Netherlands 14 min

How to use an Employer of Record in the Netherlands

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If you want to expand your team in Europe, the Netherlands is a solid destination to begin your search for candidates. After all, the country ranks highly on many markers, including standard of living, global innovation, and digital infrastructure. The Dutch labor market also has a highly educated and skilled workforce worth considering.

To hire employees in the Netherlands, you’ll have to establish a local legal entity and deal with all the costs and hassles of international employment. Alternatively, you could partner with an employer of record (EOR) in the Netherlands.

An EOR can easily help you hire employees in the Netherlands without a costly new office location and legal responsibilities. You also won’t have to worry about tax and labor law compliance and paying your workers in the local currency. From payroll and benefits to HR and compliance, an EOR can help you hire workers all over the world, including in the Netherlands.

Wondering how to use an employer of record in the Netherlands? In this article, we cover everything you need to know about how you can work with an EOR to hire Dutch employees.

5 steps to hiring in the Netherlands using an employer of record

Here are the five steps you need to take to find an EOR recruit talent in the Netherlands: 

Step 1: Select a suitable EOR 

Start by identifying your business and doing some research on the available EOR services. Every provider is slightly different. It’s essential to understand the list of services that each EOR offers so that you can review the pros and cons.

Some EORs do not own entities in every country they cover. Instead, they work with third -party vendors in those countries. This can create a disjointed experience for both you and your employees, and is usually pricier for you. 

Another thing to look out for is country coverage. While you obviously need to find an employer of record that can help you to hire in the Netherlands, think about which other countries you may want to target in the future. 

Step 2: Think about security

Look for an EOR service provider that highlights their commitment to safeguarding your intellectual property and maintaining data security for your business. Then ask questions about the software and processes they use to help them ensure strong levels of security and compliance.

Step 3: Ensure that the EOR provides a best-in-class employee experience

While working with an EOR, make sure the provider is capable of giving your employees an excellent employee experience. Apart from dealing with the hiring process and labor law compliance, the EOR should also make sure they’re treating employees well during the entire hiring, onboarding, and payments process. That means finding a service that can provide a great onboarding process, an easy-to-use payroll interface and a host of attractive employee benefits.

Step 4: Check reviews and testimonials

Once you have a shortlist of EOR partners that are best suited for your business, find out what other people are saying about each of them. You may find reviews and testimonials on the EOR’s website, employee testimonials, and on third-party review sites. It might also be worth contacting some of their clients directly to get some insight into the quality of the services provided by the EOR.

Step 5: Decide on a compensation package

The final step before you start hiring international employees in the Netherlands is to decide what you are planning to pay them, both in terms of compensation and benefits. A good EOR partner will work with you to develop an equitable compensation package for all global employees. The EOR will usually have a team of employment experts that can help you attract and retain employees with a competitive package based on local labor laws, the employee’s role and experience level.

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What are the benefits of using an employer of record in the Netherlands?

Whether you want to build a whole new team in the Netherlands or hire just one outstanding candidate, an EOR can help you hire and pay remote workers quickly and safely. The key benefit of using an EOR is that you can hire talent without having to spend time and money establishing a legal entity in the country.

You can also rest easy knowing that you have an employment contract that complies with all local labor laws. An employment contract will typically include details of remuneration, payroll, working hours, location, benefits, and details of termination and severance pay.

Additionally, an EOR can help you manage the HR and administrative processes that come with global hiring, such as:

  • Setting up onboarding procedures

  • Managing global workers in a single platform

  • Making tax and payroll deductions

  • Paying workers in the local currency

  • Staying up-to-date with evolving labor laws.

How much does it cost to use an EOR in the Netherlands?

How much you pay to use an employer of record in the Netherlands will depend upon the type of company and its payment structure.

Traditional, legacy EOR companies tend to charge more than newer, more agile alternatives. There are cheap options out there, but these companies don’t always offer high levels of compliance or security. Here are a few ways prices are calculated while using an EOR and a few factors that affect the overall cost.   

Payment structure

Some EOR services in the Netherlands charge a percentage of each employee’s salary. This ranges from around 15% to 18%. While this is a straightforward way to price the service, it can discourage employers from hiring top-level talent or offering a pay raise.

Other EOR services in the Netherlands charge a flat monthly fee for each employee. This fee tends to range from $599 to an excess of $2,000 per employee per month. Prices may vary depending on which countries you are hiring in and whether you commit to paying monthly or annually. Using an EOR to pay contractors generally tends to cost upwards of $25 per contractor per month. 

Minimum or maximum employee or contractor requirements

Consider whether an EOR specifies rates depending on the number of employees or contractors you have on the books. A minimum or maximum employee or contractor requirement will impact your company’s overall cost.

Onboarding fees

Some EOR services also charge an additional onboarding or setup fee.

Remote offers a low, flat-rate payment model and complete price transparency. Our fair price guarantee means there are no commitments or hidden fees, plus we offer the strictest quality and compliance standards for hiring in the Netherlands.

Hiring in the Netherlands

The Netherlands is one of the happiest countries in the world, with one of the highest standards of living. The country's strong economy and talented workforce make it a popular location for ambitious businesses looking to expand in Europe.

When you hire in the Netherlands, you are making an investment. The country has strong labor conditions and protections, so employing people there means making a commitment to your new team member(s).

Here is a quick overview of what you can expect:

Minimum wage: €1,995 per month (for ages 21 years and older), usually paid on a monthly basis

The standard working week: 36 to 40 hours

Paid holiday entitlement: At least 20 days per year

Employer contributions: Around 16.5% of an employee’s salary

Read detailed information about hiring employees and contractors in the Netherlands on our Country Explorer page

Employment contracts and agreements in the Netherlands

Legally compliant employment contracts and agreements in the Netherlands have to include:

  • Name and address of both employer and employee

  • The employee’s work location

  • The employee's job or the nature of the work

  • Standard working hours

  • Salary and payroll details

  • Contract start date

  • Length of the contract

  • Length of the probationary period

  • Holiday entitlement

  • Notice period

  • Details of pension contributions (where applicable)

Labor law compliance in the Netherlands 

Working hours

Working hours cannot exceed 60 hours per week, and cannot exceed the following averages:

  • 48 hours over a 16-week period, or

  • 55 hours for up to 4 consecutive weeks

Standard working hours in the Netherlands are 36 to 40 hours per week. Work that takes place beyond the hours specified in the employment contract is considered overtime, with overtime compensation as a compulsory requirement.

Equality

In the Netherlands, it is against the law to discriminate based on religion, politics, race, gender, age, or disability. Therefore, employers have to offer the same working conditions and pay scales to all employees.

Penalties

In the Netherlands, employers face fines and penalties if they fail to pay the minimum wage or comply with labor laws. Late filing and payment of income tax can also incur penalties and interest payments.

Payroll and payroll taxes in the Netherlands

Through Remote, all employees are paid in equal monthly installments on or before the last day of each calendar month. Payments are made after an employee has completed the work period.

Employer contributions include:

  • 5.49% – AOF lag (disability insurance)

  • 6.75% - Heffings ZVW premie (health insurance)

  • 1.11% - Premie Whk gediff (work resumption fund)

  • 0.5% - Uniforme opslag kinderopvang (childcare allowance)

  • 2.6% to 7.7% depending on contract – AWF hoog (unemployment insurance)

All of these contributions are paid up to a maximum base salary of €59,706 (approximately $67,700 USD).

Employee contributions include:

  • 17.9% – AOW (old age pension)

  • 9.65% – WLZ (long-term care)

  • 0.1% ANW (orphan and widow/widower pension)

Employee income tax rates are as follows:

  • 0% – on annual earnings up to €37,149 

  • 36.93% – on annual earnings up to €37,149 (approximately $78,700 USD)

  • 49.50% – on annual earnings over €73,031

Some employees are also entitled to a general tax credit and a labor tax credit, which are deducted from their income taxes. Employers are responsible for deducting employee contributions at source and paying contributions to local authorities.

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Guide To Payroll Taxes in the Netherlands

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The Netherlands employee benefits and compensation

Minimum wage

In the Netherlands, the minimum monthly wage is currently set at €1,995 per month for any employee over the age of 21. For employees aged 15 to 20, the youth minimum wage applies.

Leave entitlement

The Netherlands celebrates 8 official public holidays.

  • Statutory leave: Full-time workers are entitled to 20 days of paid holiday leave every year, but many companies offer 24 or even 32 days of paid annual leave.

  • Pregnancy and maternity leave: Mothers are entitled to 16 weeks of paid leave, with 4 to 6 weeks taken before the due date and 10 to 12 weeks taken after the birth of their child. The Employee Insurance Agency (UWV) is responsible for this payment.

  • Paternity leave: Fathers or partners are entitled to one week of paid leave after the birth of a child. They can also take up to five weeks of unpaid leave in the first six months of parenthood.

  • Parental leave: Employees with children aged up to 8 can take unpaid parental leave.

  • Sick leave: If an employee cannot work due to sickness, they are entitled to 70% of their last paycheck for the entirety of one year.

Here at Remote, we believe that all employees (wherever they happen to be based) should be fairly compensated. For us, minimum statutory benefits are just the start. Additional benefits – such as flexible working hours, additional paid leave, and medical insurance – can create a much happier workforce and a globally competitive benefits package.

Want to create and manage a competitive and compliant global benefits package? With Remote, you get access to local employment law experts and a network of global, benefit-providing partners. We can even provide benefits for your global contractors.

Read our detailed guide on employee benefits in the Netherlands for useful advice on attracting top talent.

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The Netherlands severance pay and employee terminations

Probationary period

Probation periods cannot last more than two months. They can only last more than one month when an employee is given an indefinite contract or one lasting at least two years.

Employers can terminate an employee’s contract within the probationary period if the employer is not meeting the required standard of performance.

Terminations and notice period

Dutch labor laws outline several legal ways to terminate employees. When either party wants to terminate the employment contract, a notice period is enforced. Notice periods are always twice as long for employers as they are for employees.

The notice period for employees is usually one month, up to a maximum of six months. The notice period for employers depends on an employee’s length of service and ranges from one to four months.

Severance pay

In the Netherlands, severance pay is called a transition payment. This sum may be payable depending on the reason you are terminating your employee’s contract. The transition payment is calculated as a third of your employee’s gross monthly wage per year of service.

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How to terminate an employee in the Netherlands

Terminating an employee in the Netherlands (or anywhere else) 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.

What are the risks of employee misclassification in the Netherlands?

The Netherlands has different definitions for “employee” and “contractor”, and each classification is treated differently. Employees have stronger protections under Dutch labor laws, and employers must offer benefits, make payroll deductions, and pay minimum wages to employees. On the other hand, contractors do not have these rights and protections.

By classifying an employee as a contractor, employers don’t have to pay the required tax and social security contributions or provide statutory benefits. Failing to classify employees and contractors correctly can have serious consequences for a business.

If the Tax and Customs Administration in the Netherlands sees evidence that a company is misclassifying an employee as a contractor, the employer may receive a fine and will have to pay social security premiums retrospectively. Costs can quickly mount up if the contractor has been working for you for a while.

An EOR like Remote has an expert team who have in-depth knowledge of Dutch employment law. They understand how the Dutch government defines employees and contractors and can help you mitigate these risks. Read our detailed guide on worker misclassification for more information on this topic.

link to When should you convert a contractor to an employee?

When should you convert a contractor to an employee?

While contractor designations may be appropriate for some business relationships, companies cannot simply pay people as contractors because it’s easier. Contractors and employees fulfill different roles and have distinct legal definitions. Converting a contractor to an employee can protect the employer from penalties, provide a better experience for the employee, and make it simpler for both parties to collaborate.

Get started with an EOR in the Netherlands

There’s so much to be gained from expanding your business globally. You get access to new markets and the very best international talent – which there’s no shortage of in the Netherlands.

But, hiring employees in the Netherlands is not an easy or straightforward process. As an employer, you have many labor law and tax obligations to fulfill, and several pitfalls to avoid, even if you’re not planning to establish an owned entity in the country.

Luckily, there’s an easy way to maximize benefits and minimize risks. Choose Remote as your employer of record in the Netherlands, and we’ll help you to scale globally while ensuring compliance with all local employment legislation. We’ll also manage payroll and benefits for your operations in the Netherlands, helping you to attract the best talent while leaving you to focus on optimizing your international team. Our in-house legal and HR experts keep pace with local labor regulations, so you don’t have to!

Hire international employees with Remote and make global expansion a simple affair. Get started with Remote to begin hiring Dutch talent right away.  

Read Remote's expert guide to hiring in the Netherlands

Use our expert hiring guide for information on local benefits, taxation, and compliance requirements to help you employ in the Netherlands with ease.

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