To do business in the Netherlands, it is vital to have a good understanding of its business or work culture. Making the right impression with the right people is the key to success in Holland, and it is important to back this up with the right research on the market and potential business associates.
As a global PEO (Professional Employment Organization) it is our goal to be familiar and updated with the business culture in the country we work with and in. By sharing our knowledge about the Dutch work culture, we want to support your global expansion plans. Therefore, we will address all the aspects of the work culture in the Netherlands to start your expansion well-informed.
Work Culture in the Netherlands
The Netherlands, which is ideally situated at the commercial heart of the European continent, offers great opportunities. However, understanding the work ethic and culture of the Netherlands will go a long way to creating the right business environment for your company and staff.
Dutch business culture is relatively flexible. The openness characterizing Dutch society is reflected in the horizontal structure of business culture seen in many companies, where the managing director and employees are all considered co-workers. Executives do not usually display their power – but still have the authority.
Companies have specialized employees while managers are seen more as a problem solver or facilitator. There is emphasis on bringing multiple specialists together, thereby improving diversity and expertise. The Dutch like consensus so are fond of meetings, which combine informality with protocols and a strict agenda.
The Dutch traditionally keep their professional and private lives separate – do not expect too much socializing. Here are a few tips on business interaction as you get ‘down to business’:
- Punctuality: After fixing an appointment arrive on time for the meeting – it shows you can keep to deadlines. Allow time for the traffic and call if you are going to be late.
- Language: If you are more comfortable discussing business in English, the Netherlands is the place to be as most Dutch professionals speak the language fluently. It is still best to speak plainly – English idioms may be misunderstood by your opposite numbers.
- Business Relationships: Realize the business relationship will revolve around strict agendas and sticking to the point. Small talk is unlikely to feature in the early days as the Dutch will be keen to get down to business, while expecting all team members on both sides to be fully briefed and taking part in discussions.
- Introductions and Greetings: Shake hands firmly, maintain trust-building eye contact and make the introduction using your first and last name.
- Business Cards: These are generally exchanged towards the end of the introductory meeting. Dutch business cards typically include any academic qualification. They may also show a home address and telephone number – but this is not an invite for ‘after hours’ contact.
- Dress Code: This varies, but always within the boundaries of being presentable. Suits and ties may prevail in the upper levels of business hierarchy or government, but in the summer particularly shirts, blouses, jeans, slacks, trainers and even tee-shirts are typical office wear.
- Gift-giving: This is not a common practice in Dutch business, and any gifts exchanged at the conclusion of the deal should be modest and neutral.
- Sealing the Deal: As meetings are very much agenda-driven there will be attention to detail in following the planned course of action, and with the egalitarian approach towards involving everyone, progress could be slow. But once a decision and agreement is reached, setting the deal in stone will be confirmed by rigidly enforced contracts.
- Business Meals: Another concept not overly common in Dutch commerce. Business lunches are unusual, and dinner is kept generally as a private social occasion. But if a business meal is called for there will be little small talk.
Recruiting in-country through Bradford Jacobs’ Employer of Record (EOR) services means the culture and customs of your new territory will automatically be an open book.
Netherlands’ National Minimum Wage
The minimum wages paid to employees aged over 21 in full-time employment increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The Dutch government adjusts the rate annually in January and July in line with collective agreements. The new weekly rate is €392.55 (US$460) and €78.51(US$92) per day.
The law does not decree a minimum hourly wage as hours vary between businesses depending on the number worked in a week. Part-time workers calculate their entitlement by taking the minimum weekly wage, dividing that by the number of hours in a full working week and multiplying the result by the number of hours they work.
Probation Periods in Netherlands
Probationary or Trial Periods (Proeftijd) are allowed by law in the Netherlands and written into the employment contract but both employer and employee must agree to it, unless covered by a collective labor agreement.
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. An employment contract can be terminated by either party during the probationary period.
Working Hours in Netherlands
Working hours’ regulations are included in the Working Hours Act and the Working Hours Decree (ATB) and apply to all workers including foreigners. Employers must make a record of all hours worked by their employees.
Between 36 and 40 hours generally comprise a working week, or seven to eight hours per day, scheduled between 6am and 6pm, five days a week. The maximum hours is 60 per week and 12 hours per shift, which must average out to 55 hours over four weeks and 48 per week over 16 weeks.
Employees must have 11 hours consecutive rest between workdays. Working a five-day week, there must be 36 consecutive hours of rest for workers in a 14-day period.
Employees receive 30-minutes rest after working over 5½ hours, which can be split into two 15-minute breaks. More than 10 hours must include at least 45 minutes rest, again split into a number of breaks. A collective arrangement may allow for more break time but not less. An employee working for 5½ hours, must have a 15-minute break.
Overtime in Netherlands
This is a legislative grey area in Dutch labor law, which has no specific provisions regulating overtime or any compensatory payments. Agreements regarding overtime may be agreed contractually, or as stipulated in the employee handbooks or by a Collective Labor Agreement (CAO)
Notice Periods in Netherlands
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. Generally, fixed-term contracts end on a fixed date, but employers should let employees know if the contract is not to be renewed.
Dutch law provides for the following terms of notice employers give to employees:
- Fewer than 5 years’ service – 1 month
- More than 5 years, fewer than 10 years – 2 months
- More than 10 years, fewer than 15 years – 3 months
- 15 years’ service or more years – 4 months
Employees’ statutory notice period is one month unless stipulated in the contract. However, the employer’s notice period must then be double that of the employee. The maximum for the employee is 6 months.
In the following circumstances, employers do not have to give notice:
- During the employee’s trial period
- Summary dismissal due to gross misconduct, for example
- Employee resigns with immediate effect following breach of contract, for example
Notice periods can be contractually shortened, or as a Collective Labor Agreement (CAO) permits; however, in the absence of then statutory terms apply.
Redundancy, Termination, Severance in Netherlands
Regulations for dismissals are strictly applied in the Netherlands, where employers must have a valid reason for terminating employment. If the employee agrees with dismissal, there are two options:
- If dismissals are mutually agreed, the employer must record the terms in a written statement and consider unused vacation and notice period.
- If the employer terminates employment and the employee agrees with the reason in writing. In this case they receive a transition payment, similar to a severance payment that applies if the employee has been in position for a minimum of two years.
If neither of these cases applies, the employer needs approval from the Employee Insurance Agency (UWV). However, employees have a 14-day ‘reconsideration period’ to revoke their agreement and do not need to give a reason. If the employer does not record the reconsideration period in the termination agreement it increases to 21 days by default.
Where employees do not agree with the reason for dismissal, employers need permission from the UWV. Grounds include economic reasons or the employee’s long-term incapacity for work. Other potential reasons for dismissal, such as poor performance or conflict, can be adjudicated by a sub-district court or an independent dismissal committee under a Collective Labor Agreement (CAO).
Pension Plans in Netherlands
In the Netherlands, options for pension plans include individual schemes, company plans that are financed by a pension fund, or through membership of compulsory schemes for particular sectors. Employers must inform staff about which applies.
You can learn more about pension plans that are available in the Netherlands here.
Public Holidays in Netherlands
Employers actually have no legal right to benefit from a day off on official public holidays; this is usually dealt with either through contracts or collective labor agreements.
- New Year's Day - January 1
- Easter Sunday and Monday - during March/April
- Queen’s Day - April 27
- Liberation Day - May 5 (not a day off every year)
- Ascension Day - May/June
- Pentecost Sunday and Monday - May/June
- Christmas Day - December 25
- St. Stephen’s Day - December 26
Sick Leave in Netherlands
It is a legal right for Dutch employees to receive sickness benefit for the first 24 months of their illness, paid either by the employer or via the Employee Insurance Agency (UWV) under the Sickness Benefit Act. Sick pay is a minimum 70% of salary, including overtime payments and other personal benefits. Incapacity due to pregnancy complications, giving birth or organ donation entitles the employee to their full salary.
Payments start after two ‘waiting days’. Employers must report the sick leave, online, to the UWV if the worker is absent for 42 weeks. Failure to do so will result in a fine. If their employment contract ends during the sick leave this is dealt with by the UWV’s Social Medical Affairs division. If they are still unable to work after two years, they may receive benefits under the Work and Income (Capacity for Work) Act.
Vacations, Holidays in Netherlands
Full-time employees are entitled to a minimum four paid working weeks holiday per year; employers must continue to pay their salaries. Employers often offer up to 25 calendar days or more. Vacations must be used within six months of the following year, or they are forfeit; unless employees have reasonably been unable to take holiday.
Holiday pay is 8% of total gross salary which includes overtime payments, commission, and payments for unsociable hours. It is paid in May or during the 12 months in installments, but only with the employee’s written permission or it is in the contract or agreed through Collective Labor Agreements (CAOs). However, those employees who earn more than three times the National Minimum Wage, are not entitled to holiday pay.
Also, CAOs or contracts determine whether public holidays equate to a day off. The CAO may allow for a Christian public holiday to be substituted with an alternative religious holiday, such as Eid Al-Fitr at the end of Ramadan or Chanukah.
Maternity, Paternity Leave in Netherlands
Maternity Leave: Employees are entitled to 16 weeks leave. Four to six weeks pre-natal and at least 10 weeks post-natal, with the mother allowed to add the remaining two weeks to her leave after the birth. Leave may be extended if birth is after the due date. Multiple births increase the allowance to at least 20 weeks leave. If the mother dies during childbirth their partner is eligible for the maternity leave.
Maternity Benefit: Employers apply to the Employee Insurance Agency (UWV) for the maternity allowance for their employee, who receive their 100% daily salary capped at €223.41 (US$261).
Paternity / Partner Leave: Fathers (or partners) who work full time (40 hours per week) are entitled to receive 1 weeks paid leave during the first four weeks after the baby is born on full pay. Also, since July 2020 there has been an increase of another 5 weeks at 70% of salary, taken in the first six months after birth.
Parental Leave: This is calculated at 26 times the hours worked in a week and it is taken during the first eight years of the child’s life. Employees are not legally entitled to any pay during this time unless this has been written into the employment contract or agreed in a Collective Labor Agreement.
Bonuses in Netherlands
Some companies write into the employment contract what is termed the 13th month’s pay. It equates to around 8.33% of an employee’s salary and is paid around November/December, in time for the holiday period.
In some sectors, employees can benefit from a bonus scheme or plan, but this is not mandatory and will depend on the position in the company, the type of business and whether it has been included in the employment contract.
If a company decides to pay bonuses, all workers must be treated equally with no discrimination. However, a bonus which is dependent on performance is legitimate.
Car Allowance in Netherlands
Employees using their own car for travelling between home and work may receive an allowance of €0.19 (US$0.22) per km as set by the tax authority, but free of tax and social insurance liability for a maximum of 214 days per year.
Do Not Suffer Culture Shock, Call Us!
The complexities of Netherlands’ tax, payroll and employment laws are part of a business culture that poses questions for your international expansion. Bradford Jacobs removes the mysteries of all these issues – freeing your staff to concentrate on growing your business.
For more information, contact one of our consultants today!