Employer of Record in the Netherlands

Without setting up a brick-and-mortar establishment there, EOR Services in the Netherlands can help you onboard remote teams seamlessly. Expanding internationally often involves overcoming legal and administrative hurdles, and establishing physical offices can be a daunting task. The comprehensive and automated platform offered by EOR Services enables you to efficiently set up, compensate, and manage your remote workforce in the Netherlands.

Discover how EOR Services can support your business with payroll, compliance, and onboarding.

Overview of the Netherlands

• Population size: 16,979,729
• Currency: Euro
• Capital city: Amsterdam
• Languages spoken: Dutch, English
• GDP: 1.7%

Employment Landscape in the Netherlands

The Netherlands does not have a single act that governs all of employment law. Rules included in the Collective Labor Agreement, the Dutch Civil Code, internal corporate regulations, and individual employment contracts with each employee govern it.

The Dutch Ministry of Social Affairs and Employment prioritizes providing favorable working conditions and defending workers’ rights. Businesses may always satisfy their personnel requirements more flexibly by using collective labor agreements and temporary agency. This is one of the primary reasons that, before starting your business in the Netherlands, you should deal with reliable and trustworthy professional services that understand the legal framework controlling employment regulations.

Entitlements	Explanation
Statutory Working Hours	60 hours per week (maximum) 12 hours per day (maximum)
Leaves Allowed	There are other leaves available to employees, such as: Adoption Leave (adoptieverlof) Emergency Leave of Absence (calamiteitenverlof) Prolonged compassionate leave (langdurig zorgverlof) Short-term compassionate leave (kortdurend zorgverlof)
Annual leave accrual entitlement	In most circumstances, 20 days are the maximum number of days of paid statutory yearly leave. Employers pay employees while they are on leave, plus an additional 8% of their yearly wage as a “bonus.” By accruing leave, employees can “store up” the number of days they are entitled to.
Maternity and Parental Leave	Maternity leave lasts for sixteen weeks, with six weeks spent prior to and ten weeks following the birth of the child. Parents whose child is younger than eight years old are also eligible for parental leave. (Ouderschapsverlof) Under parental leave, an individual may take a maximum of 26 times as many leaves as the total number of hours they work in a week.

Contractors vs. Full-time employees

For full-time employees, the key facets of the employment arrangement encompass:

• Individualized Work: Each employee carries out their tasks independently.
• Compensation: Employees are remunerated for their services.
• Hierarchical Relationship: There exists an authority-based connection between the employer and the employee.
• Legal Protection: Dutch law safeguards employees, requiring approval from the UWV (Employee Insurance Agency) or a sub-district court for terminating indefinite contracts, and mandates the consistent withholding of payroll taxes for full-time employees.

In contrast, with contractors, the following principles come into play:

• Independent Work: Contractors operate autonomously in their tasks.
• Absence of Authority: There is no hierarchical relationship between the employer and the contractor.
• Non-Personal Work: Contractors are not obligated to personally execute the work.
• Flexible Agreements: Agreements can be terminated with notice, offering greater termination flexibility. There are no constraints on contract termination.
• Payroll Freedom: Employers have the discretion to withhold or not withhold payroll taxes.

As a result, many foreign employers often opt for contractor arrangements due to their more adaptable policies and contracts.

To learn more about EOR Services’ tailored solutions for your business requirements, we invite you to book a demo!

Recruitment in the Netherlands

Here is a comprehensive checklist to assist you throughout the entire hiring process in the Netherlands:

• Start with a thorough screening of potential employees, including a rigorous background check and verification of their original documents.
• Register as an employer with the Dutch Tax and Customs Administration to meet your payroll tax obligations when hiring in the Netherlands.
• Create a clear employment contract outlining details like Collective Labor Agreement (CAO) application, pension schemes, working hours, and other relevant terms. A comprehensive list of contract elements is provided below.
• Ensure your employees receive the minimum wage and holiday allowances appropriate to their employment type.
• Provide a safe and healthy work environment, adhere to leave schemes, and grant annual days off to your employees.
• Conduct a comprehensive risk assessment and evaluation for your employees, maintaining transparency regarding workplace hazards and your efforts to mitigate them.
• For permanent Dutch employees, deduct social insurance premiums from their pay or opt to become a self-insurer and make premium payments to the Dutch Tax and Customs Administration.
• Verify that your employees have Dutch Health Insurance coverage.
• Explore recruitment opportunities within the European Economic Area before considering candidates from other countries.
• Apply for work permits for employees through the Employee Insurance Agency (UWV).
• Arrange suitable accommodation for employees hired under a work permit.
• Recognize the two primary types of employment contracts in the Netherlands: temporary and permanent. Contracts can be either verbal or written, specifying the applicability of a Collective Labor Agreement (CAO).
• Note that after three consecutive temporary contracts or three years of temporary contracts, an employee must be offered a permanent contract, unless otherwise stated in the CAO.
• Within one month of the employment commencement, the employer must sign an employment contract containing essential details such as the workplace, identities and residences of the parties involved, job description, working hours, salary, pension arrangements, contract duration, and more.
• Explore popular job platforms for hiring in the Netherlands, including Indeed.nl, LinkedIn, Nationale Vacaturebank, Monsterboard.nl, Randstad, and Werk.nl.

For expert guidance on navigating the hiring process in the Netherlands, don’t hesitate to reach out to EOR Services.

Probation & Termination

Probation:

The probationary period should be clearly documented. In the Netherlands, the standard probation period for an indefinite employment contract or a contract lasting two years or more is set at 2 months. For contracts of shorter duration, the maximum probation period allowable is 1 month. It’s important to note that a probationary period is only applicable in employment contracts with a duration exceeding 6 months.

Termination:

In the Netherlands, there are typically five methods for terminating an employment contract:

• Mutual Agreement: Both parties agree to terminate the contract amicably.
• Termination via UWV WERKbedrijf: Termination proceedings conducted before the Employee Insurance Agency (UWV WERKbedrijf).
• Dissolution by Cantonal Court: Termination due to the dissolution of the contract as determined by the cantonal court.
• Employee’s Consensual Termination: Termination with the consent of the employee.
• Dismissal for Urgent Cause: Dismissal due to a compelling and immediate reason.

Topics	Explanation
Termination by mutual consent;	With a settlement agreement, the employer attempts to end the termination in an amicable manner with the worker. The termination date of the employment contract and the amount of severance that the employer must pay are both specified in a settlement agreement. This agreement also includes any future commitments.
Termination proceedings before the UWV WERKbedrijf (Employee Insurance Agency)	The employer may file a request for termination with the UWV WERKbedrijf (Employee Insurance Agency) if the parties are unable to come to a mutually agreeable solution and the employer decides to end the employment agreement for commercial or economic reasons. The employment agreement cannot be terminated without solid justification and supporting documentation. There will be writing in both proceedings (in part). It is generally illegal in the Netherlands to terminate an employee’s job for sickness.
Termination due to dissolution of contract by the cantonal court.	In the event that mutual consent cannot be reached between the employer and employee, the employer may submit a request with the sub-district court to terminate the current contract for personal grounds (such as underperformance).
Termination with the consent of the employee	A new criteria for termination under the Work & Security Act is the employee’s written consent following notification from the employer.
Dismissal due to an urgent cause	An employer may terminate an employee for an urgent cause and with immediate effect if the employee has committed theft or other significant misbehavior. There is no need to obtain previous approval from the UWV court as this is handled through a different process. In order to fully terminate the employment contract, the employer might need to start conditional termination processes in court and notify the employee of the dismissal as soon as feasible.

Employer of Record (EOR) Solution for the Netherlands

Business expansion in the Netherlands can be expedited and simplified with the EOR Services Netherlands Employer of Record (Netherlands EOR) solution. Opting for the EOR solution ensures a seamless and compliant processing of payroll and other employment responsibilities, eliminating the need to establish a new entity in the Netherlands. EOR Services offers comprehensive support in handling your employees’ monthly payroll, employment contracts, work permits, and tax obligations in the Netherlands.

Outsourcing via an Employer of Record is a critical decision for companies expanding into the Netherlands. They must decide whether to establish their own Dutch office to manage employment, payroll, onboarding functions or entrust these tasks to a global employment organization. EOR Services is your solution in this regard. With our Employer of Record services, you can efficiently deploy staff, oversee payroll management, and ensure all compliance requirements are diligently met. Contact us today to learn more.

Types of Visa

Visa Category	Explanation
Provisional Residence permit (MVV)	You must apply for both a residence permit and a provisional residence permit (MVV) if you are not a citizen of the European Union. The Entry and Residency Procedure is the term for this. The kind of business—sole proprietorship, partnership, or startup—determines the cost of a residency permit. It is necessary to renew residence permits annually.
Single Permit (GVVA)	You must apply for a combined residence and employment permit (GVVA) if you are not from the European Union or Switzerland and you want to work in the Netherlands for a period longer than three months. This three-year visa is often sponsored by a company. The Dutch Employee Insurance Agency (UWV) may issue a separate work permit to an employee who is prepared to work for a shorter period of time than three months. This work visa can be extended if needed and has a maximum one-year expiration date. Get in contact with us to receive a price for obtaining the required permissions.
Intra-company Transfer – Separate work permit and residence permit	Employers must file two separate applications for intra-company transfers: one for a residence permit with the Immigration and Naturalization Service (IND) and another for a work permit with the Dutch Employees Insurance Agency (UWV). Depending on the worker’s nationality, the employer might have to submit an application for a temporary residency permit (MVV). The sponsor subsequently submits the employee’s application for the Entry and Residence Procedure (TEV), as previously indicated. The IND may expedite your process to 7 weeks if you are an employer and a registered sponsor.
Entrepreneur Permit	ZZP’ers, or self-employed without workers, are the term used in the Netherlands to refer to freelancers, entrepreneurs, and startup founders. Entrepreneurs can speak with the IND on the necessary papers to register their firm as a ZZP or to set up their own business in the Netherlands. An entrepreneur can stay in the nation for a year with the related residence visa under a new plan, during which they can work on developing their product and expanding their firm. This period can be extended if the enterprise satisfies the standards of the self-employment scheme.

Types of Work Permits

Type of Payroll	Description
Remote Payroll	When a foreign, non-resident corporation pays a resident employee, it’s known as a remote payroll. One way a non-resident firm might pay its employees (both foreign and domestic) in the Netherlands is through a fully outsourced service. Here’s where EOR Services enters the scene. You may rely on EOR Services to handle your payroll administration in the Netherlands through outsourcing.
Local Payroll Administration	Sometimes a business will use one of the forms to register in the Netherlands, but choose to outsource its payroll to another business. Payroll services can assist with this, which is where EOR Services can provide you with a solution. It’s important to keep in mind that the company, in its capacity as the Employer of Record, is still entirely in charge of making sure that all labor, immigration, tax, and payroll laws and regulations are observed. Get in touch with us to handle your payroll taxes and oversee your Dutch company.
Internal Payroll	Some large businesses need more sophisticated payroll management systems for all of their employees worldwide. In these circumstances, the business must seek full incorporation in all necessary places and appoint personnel capable of managing all payroll-related responsibilities.
Fully Outsourced Payroll and Employment	Payroll outsourcing can be fully outsourced by businesses to an EOR in the Netherlands, such as EOR Services. It oversees the three components of payroll in the Netherlands as well as all other payroll-related matters. The personnel receives monthly salary, from which social security and taxes are withheld at the source and given to the local government. EOR Services handles payroll processing and furnishes paystubs to staff members.

Payroll and Taxes in the Netherlands

When it comes to payroll and taxes, there are several regulations in the Netherlands that need to be followed. All businesses must have a payroll tax number and be registered with the Dutch Tax Authorities. Three things make up payroll tax: corporation tax, income tax withholding, and national insurance withholding (which is part of payroll tax). These are a few of the primary issues facing Dutch payroll outsourcing.

Types of Payroll

Taxes in the Netherlands

In the Netherlands, global income is categorized into three distinct types of taxable income, each subject to its specific tax rate within what is referred to as a ‘box.’ These boxes serve as separate schedules for tax assessment. An individual’s overall taxable income is determined by the combined income within these three categories.

Box 1 encompasses taxable income derived from work and property ownership, incorporating the following elements:

• Earnings from employment.
• Income stemming from homeownership, which is considered as deemed income.
• Recurring receipts and payments.
• Benefits associated with income provision.

Box 2 relates to taxable interest income, while box 3 relates to taxable income from savings and investments.

Employer Taxation

Tax	Explanation
Corporate Taxes	15% – on a profit up to EUR200,000 21.7% – on a profit of EUR200,001 and above
Social Security Contribution	11.99% to 16.99%
Payroll Tax	19.81%

Employee Taxation

Taxes	Explanation
Income Taxe	Taxable Income (EUR) Tax on Excess (%) 0-34,712 9.7% 34,713 to 68,507 37.35% Greater than 68,508 49.5%
Social Security Contribution	27.65%

Bonuses

As vacation compensation, employees get incentives that make up a minimum of 8% of their annual salary. If a work council is in place, it can help the employers start, change, or end a bonus program.

The prerequisites or standards for qualifying for a bonus must be made clear in the employer’s criterion list. Dutch employees ought to be able to defend the rewards as they have the option to dispute the amount.

If you hail from a non-European Union country and are looking to relocate your workforce to the Netherlands, it is essential to secure both work permits and residence permits. Before obtaining these permits, the initial and critical step involves registering your company in the Netherlands. Collaborating with your Employer of Record, EOR Services, can significantly ease the process of sponsoring the necessary permits for your employees.

The entire registration process typically spans a duration of 2 to 4 weeks and encompasses six vital steps for establishing a subsidiary company in the Netherlands:

Step 1: Selection of a Unique Business Name: Your chosen business name must be distinctive, with no prior usage or trademark registration in the Netherlands.

Step 2: Notarization of Articles of Association: Whether you opt for a privately held or publicly held company in the Netherlands, the Articles of Association must be notarized. The services of a civil law notary are essential for drafting and executing these incorporation deeds.

Step 3: Registration with the Dutch Chamber of Commerce: After naming your business, registration with the Dutch Chamber of Commerce is mandatory. Additionally, you need to submit a trading name that complies with the Trade Name Act’s regulations. Your details are then shared with the Tax and Customs Administration, and a unique KvK number is generated for your business, to be used in all invoices and correspondence.

Step 4: Opening a Corporate Bank Account: Establishing a corporate bank account with a Dutch commercial bank streamlines payments and transactions. Although accounts with foreign banks are permitted under SEPA rules, documents related to your company’s Chamber of Commerce registration, articles of association, and proof of board members’ and directors’ responsibilities might be requested.

Step 5: Employee Insurance: Before recruiting employees, registration with the Dutch Tax and Customs Administration is essential. You will receive a payroll number for return submissions. Contributions for the National Insurance Scheme and Employee Insurance Agency on behalf of your employees are mandatory.

Step 6: Conducting a Risk Assessment and Evaluation: Before commencing business operations, a comprehensive risk inventory and evaluation must be conducted to address the following:

• Identifying potential risks faced by you and your employees.
• Implementing measures to prevent or mitigate these risks.
• Outlining the actions to be taken in response to identified risks.

EOR Services simplifies this process, offering local partnerships in the Netherlands through Employer of Record solutions. This approach allows you to retain control over your global workforce without the need to establish local legal entities. Discover how EOR Services streamlines global employment processes by visiting our website.

Conclusion

Hiring in the Netherlands is a wise move for most organizations expanding abroad since it’s a great business location with first-rate infrastructure and a vast talent pool. To encourage more companies to open offices and hire employees in the Netherlands, the government has also created legal frameworks. More experienced and highly qualified people can set up shop there more easily thanks to certain regulations.

With the experience and robust global job network of EOR Services, you may achieve all of your goals for your foreign expansion.