Remote is now available in over 50 countries!

That's over 25% of the planet, but we aren't stopping there because every company deserves the chance to build amazing, global teams. Our team of HR and employment law experts will continue to establish our own legal entities without outsourcing or working with third parties. All of these country launches involve a huge amount of work as each country has unique labor laws and regulations that we must adhere to. Our teams of local experts sift through all the nitty gritty details to make sure your company stays 100% compliant. 

Our fully owned local entities allow us to give you the best possible service. We eliminate the risk of third party handoffs, keeping your data safe at all times. We can now handle payroll, tax, benefits, and compliance in each of these new markets so you can focus on what matters most — growing your international workforce. 

We’re so excited to be able to help you pay and manage your team in 9 new countries!

Remote Country Celebration Q3

Remote is all about rigor. We only offer a new country once we have opened a fully owned legal entity and performed an intensive compliance review to ensure you and your team receive world-class service, support, and peace of mind.

Over the last few months, we have completed this process in several new countries around the world to help you grow your global team. 

We are excited to welcome these new countries to Remote’s global HR management network:

🇦🇺 Australia [2 additional states - Victoria, Queensland]

🇨🇦 Canada [Now available in all 10 provinces]

What happens when Remote opens a new country?

If you follow Remote, you know we never work through third parties. We own and operate our own local legal entities in every country we cover, and we take the time to make sure our operations are more compliant, more efficient, and more sustainable than anyone else’s.

Currently using another employer of record or contractor management platform for your team? Ask your provider about their local entities and compliance in the countries where your team members live. We guarantee no one provides a better experience for your team, more knowledge about local compliance, or stronger protections for your intellectual property and invention rights.

While we only offer employer of record services in countries where we have opened entities, our robust international infrastructure allows us to help you pay and manage contractors all over the world, right now. If you have contractors in other countries, you can onboard and start making payments in minutes. Sign up now to get started!

When you use Remote, you show your team you are committed to growing your business the right way. And because we own our own infrasturcture, we can offer what no one else can — reliable, flat-rate pricing with no hidden fees and no surprises.

The year is drawing to a close, but we are not slowing down. We have already begun opening more new countries in October, with several more on the way!

View our roadmap for new countries in our Country Explorer, where you can also get information on things like public holidays, taxes, benefits, and more for each country. 

If Remote isn’t in the country you’re looking for yet, we will be soon! Select any page in our Country Explorer to be notified when we open our local entity in that country. Once we launch, you can begin onboarding new full-time employees there in minutes. Remember: we can already help you manage and pay international contractors everywhere in the world!

Remote’s own team includes more than 400 people living and working in more than 50 countries all around the world. We are working around the clock to bring you the best employer of record and contractor management services on the planet — and never compromising on quality, compliance, or care.

To stay up to date with our new country announcements as they happen, follow Remote on Twitter and LinkedIn!

If you have questions about country availability or your global employment plans, we’re happy to help. Chat with us online, contact one of our teams, or reach out on social media. No matter where you live and work, we are ready to help you grow.

Remote adds a stack of new countries in Q3 2021

Are you prepared to protect your valuable intellectual property and sensitive data when you employ workers in multiple countries?

If you have questions about IP and data protection abroad, we are here to help. In this in-depth webinar, three of Remote’s top global employment experts come together to share their tips and strategies on how to keep your company protected.

Why worry about international IP protection and data security?

Protections for IP and data are not automatic. Not only do you need to keep your valuable information safe, but you must continue to do so to avoid potential losses.

Remote understands international intellectual property rights better than anyone else. That’s why we developed Remote IP Guard: the safest, most effective way to ensure you retain maximum ownership of your intellectual property when you have workers in other countries. With Remote, you never have to worry about third parties or unnecessary exposure to risk. Our intellectual property transfer process is the smartest and safest way to stay safe as you grow.

In addition to our IP protections, Remote also offers the strongest data protection for companies hiring abroad. We are industry leaders in data protection and hold a number of rigorous certifications that showcase our commitment to good data practices. See for yourself how Remote sets the standard in data security.

Don’t wait! If you have questions about IP protection and data security, this webinar has the answers you need.

Ready to see for yourself what Remote can do for your business? Contact us today and one of our experts will help you discover the best way to grow your global team quickly, safely, and compliantly.

[Webinar Recording] IP protection and data security for distributed teams

It's never been easier to set your company up for global success. Thanks to the benefits of globalization, even small companies can hire and onboard workers from around the world. Nothing guarantees success like hiring the best people for all your open roles.

Despite the ease with which companies can hire internationally, many companies have been tentative about working with a remote team. Some employers are still hesitant to take the leap out of concern for productivity or a lack of experience hiring and managing a remote team.

Now that the whole world has had a taste of remote work, a lack of experience is no longer an excuse. Today’s most talented workers expect the option to live where they choose and work remotely. The benefits of globalization apply to workers just as they apply to the companies employing them. 

Companies seem to be listening. Gartner’s research shows 74% of companies plan to shift at least some employees to permanent remote work in their post-pandemic strategies.

All these changes add up to one truth: Now is the perfect time to embrace the benefits of globalization and grow your international team.

Today’s global interconnectivity is unlike anything the world has seen before. Networks of commerce, supply, culture, and geopolitics, not to mention the actual internet tying it all together, have brought us all closer together. That blurring of borders means businesses of all sizes are now just a moment away from working with employees in other countries.

While global markets are only ever a click away, the complexity of managing your company’s growth in those markets can be daunting. With different time zones, languages, and cultural customs, maintaining a consistent global presence presents its fair share of hurdles to overcome.

Those opportunities are worth the effort, though. That’s why a global workforce can be so essential to growth for companies big and small. Instead of forcibly relocating employees or demanding odd work hours, everyone can work from the comfort of their own location and time zone — bringing with them all their local and cultural expertise.

Globalization opportunities for employers

After being forced into a global experiment of remote work in 2020, the biggest questions about remote work’s viability proved to be unfounded. Working with remote employees has positive effects on productivity, and employees overwhelmingly appreciate the flexibility remote work can offer. Thanks to modern tools, even collaboration with distributed teams is easy and straightforward. Suddenly, every company’s future now includes a global component.

Many employers were scared to lose the value of in-person collaboration and workplace culture. Though maintaining a workplace culture without a physical workplace is a little different, the past year has proven that it's not necessary for team cohesion or quality of work.

People are not only capable of staying productive, but most people can work more efficiently remotely than they could in offices. Without commutes and cubicles, factors including absenteeism and distractions drop significantly.

In the new, interconnected world, your remote employees are only an email, Slack message, or video call away. Technology makes it simple to replicate the parts of the office that facilitate collaboration while eliminating the parts that do not. For example, instead of long email chains, public documentation tools allow workers to keep projects and notes available for all to see.

The biggest hurdle in using these technologies is simply practice. The more your team uses these tools with a remote-first mindset, the more efficiently your team will be able to work asynchronously — another boost to productivity.

Working outside the office reduces overhead.

After salaries and benefits, one of the largest costs for any company is office space. Not only do you need to rent an office large enough for your employees to work comfortably, but you also have to maintain and stock the place.

By setting up your company to work remotely, you greatly reduce the need for office space. You can either choose to let go of your office completely or save on surface area by not having all your employees come in every day.

Many employees don't want to go back to the office full time, if they want to go back at all. Research from Remote found that 81% of workers would move to a new area if they could do so without jeopardizing their upward career mobility. For the average employee, the ability to work remotely is a welcome perk.

The amount of time people lose by commuting to and from work is substantial. A one-way trip to the office can easily take more than an hour in some areas. Even in small cities, it’s normal to spend at least 30 minutes a day going back and forth from the office to home, and that’s assuming the employee doesn’t head home for lunch. Remote work eliminates hours of wasted commuting time every month.

While working during a pandemic is stressful, normal remote working actually relieves stress. Parents, for example, don’t have to deal with school closings in normal circumstances. Employees looking to relocate don’t have to worry so much about whether their choice of living situation will hurt their careers. When opportunities are global, everyone benefits.

One of the best parts of working remotely is the ability to create your own schedule. When everyone works asynchronously, what does it matter if someone wants to take a long lunch or run a few errands? Measuring employees based on output instead of hours allows leadership to focus on meaningful metrics and gives employees a greater sense of freedom.

Globalization and opportunities for talent acquisition

The benefits of a remote global workforce don’t stop at increased productivity, cost savings, and happier employees. Expanding your employment strategy to hire globally allows you to hire and retain the best talent, regardless of where they live.

The idea that top talent will move for the job is outdated, if not outright wrong. A 2020 study from Harvard shows that between 65% and 82% of Americans who move stay within their county or state. The most common reason for moving is for better housing, followed by family-related reasons. Job-related reasons only accounted for 21% of moves in the study.

The simple truth is that most people, American and otherwise, prefer living near friends and family in a place that they know. Even if you convince some employees to relocate, you have to make your offer even more attractive by adding relocation fees and other benefits — especially since highly skilled employees can always find work without moving.

The beauty of globalization is that you don't have to miss out on hiring top talent because of location. You can hire the best employees globally without asking them to uproot their lives. Plus, if any of your more adventurous employees want to move, you can retain those employees without having to replace them.

Diversity and inclusion are good for every organization. Studies show again and again that nailing diversity and inclusion in the workplace work miracles on your bottom line. Plus, tackling inequity in your company is just the right thing to do.

It's hard to hire a truly diverse workforce if you're limited to local talent only. When you take away the restrictions of working at headquarters, increasing diversity of talent within your organization becomes much easier: a natural extension of the ability to hire people from anywhere in the world.

Globalization also helps your employees showcase their talents on equal ground. Introverts tend to fly under the radar in an office environment, but working remotely allows introverts to excel. Extroverts can participate in team bonding activities, meet with nearby coworkers, or even spend time working from a coworking space. With remote work, the possibilities are endless

Hiring international employees globally can add complexity if you don’t have the experience or expertise. The task of figuring out local employment laws can seem daunting. 

Luckily, that shouldn't stop you from enjoying the benefits of globalization when building your remote team. At Remote, we specialize in local employment law across the globe. We help you manage risk, fast-track onboarding, and scale effectively while avoiding the legal risks of international expansion.

If you own a legal entity in the country, you either need a trusted local payroll provider or an internal team of local payroll experts. That may make sense if you’re planning a major expansion into the country, but most businesses don’t need to go to that much trouble. Working with an EOR that owns its own local legal entity is the safest, smartest way to manage payroll and benefits in another country.

The only way you can avoid the risk of a permanent establishment in a country is by knowing the law and legislation. As a tax classification, permanent establishment could cost your company a lot of money if you don’t understand the risks. Our guide to permanent establishment risk can help you learn more.

People are compensated differently in different countries. Do you want to pay everyone the same salary, independent of location, or would you rather adjust salaries based on cost of living? The answer is not always straightforward and requires you to establish a global compensation strategy before proceeding with new hires.

Keep control of your intellectual property

Protecting your IP in every country where you have employees is challenging. Some global employment providers may even pass your IP to their partners. No matter where you hire, make sure your IP stays protected. As experts in international employment law, we created Remote IP Guard to guarantee the maximum protection for your intellectual property abroad.

Reap the benefits of globalization with an international workforce

The time to expand your hiring search and enjoy the benefits of globalization for yourself is now. Remote work provides benefits for employers and employees alike, allowing you to access the best talent and provide a better experience for your hardworking employees.

Allowing employees the flexibility to work from anywhere is no longer a perk, but a requirement, especially for the most experienced and in-demand workers. Don’t give the competition an edge — embrace globalization and let remote work become your organization’s superpower.

The benefits of globalization for growing companies

What is the Society for Worldwide Interbank Financial Telecommunication (SWIFT)?

With remote work options increasing worldwide, companies are no longer limited to the talent in their own backyard. More and more businesses are realizing the benefits of building global teams. But it’s much easier to pay local employees than employees across the globe.

SWIFT is one of many tools available that can help you manage payroll. But what is SWIFT, and how does it work with international payroll?

This article will provide you with the basics of what SWIFT is, how it works, and when it may help your global team.

The Society for Worldwide Interbank Financial Telecommunication, or SWIFT, is a member-owned group that provides secure financial communications for members. SWIFT uses their global messaging platform to facilitate global financial transactions, including payments to international employees and contractors.

More than 10,000 banks in 200 countries use the SWIFT network to complete financial transactions. SWIFT communications facilitate more wire transfers than any other network.

SWIFT is a messaging platform through which banks send information about transactions. The banks themselves carry out the transactions. When you use an international wire transfer to pay an employee, your bank sends data about the transfer to the receiving bank using SWIFT codes.

If your bank doesn’t have an existing relationship that enables them to transfer funds to that bank directly, then one or more intermediate financial institutions may be involved. For example, your bank, Bank A, talks to Bank B, who talks to Bank C, who talks to the final destination, Bank D.

Think of it like stepping stones across a river. You might not be able to jump from one side to another, but you can make several small jumps to complete the distance. SWIFT connects the stones so transactions, like those from employers to employees, are processed.

A SWIFT code is a unique code used to identify an individual institution involved in a transaction through the SWIFT network. Each code is composed of either eight or 11 characters:

The first four characters refer to the institution.

Characters five and six refer to the country.

Characters seven and eight refer to the city.

When used, characters 9-11 refer to a specific branch of that bank.

SWIFT codes may also be called a Bank Identifier Code (BIC), a SWIFT ID, or an ISO 9362.

Unless you are a financial institution initiating or receiving SWIFT communications, you do not need a SWIFT code. However, if you are paying your workers via international wire transfers, you will need to know the SWIFT codes of the banks involved.

SWIFT is used by many banks and financial institutions, as well as brokers and others. If you are paying workers or contractors abroad via international wire transfers, then SWIFT would be useful.

SWIFT provides members with a dashboard to view and manage their transactions. If your bank plans to pay your employees using SWIFT, you need to gather the appropriate information as well as process, track, and manage your payroll. 

Outsourcing payroll may be able to handle SWIFT payments for you. That way, you can focus on delivering value to your clients rather than on micromanaging payroll.

You will need the following basic information for a SWIFT transaction:

The name and address of the receiving bank

The recipient's account number or IBAN (International Bank Account Number)

Incorrect SWIFT codes or other information can delay processing, which can mean workers don’t get their payments on time. This can have consequences if the delay violates the employment contract or local statutes.

What’s the difference between SWIFT codes and routing numbers?

Routing numbers and SWIFT both identify specific institutions and are used in financial transactions. However, they are not the same.

A SWIFT code is an eight- or 11-character code composed of letters and numbers that refers to an institution within the SWIFT network. A routing number is a nine-digit code composed of numerals that identifies a specific US bank.

SWIFT is member-owned. Members pay a one-time initial fee and then annual fees thereafter. However, your bank or financial institution may charge fees and exchange rates on individual wire transfers.

We know that SWIFT is used to process global payments, but where does it fit into a larger suite of global payroll tools?

How is SWIFT used to pay global employees?

If you don’t have a local legal entity, you can’t directly use SWIFT to pay your global employees and contractors. However, if you use an Employer of Record (EOR) partner, they can collect the necessary data and initiate transactions for you.

What’s the best way to pay international employees?

There are many ways to pay remote workers, including checks, ACH transactions, and wire transfers via SEPA or SWIFT. The right choice for your situation depends on several factors, including the currency and the location of participating parties.

If your workforce is fully distributed, you may have several different ways of compensating employees. Remote’s Guide to Managing Global Payroll has more information on paying international employees.

When is an employer of record the safest way to manage global HR?

Without a local legal entity, you cannot employ workers in a different country. The costs of setting up a local legal entity can be significant, and completing the process may take weeks, months, or even longer. Depending on how many workers you want to hire, these costs may not make sense for you.

But you still have options. An employer of record (EOR) allows companies to employ workers in other countries without having to open legal entities first. However, not all EORs operate the same way. Your EOR partner should be able to help you stay compliant with labor laws and statutes, as well as provide you with advice on the classification status of your employees.

Beyond payments, EORs can provide a wide variety of services for international teams. A robust EOR partner can help you:

Remain compliant with local statutes wherever your workers live

Put together a competitive benefits package specific to where your team lives

Onboard your employees to ensure a seamless experience

SWIFT and your EOR help grow your global workforce

Business in 2021 is global, and with that international reach comes with a sea of complexity. SWIFT communications are an important part of many international payroll toolkits.

Of course, your workers need more than just paychecks. The right partner can help you provide a first-class experience for your global team. With Remote, you can sign up in minutes to begin onboarding international employees and contractors right away.

Terminating an employee is not a pleasant experience. As an employer, the last thing you want on your hands is a disgruntled worker who has been terminated unfairly. As much as you want to avoid this situation, though, you need to plan for the worst-case scenario. That starts with understanding the rights and obligations of both parties involved.

If you’ve read our guide on leave entitlements in the Netherlands, you know Dutch labor laws are friendly to employees. Accordingly, the Dutch termination process begins long before the news is broken to the employee. In this guide, we outline what you should know before considering termination and the type of termination that is appropriate for each use case.

Legal reasons to terminate a Dutch employee

In the Netherlands, there are six ways to terminate an employee: 

Dissolution of the employment contract by court ruling

Dismissal-based permission from the Public Employment Service (PES)

Dismissal during the probationary period 

Expiration of a definite employment contract 

An employer is within their right to terminate an employee’s contract immediately in the case of gross negligence in the performance of duties, theft, damage of property, or physical violence. These are classified as “urgent reasons” and allow employers to take swift action.

If an employee violates clearly communicated company regulations, such behavior can result in summary dismissal. The employer must still communicate the reason for dismissal in writing to the employee. 

It is not uncommon for an employee to contest this type of dismissal in the subdistrict court. Forward-thinking HR teams point to the importance of “clearly communicated company regulations” in such cases. There is some subjectivity in this classification, but you can reduce uncertainty with well-documented processes. 

In some situations, the employer can ask the cantonal court to dissolve the employment agreement on reasonable grounds. The court can rule in favor of a dismissal based on the following: 

There are strict rules that apply when dismissing an employee because of underperformance. For one, the employer must document in detail the steps that have been taken to guide the employee towards improved performance. An employee’s illness cannot be used as a justifiable reason for underperformance. It is advisable to document performance evaluations and give the employee sufficient time to improve their performance. If it is also not possible to move the employee to another role within the company, then the court may grant approval for dismissal based on underperformance. 

What constitutes non-permissible conduct needs to be communicated to the employee before it can be used as a valid reason for dismissal. A handy way to do this is to have clear guidelines outlined in the company’s handbook. 

When there’s a strong difference in opinion, a clash of personalities, or a specific incident that puts a permanent strain on the working relationship, this can result in a fair termination. The first course of action is to seek a resolution through mediation. If the issue cannot be resolved, a disrupted relationship can be a valid ground for dismissal. 

If an employee’s ongoing absence from work due to an illness is heavily impacting the company, the court can rule in favor of dismissal. The employer will be expected to demonstrate that operations are impacted because it’s impossible for the employer to have the employee’s workload covered..

When an employee refuses to work for conscientious reasons, the two parties must first attempt to arrive at a solution together. If resolution proves impossible and the employee’s absence harms the company’s operations, the employer can apply for dismissal.

Terminating an employee in the Netherlands sometimes requires permission from the Public Employment Service (PES), also known as “Uitvoeringsinstituut Werknemersverzekeringen” in Dutch, or “UWV.” These are the termination cases that require permission:

When the company has suffered major financial losses, a decrease in work, organizational downsizing, or technological changes, the employer has to apply for a dismissal permit from PES first before giving notice to an employee. Finalizing this process typically takes around six weeks. Time spent obtaining a dismissal permit can be deducted from the applicable notice period. 

If an employer needs to dismiss at least 20 employees within 3 months due to economic reasons, the event qualifies as a collective redundancy. To go through with this process, the employer must report the case to PES and any relevant trade unions representing affected employees.

According to Dutch law, an employer is expected to continue paying an employee during their period of illness for up to two years. This usually amounts to at least 70% of the employee’s salary. The employer is obliged to put measures in place to reintegrate the employee and facilitate their return to work. These reintegration measures must be clearly documented in case termination is eventually needed. If the employee is still unable to carry out their duties after two years (and is not likely to recover within 26 weeks), the employer is allowed to request permission from PES to terminate the employee’s contract.

It is possible to terminate a Dutch employment contract amicably through mutual consent. Both parties must agree to enter into a settlement agreement in writing for the termination to be valid, and the employee’s consent must be explicit and clear. 

With a settlement agreement in place, it is not compulsory to observe the notice period or rules regarding severance payments. If both parties decide to include a severance payment, this must be stated in the agreement. There is also a two-week reflection period, during which the employee is allowed to dissolve the settlement agreement. 

Probationary dismissal in the probationary period

There are no conditions for termination during the probationary period in the Netherlands. The employee or employer is at liberty to terminate the contract without adhering to the standard notice period. The employee has a right to be informed of the reason for dismissal.

Expiry of an employment contract for a definite period of time

It is not compulsory to renew a definite contract under Dutch employment law. If the employer has no plans to renew an employee’s definite contract, the employee must be informed, even though the end of the contract signifies a termination. If the company wishes to terminate a definite contract before the end date, it can only do so if conditions were previously agreed upon in writing. In such cases, the notice period is one month.

The probation period in the Netherlands is typically used as a trial period. This allows both parties to terminate the contract without notice or reason. It is possible to exclude a probation period clause in the contract, although it is not advisable. Removing the probation period makes dismissal more difficult by progressing the employee to full status immediately.

The maximum probationary period allowed under Dutch employment law depends on the contract length:

Indefinite contracts have a probation period of two months.

Definite contracts of less than two years have a maximum probation period of one month.

Definite contracts of two years or more have a maximum probation period of two months.

It is possible for the probation period to be considered null and void. This can happen in the following scenarios:

When the probation period is not agreed upon in writing

On a temporary contract of six months or less

When the employee’s contract is switched from a temporary one to a permanent one

When the contract is extended without any changes to the employee’s work responsibilities

Termination notice period in the Netherlands

A notice period applies when an employee wants to resign from their position or when the company wishes to dismiss an employee for a justifiable reason. The notice period is mandatory and typically indicated in the employment contract. If the employment agreement does not include notice period requirements, the statutory minimum of one month goes into effect. The notice period applies to both employees with permanent contracts and, in some cases, to those with definite (fixed-term) contracts. 

There are a few scenarios in which termination of an employee in the Netherlands does not require notice: 

The employee resigns immediately (also known as summary resignation) 

Notice periods for employees in the Netherlands

An employee currently on probation has the right to terminate their contract (by resigning) without a notice period. The notice period that applies in the case of permanent contracts depends on the duration of the employee’s contract or previously agreed upon notice period with the company. Typically, the notice period for an employee is one month and always starts on the first of the month.

If a longer notice period has been agreed upon, the employer’s notice period must be twice as long as the employee’s. For example, if the employee’s notice period is four months, then the employer’s notice period would be eight months.

Notice periods for employers in the Netherlands

Under Dutch labor laws, an employer is required to give notice when terminating an employee’s contract. The amount of notice required depends on how long the employee has been with the company. 

If employed for less than five years, the notice period is one month.

If employed between five to 10 years, the notice period is two months.

If employed between 10 to 15 years, the notice period is three months.

If employed for 15 years or more, the notice period is four months

HR teams must adhere to the notice period rules. Failure to do so can result in extra compensation for the employee. For example, if an employee with a notice period of one month is informed on the 18th of August that they will be terminated on the 1st of September, the company would be in violation. In this case, the employee would need to be allowed to continue work until the 30th of September, which is when the one-month notice period would end. 

Giving notice to employees on definite contracts

Definite contracts have a clear end date, but when a contract is valid for six months or more, the employer is obligated to inform the employee at least one month in advance if their contract will not be renewed. If an employer fails to give notice on time, the employee is entitled to compensation calculated based on their contract and how late the employer was in giving notice. 

It is also possible for a definite contract to be later deemed as “indefinite” under the scrutiny of Dutch employment law. When a definite contract has a maximum gap of three months between contracts or if the sum total of the employee’s definite contracts amounts to three years, a definite contract could be considered indefinite. In these cases, the termination process is the same as with an indefinite contract. 

When are employees entitled to transitional pay in the Netherlands?

Employees who are dismissed are sometimes legally entitled to what the Dutch call “transition pay,” which is different from severance pay. Transitional pay compensates an employee for their loss of employment while they transition to new employment. 

An employee must have worked for a company for at least two years to be eligible for transition pay. Dutch transition pay is different from severance pay under Netherlands employment law in that severance pay is given in the event of a mutually agreed dismissal. An employee is entitled to transition pay in the following cases:

A fixed-term contract has been terminated.

The employment contract has been rescinded by the court at the employer’s request.

The employee has terminated their contract due to gross misconduct by the employer (in serious culpable acts or negligence, the court may grant additional transition pay known as “fair compensation”).

The employer has been permitted by PES to give the employee a notice of termination.

An employer is exempt from paying transition pay in the following cases: 

The employee’s contract was terminated by mutual consent of both the employer and employee.

The employee was dismissed because they acted with serious culpability or gross negligence.

The dismissed employee is under 18 years of age and worked part-time for 12 hours a week on average.

The employee’s temporary contract is renewed before the old one expires.

How is Transition Pay in the Netherlands Calculated?

The amount of transition pay an employee is entitled to is based on their age, years of service, and gross monthly salary. When an employee is dismissed, they are entitled to 1/3 of their monthly salary for each year of service, up to €84,000. If the employee earns more than €84,000 per year, then the transition pay limit is equal to their annual salary. 

For example, an employee who earns €5000 per month and has worked at the company for five years would be entitled to a severance payment of €8333.33. This is calculated by multiplying five (the number of years worked) by 1/3 and then multiplying the result by the gross monthly salary of €5000. 

In the Netherlands, tax authorities view transition payments as income and tax them as such. If the employee decides to spend their transition pay on professional education, they do not have to pay taxes on that income. When processing an employee’s transition payment, the company should also include outstanding holiday pay, profit distributions, and annual bonuses.

Let Remote help manage your employees in the Netherlands

We agree that terminations are never easy, but setting clear expectations and following the law to the letter can make things easier for both sides. It’s important you know what the process entails before you need to terminate an employee so your company is adequately protected. 

The great thing about working with an EOR like Remote is that we not only handle the process of onboarding and payroll, but we also manage terminations through our locally-owned Dutch entity, guaranteeing your terminations always follow the rules. Our team of HR and employment law experts in the Netherlands takes on the responsibility of handling this complicated process by working closely with PES to make sure all the paperwork is processed with accuracy and any outstanding payments are paid out to the employee to maintain compliance at all times.

Want to learn more? Check out our Netherlands Country Explorer for additional information on Dutch employment.

How to terminate an employee in the Netherlands

The Dutch labor market is attractive for many reasons. Not only is 90% of the population proficient in English, but the Netherlands has one of the top education systems in the world. No wonder many companies are already hiring employees and contractors in the Netherlands.

If you are considering opening a new office or starting a new team, the Netherlands might be for you. But Dutch workers are classified in many ways, and each classification is treated differently.

Not only is the law in the Netherlands already complicated, but it’s also in flux. That makes everything even more difficult. Luckily, we’ve developed a comprehensive guide to employee classification in the Netherlands to help you stay on top of this fluid situation.

Key facts about worker classification in the Netherlands

Employers must always pay close attention to the classification of workers, because companies have different responsibilities to employees than they do to contractors. Generally, you have a greater obligation to employees that includes deducting payroll taxes, granting leave, and paying a minimum wage. Additionally, employees have greater and stronger legal rights and protections.

The consequences of misclassification vary by country but can be serious. For example, in the United States, the IRS can levy fines and penalties associated with failure to file a W-2 and subsequent unpaid payroll taxes.

Employees who were misclassified and were therefore denied the rights associated with employment such as leave, benefits, and severance pay are entitled to compensation. Employers risk fines and lawsuits resulting from such misclassification.

See also: When should you convert a contractor to an employee?

The new Balanced Employment Market Act (WAB) in the Netherlands took effect in January of 2021. This act was intended to crack down on false self-employment and associated abuses. As such, employers are now responsible for correctly classifying employees.

To help employers, the government provided a pilot program for a web tool to help clarify if an employment relationship exists. There is a moratorium on enforcement, fines, and penalties until October 2021. After that time, employers will be liable for misclassification.

A worker is considered an employee if the work they do for you meets all the following criteria:

The work must be done personally by the employee.

There is a relationship of authority in which the employer determines how the work must be performed and the employee must comply.

If the relationship does not meet all of these criteria, you may be able to classify the workers as a contractor. These workers are considered to be self-employed. If an employment relationship is found to exist, however, this would be called false self-employment.

Determining worker classification in the Netherlands

Preston Wickersham

Articles published on Remote by Preston Wickersham