contracts for employees in the Netherlands, including local benefits.

To support your plans, we made this guide including the basics of employment contracts in the Netherlands. After reading this guide you will know everything about social security, notice periods, and the average working hours.

How do you hire Netherlands Employees?

International companies hiring employees for their expansion into the Netherlands face wide-ranging tax, employment, and social insurance regulations. Compliance is essential with regulations set at national level and by Collective Labor Agreements (CAOs), as well as directives from the European Union (EU). The Dutch Civil Code, Dutch Tax and Customs (Belastingdienst) and the Ministry of Social Affairs and Employment also feature. In order to hire from abroad, employers must comply with the Foreign Nationals Employment Act (WAV).

This legal framework covers payroll and tax law, social security, termination and severance rights, vacations, sick leave, minimum wages, and other areas. These factors apply particularly when a foreign company wants to hire local employees in the Netherlands, as they must comply with all obligations on behalf of the employees.

In drawing up their employment contract or agreement, parties cannot ‘opt out’ of statutory regulations or CAOs. General considerations include:

  • The Netherlands Enterprise Agency (RVO) identifies two main types of employment contract (arbeids contract); the fixed-term (temporary) contract (tijdelijk contract) and the indefinite (permanent) contract (vast contract).
  • A contract with a recruitment agency (uitzend contract) involves three parties – the employer, employee, and the agency.
  • Contracts can be verbal or written. A written contract or agreement must indicate whether a CAO applies. Written contracts are strongly advised, however, as under Dutch law certain clauses are valid only in written form.
  • In the absence of a written contract, once an employee begins employment the contract is deemed to be in place and the employer must supply written details of the terms within one month.
  • Employees on temporary contracts must receive a permanent contract after three temporary agreements or if the contracts last three years in total.
  • The contract / agreement must include:
    - full details of employer and employee
    - employment location and employee’s role
    - usual working hours
    - start date of contract and end date if fixed term
    - salary and payment schedule
    - any probationary period
    - holiday entitlement and notice periods

Employment Contracts in the Netherlands

  • Permanent or Indefinite Employment Contracts (Vast contract): These are the norm and can be either written or verbal. In the absence of a written contract, once an employee begins employment the contract is deemed to be in place and the employer must supply written details of the terms within one month, indicating whether a CAO applies.

    Written contracts are strongly advised, however, as under Dutch law certain clauses are valid only in written form. The contract can be ended by either party, adhering to terms of notice. Where an employee does not agree to reasons for dismissal, employers need permission from the Employee Insurance Agency (UWV) to carry out the dismissal.

  • Fixed-term or Temporary Employment Contracts (Tijdelijk contract): After receiving three fixed-term contracts, or if contracts cover three years, the employee must by law be given an indefinite, permanent contract. Even when an end date is specified, employers must give one month’s notice that they do not intend to offer a new contract, at risk of being fined one month of the employee’s salary.

  • Probationary or Trial Period Employment (Proeftijd): The maximum permitted period is two months for indefinite contracts and for fixed-term contracts of more than two years. Fixed-term contracts of less than six months cannot specify a probationary period, but a contract between six months and two years can have a one-month trial period.

  • Recruitment Agency Employment Contracts (Uitzend contract): The employee signs the contract with the agency, who place the worker with a company for a specific project or period.

  • Freelance Employment Contracts (DBA modelovereenkomst): Companies are obliged to give contracts to freelances working for them under the provisions of the Declaration of Employment Relationships Act (DBA). The contract differentiates the freelance from salaried employees.

What Employment Laws exist in the Netherlands?

Dutch employment laws govern the legal relationship between employers and their staff, so contracts play the central role in applying the various regulations. The Dutch Civil Code, Dutch Tax and Customs Administration (Belastingdienst) and the Ministry of Social Affairs and Employment all figure in establishing legal parameters. European Union (EU) directives also come into play along with Collective Labor Agreements (CAOs). Additionally, in order to hire from abroad, employers must also comply with the Foreign Nationals Employment Act (WAV).

This combination provides comprehensive protection for employees in the Netherlands with mandatory provisions covering such as working hours, minimum wages, paid vacations, health and safety, anti-discrimination, illness, and injury benefits. These include:

  • 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 new 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).

How do you Onboard Netherlands Employees Internationally?

The most efficient and cost-effective method of onboarding employees into the Netherlands is through a global recruitment company such as Bradford Jacobs.

Transferring staff from abroad demands compliance with strict and time-consuming procedures to obtain visas and permits. Making mistakes risks sanctions, wasting time and money, with the likelihood the employee will not be allowed to start work, or may even be refused entry on arrival at the border.

The alternative is to locate and recruit staff within the Netherlands with Bradford Jacobs. This requires a thorough knowledge of the employment market. We have that knowledge and will clear the way for your expansion.

Our Professional Employer Organization (PEO) and Employer of Record (EOR) solutions manage every stage of the process from finding the employee to seeing their first check is paid on time. The result? Your new employees are quickly operational as part of a team making their mark in your new territory.

Translating Netherlands Employment Contracts

The legally valid contract must be in Dutch. The employer can add a translation in any language, but these versions will not be legally valid.

Tick all the boxes

Bradford Jacobs’ recruitment specialists will guide you and your employees through every step of onboarding into the Netherlands. From talent acquisition to the complexities of employment legislation, payroll and tax, Bradford Jacobs ticks all the compliance boxes, and we ensure every aspect is contractually watertight.

The global reach of our Professional Employer Organization (PEO) recruitment platforms, combined with the in-country knowledge of our Employer of Record (EOR) specialist teams, guarantees a successful and smooth transition of your employees into your new territory.

To learn more about our PEO and EOR packages, contact one of our sales specialists today.