Employer of Record in the Netherlands
Skuad’s Netherlands EOR (Employer of Record) helps you in hiring remote teams in the Netherlands without setting up any physical entity there. Setting up offices in a foreign country and navigating through the administrative and legal formalities can be a complicated process. With the support of Skuad's unified and automated platform, you can build, pay and manage your remote team in the Netherlands successfully.
Learn more on how Skuad solutions can streamline onboarding, payroll, and compliance for your business.
The Netherlands at a Glance:
Population size: 16,979,729
Currency: Euro
Capital city: Amsterdam
Languages spoken: Dutch, English
GDP: 1.7%
Employment in the Netherlands
In the Netherlands, a single law does not cover the employment law. It is governed by regulations laid out in the Dutch Civil Code, Collective Labour Agreement, internal regulations of the company, and the individual employment contract of the company.
The protection of the employees’ rights and providing strong labor conditions is of utmost importance to the Ministry of Social Affairs and Employment in the Netherlands. For more flexible workforce requirements, companies can always leverage collective labor agreements and temp agencies. This is a major reason why, before expanding their business in the Netherlands, you should go for reliable and trustworthy professional services that are aware of the legal framework that governs the employment laws.
| Entitlements
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Explanation
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| Statutory Working Hours
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- 60 hours per week (maximum)
- 12 hours per day (maximum)
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| Leaves Allowed
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Employees can avail a number of leaves, including
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Leave for adoption (adoptieverlof)
- Leave of absence due to an emergency (calamiteitenverlof)
- Compassionate leave for a short-term (kortdurend zorgverlof)
- Compassionate leave for a long-term (langdurig zorgverlof)
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| Annual leave accrual entitlement
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The number of days of paid statutory annual leave is 20 days, in most cases. Employees on leave are paid by their employers, along with a 'bonus' of 8% of their annual salary. Employees can "store up" their days of paid leave by accumulating their leave entitlement.
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| Maternity and Parental Leave |
The duration of maternity leave is sixteen weeks, 6 weeks before the birth of the child and 10 weeks after.
Parental leave is also granted for parents whose child is less than 8 years old. (ouderschapsverlof)
The maximum number of leaves that can be taken by any individual under parental leave is 26 times the total number of hours that a person puts into work in a week.
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Contractors vs. Full-time employees
In case of full-time employees, the important elements of the employment relationship are as follows:
- The work is done individually.
- The employee is paid for it.
- There is a relationship of authority between employer and the employee.
The Dutch law protects employees and mandates that an indefinite contract can not be terminated without the approval of UWV (Employee Insurance Agency) or a sub-district court and the payroll taxes have to always be withheld for full-time employees.
In case of contractors, the following hold true:
- every contractor works independently,
- there is no relationship of authority between the employer and the employee and
- The contractor does not have to perform the work personally/ individually.
Agreements can be terminated on notice and termination is possible at all times. There are no restrictions in terms of termination of contracts. As far as matters of payroll are concerned, the employer has the choice to not withhold payroll taxes.
Most foreign employers therefore go for contractors as the policies and contracts are much more flexible.
Book a Demo to know more on how Skuad ‘s customized solutions for your business needs!
Hiring Processes in the Netherlands
Here is a checklist that will help you perform the entire hiring process in the Netherlands:
- Perform a good screening of the prospective employees and the ideal candidates. Recommend a rigorous background check and identity verification of original documents.
- Register as an employer with the Dutch Tax and customs administration to meet the payroll tax obligation for employing in the Netherlands.
- Get into an employment contract with them and clearly mention whether a Collective Labour Agreement applies, pension schemes, details about the working hours, and so on. A detailed list of elements to be included in the employment contract is given below.
- According to the type of employees hired, they should be given the minimum wage accordingly and also be provided with a holiday allowance.
- Make sure you provide healthy and safe working conditions for your employees. They are also entitled to certain leave schemes and a number of days off each year.
- Conduct a risk assessment and evaluation for your employees so that there is transparency about the types of risk for the employees and how as an employer, you are addressing them.
- For the permanent employees of the Netherlands, ensure that you deduct the social insurance premiums from their pay. Another option is to become a self-insurer and pay premiums to the Dutch Tax and Customs Administration.
- Make sure that your employee has a Dutch Health Insurance policy.
- Try to find potential candidates from the European Economic Area first. In case you don’t find suitable candidates in this region, you can recruit from other countries.
- Make sure to apply for a work permit for the employee from the Employee Insurance Agency.
- You are required to find suitable accommodation for the people that you are employing on a work permit.
The two types of employment contracts in the Netherlands are temporary and permanent.
- contract with a fixed amount of time (a temporary contract)
- contract for an extended amount of time (a permanent contract)
- Contracts can be agreed upon verbally or in writing. You must specify if a Collective Labour Agreement (CAO) applies in the employment contract.
After three consecutive temporary contracts or three years of temporary contracts, an employee must be offered a permanent contract. Unless additional agreements have been established in the CAO, this is the case.
Within one month of starting work, the employer must sign an employment contract that includes details of at least the following conditions that apply to the employee:
- the place of work
- the parties' identities and places of residence;
- the employee's function or nature of work;
- the length of the employee's normal working day or week;
- the initial base salary and any other pay components, holidays, and applicable notice periods;
- the pension arrangement in place;
- the starting date of the employment;
- the duration of the employment contract (if applicable);
- the daily/weekly working hours
- probationary period duration
- details of paid annual leave
Some of the popular job platforms that can be used for hiring in the Netherlands are:
- Indeed.nl
- LinkedIn
- Nationale Vacaturebank
- Monsterboard.nl
- Randstad
- Werk.nl
Get in touch with Skuad and get expert guidance on how to go about the hiring process in the Netherlands.
Probation & Termination
Probation
The probationary period must be specified in writing. The standard probationary period in the Netherlands for an open-ended employment contract or a contract fixed for two or more years is 2 months. Otherwise, the longest possible probation period is 1 month. A probation period will only hold valid in an employment contract that extends longer than 6 months.
Termination
In the Netherlands, there are generally 5 ways of termination of an employment contract:
- termination by mutual consent;
- termination proceedings before the Employee Insurance Agency (UWV WERKbedrijf);
- termination due to dissolution of contract by the cantonal court.
- termination with the consent of the employee
- Dismissal due to an urgent cause
| Topics |
Explanation |
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Termination by mutual consent; |
In this type of termination, the employer tries to settle things amicably with the employee through a settlement agreement.
A settlement agreement specifies the end date of the employment agreement as well as the amount of severance to be paid by the employer. Any further obligations are also included in this agreement.
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Termination proceedings before the UWV WERKbedrijf (Employee Insurance Agency) |
If the employer and the employee are unable to achieve an agreement by mutual consent and the employer chooses to terminate the employment agreement for business economic reasons, the employer can file a termination request with the UWV WERKbedrijf (Employee Insurance Agency).
Well-founded arguments and evidence are required for terminating the employment agreement. Both proceedings will be written (in part).
Under Dutch legislation, there is a general prohibition on terminating employment due to illness.
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Termination due to dissolution of contract by the cantonal court. |
If the employer and employee do not reach an agreement through mutual consent, and the employer wishes to terminate the existing contract for personal reasons (for example, underperformance), the employer can file a request with the sub-district court regarding the termination.
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Termination with the consent of the employee |
The Work & Security Act adds a new requirement for termination: the employee's written approval after the employer has provided notice.
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Dismissal due to an urgent cause |
In the event of theft or other serious misdeeds, an employer may fire an employee for an urgent reason with immediate effect. This is governed by a separate procedure, and no prior clearance from the UWV court is required. The employee must be informed of the dismissal as quickly as possible, and the employer may be required to initiate conditional termination procedures in court to complete the termination of the employment contract.
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Employer of Record (EOR) Solution for the Netherlands
Business expansion in the Netherlands can take place more easily and quickly with the Netherlands Employer of Record (Netherlands EOR) solution by Skuad. Using the EOR solution guarantees smooth and compliant payroll and other employment obligations processing without the need to create a new unit in the Netherlands. Skuad can assist you with managing your employees' monthly payroll, contracts, work permits, and taxes in the Netherlands.
Outsourcing Through An Employer of Record
When expanding in the Netherlands, the companies need to take a call whether they want to set up their own office in the Netherlands for handling employment, payroll, onboarding functions or outsource it to a global employment organization. This is where Skuad comes into the picture. Through our Employer of Record services, you can deploy staff, manage payrolls and make sure the compliances are being met. Talk to us to know more.
Types of Visa
| Visa Category
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Explanation
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Provisional Residence permit (MVV)
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If you are not a European Union national, you will need to apply for a provisional residence permit (MVV) and a residence permit. This is known as the Entry and Residency Procedure.
The cost of a residence permit is dependent on the type of the business: sole proprietor, partnership, or startup.
Residence permits need to be renewed on an annual basis.
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| Single Permit (GVVA) |
If you are not from the European Union or Switzerland and you want to work for more than 3 months in the Netherlands, you must apply for a combined residence and employment permit (GVVA). This visa is usually employer-sponsored and is valid for three years.
If the employee is willing to work for less than three months, a separate work permit can be requested from the Dutch Employee Insurance Agency (UWV). This work permit is valid for a maximum of one year and can be renewed if necessary.
Connect with us to get a quote regarding the procurement of necessary permits.
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| Intra-company Transfer - Separate work permit and residence permit |
For intra-company transfers, employers need to submit two different applications: one for a work permit with the Dutch Employees Insurance Agency (UWV) and another for a residence permit with the Immigration and Naturalization Service (IND).
Depending on the nationality of the employee, the employer may need to apply for a provisional residence permit (MVV). The sponsor then applies for the Entry and Residence Procedure (TEV), as mentioned above, for the employee. If you are an employer and a registered sponsor, your procedure can be fast-tracked to 7 weeks by the IND.
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| Entrepreneur Permit |
Freelancers, entrepreneurs, and startup owners in the Netherlands are known as ZZP'ers (zelfstandige zonder personeel), meaning self-employed without employees. If entrepreneurs want to set up their own business or register their company in the Netherlands as a ZZP’er, they can do so by consulting with the IND on the documentation that will be required to do so.
A new scheme’s associated residence permit allows an entrepreneur to reside in the country for a year and develop their product and grow their business which can be extended if the business meets the requirements of the self-employment scheme.
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Types of Work Permits
| Type of Payroll
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Description
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| Remote Payroll
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A remote payroll is when a foreign, non-resident company pays a resident employee. A fully outsourced service is one option for a non-resident corporation to pay its employees (both local and international) in the Netherlands.
This is where Skuad comes into the picture. Skuad will provide you with outsourced services for your payroll management in the Netherlands.
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| Local Payroll Administration
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In some instances, a firm will register in the Netherlands using one of the various forms but opt to have another company handle its payroll. This can be done with the help of a payroll service which is where Skuad can offer you a solution. It's crucial to remember that as the Employer of Record, the corporation is still completely responsible for ensuring that all employment, immigration, tax, and payroll rules and regulations are followed.
Connect with us to manage your payroll taxes and manage your business in the Netherlands.
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| Internal Payroll
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Some large enterprises require more robust solutions for managing their payroll for all employees across the globe. In such situations, the company has to go for complete incorporation in the required locations and hire staff that can handle all payroll-related obligations.
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| Fully Outsourced Payroll and Employment
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Companies can outsource their payroll completely to an EOR in the Netherlands like Skuad. It manages all aspects of payroll, including the three elements of payroll in the Netherlands.
Monthly payments are rolled out to the staff with tax and social security deducted at the source and paid to local authorities. Skuad takes over these duties of payroll and also provides the employees with payslips.
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Payroll and Taxes in the Netherlands
Many regulations need to be followed when it comes to payroll and taxes in the Netherlands. All businesses must register with the Dutch Tax Authorities and receive a payroll tax number. Some of the primary concerns for payroll outsourcing in the Netherlands are income tax withholding, national insurance withholding (included in payroll tax), business tax, and permanent establishment concerns, i.e., these are the three components of payroll tax.
Types of Payroll
Taxes in the Netherlands
Worldwide income in the Netherlands is split into three types of taxable income, each of which is taxed separately under its own schedule, known as a 'box.' There is a different tax rate for each box. The total income in these three categories determines an individual's taxable income.
The following items are included in Box 1 of taxable income from work and property ownership:
- Earnings from work
- Home-ownership (deemed income).
- Receipts and payments are made on a regular basis.
- Benefits related to the provision of income.
Box 2 relates to taxable interest income, while box 3 relates to taxable income from savings and investments.
Employer Taxation
| Tax
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Explanation
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| Corporate Taxes
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15% - on a profit up to EUR200,000
21.7% - on a profit of EUR200,001 and above
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| Social Security Contribution |
11.99% to 16.99%
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| Payroll Tax |
19.81%
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Employee Taxation
| Taxes |
Explanation |
| Income Taxe |
| Taxable Income (EUR) |
Tax on Excess (%) |
| 0-34,712 |
9.7%
|
| 34,713 to 68,507 |
37.35%
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| Greater than 68,508 |
49.5% |
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| Social Security Contribution |
27.65% |
Bonuses
Bonus as a vacation allowance is given to the employees which equals to minimum of 8% of their annual gross wages. A work council may help the employers, if there is one, to institute, change or end a bonus scheme.
The criteria or guidelines for earning a bonus must be clearly mentioned by the employer in the criteria list. Also, they should be able to justify the bonuses, since Dutch employees have the right to challenge the amount.
Incorporation: Incorporating A Subsidiary Company in the Netherlands
If you are from a country outside of European Union and want to move all the staff here, then you will need work permits as well as residence permits. Prior to obtaining the permits, you must register your company in the Netherlands. Your Employer of Record can help you sponsor the necessary permits for employees.
The duration taken for the entire procedure of registration is between 2-4 weeks. There are 6 essential steps to opening a subsidiary company in the Netherlands:
Step 1: Ensure that you select a unique business name. It shouldn’t have been in use already and registered as a trademark in the Netherlands.
Step 2: Notarization of Articles of Association: Whether you wish to set up a privately held or publicly held company in the Netherlands, you will need to get the Articles of Association notarized. The services of a civil law notary for drafting and executing deeds of incorporation will be required at this stage.
Step 3: Register the name and the business at the Dutch Chamber of Commerce: Once you have decided the name of the business, you need to register it with the Dutch Chamber of Commerce and also submit a trading name that should abide by the regulations laid down by the Trade Name Act. Your details are then passed on to the Tax and Customs Administration. Post-registration, a unique number, called the KvK number, will be generated for your business. This number will be used in all your invoices and outgoing posts.
Step 4: Open a corporate bank account: A bank account in one of the Dutch commercial banks makes the payments and transactions smoother, even though accounts in foreign banks are also allowed by the new SEPA rules. Documents related to the registration of the company with the Chambers of Commerce, articles of association, proof of the responsibility of the board members and directors might be required.
Step 5: Employee Insurance: Before you start hiring employees, register with the Dutch and Tax and Customs Administration. You will receive a payroll number that will be used for submitting returns. You are required to pay contributions on behalf of your employees for the National Insurance Scheme and Employee Insurance Agency.
Step 6: Conduct a risk inventory and evaluation: Before starting the business, this evaluation must be carried out to answer the following questions:
- What are the risks that you and your employees are susceptible to?
- What measures have been taken to prevent or mitigate the risk?
- What action are you planning to take?
Skuad can simplify the process for you as it can locally partner in the Netherlands with the help of EOR solutions by Skuad. You can retain ownership of your employees abroad without having to set up local legal entities. Visit Skuad to know how we make global employment a seamless process.
Professional Employer Organization
A Professional Employer Organization (PEO) acts as your co-employer and handles multiple employee-related liabilities, including payroll, compensation, benefits, taxes, and payroll administration. It has some liabilities of the workers. Whereas an EOR works as a full legal employer for the payroll employees and has complete liabilities of workers. If partnering with a PEO, you need to have your insurance; with an EOR, employees are part of their insurance. The PEO handles State Unemployment Tax and Federal Unemployment Tax Act rates, while EOR offers insurance coverage for all. With a PEO, you need to make decisions all the time; with an EOR, all HR-related decisions and paperwork are made by the EOR, giving you more time to look after your business.
Skuad’s Netherland Employer Of Record solution helps discover global talent and facilitates the onboarding of full-time employees and contractors optimally, cost-effectively, and flawlessly.
Conclusion
Hiring in the Netherlands is a good solution for most companies that are expanding globally as it is a great place for business with a great infrastructure and the availability of a diverse talent pool. The government has also created legal frameworks so as to encourage more and more companies to hire in the Netherlands and set up their services in the country. More highly skilled and experienced people are welcomed and there are laws that facilitate them to set up their businesses there.
Skuad’s expertise and its robust global employment platform will help you achieve all goals for your global expansion. To know more about the EOR services of Skuad, click here.
FAQs
1) What is an employer of record in the Netherlands?
An Employer of Record (EOR) in the Netherlands legally employs employees for a client company. The EOR manages payroll processing, tax compliance, benefits administration, and ensures adherence to Dutch labor laws. This allows companies to hire employees in the Netherlands without setting up a local legal entity.
2) What is the WHK tax in the Netherlands?
The WHK tax in the Netherlands, also known as the Work Resumption Fund (Werkhervattingskas), is a tax that employers must pay to fund benefits for employees who are sick or disabled. The WHK tax covers costs associated with long-term sickness and disability benefits. Employers receive an annual assessment from the Dutch Tax and Customs Administration (Belastingdienst) detailing their WHK tax obligations.
3) What is an employer statement in the Netherlands?
An employer statement (werkgeversverklaring) in the Netherlands is a document that confirms an employee's employment status, salary, and terms of employment. This statement is often required by banks and financial institutions when an employee applies for a mortgage or other forms of credit. The employer statement typically includes details such as the employee's job title, start date, type of employment contract, and gross monthly salary.
4) What is the WHT tax in the Netherlands?
The WHT tax in the Netherlands refers to the Withholding Tax, a tax that is withheld from certain types of payments made to non-residents. This includes dividends, interest, and royalties. The WHT tax is designed to ensure that the correct amount of tax is collected on income earned by non-residents from sources within the Netherlands.
5) What are the employer obligations in the Netherlands?
Employer obligations in the Netherlands are governed by Dutch labor laws and regulations. These obligations include a written employment contract, statutory minimum wage, adherence to working hours and overtime regulations, safe and healthy working conditions, paid annual leave, sick leave, and maternity leave, and compliance with social security contributions, including WHK and other taxes.
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