Everything you need to know about employee benefits in the Netherlands

If you want to make a competitive offer to your next employee in the Netherlands, you need to know about Netherlands benefits. Employees in the Netherlands have one of the highest-ranking work-life balances in the world, and employee benefits play an important role in keeping that balance. In this guide to employee benefits in the Netherlands, you'll find what employee benefits are required by Dutch law and which ones you can use to attract and retain talent.

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Who is entitled to employee benefits in the Netherlands?

Every person in the Netherlands with an employment contract is entitled to certain statutory benefits. These benefits ensure that employees can take paid time off, are entitled to sick leave, get maternity and paternity leave, and are paid a minimum wage.

Before sending out a contract, always check if your future employee works in an industry where the benefits package is more extensive due to a specific Collective Labor Agreement, known as a CAO in the Netherlands

It's not uncommon for employers to offer extra benefits to employees in the Netherlands. These extra benefits can be the result of a Collective Labor Agreement (CAO) in a specific sector or may simply be common practice for the industry. Some of the more common extra benefits are a pension scheme or paid travel expenses. With more companies going remote, there are other benefits growing in popularity, like a work-from-home stipend or an allowance for a home office.

Statutory employee benefits in the Netherlands

Dutch employment law provides strong labor conditions and protections for employees. In this section, we'll go through the general employee benefits that are mandatory for all employment contracts.

Minimum wage in the Netherlands

The legal minimum wage in the Netherlands for employees over the age of 21 in 2021 is €1.684,80 per month for a full-time employee. Full-time can be a 36-, 38-, or 40-hour workweek, depending on the sector or company policy.

Salaries need to be paid in a timely manner before the end of each month.

Working hours in the Netherlands

Dutch working hours depend greatly on the sector. Most full-time employees work from 36 to 40 hours per week over a four- or five-day period. These are hours somebody is actually working, so lunch or other breaks aren’t counted as working hours. If an employee goes for a business lunch, this does count as time spent working.

There is a maximum of hours any employee is allowed to work per week. The maximum working hours for a given employee is set at 60 hours. A single shift can be no more than 12 hours long, and an employee needs to get at least 11 hours off between shifts. This ensures that employees have ample time to maintain a healthy work-life balance.

Paid time off

One of the pillars of employee benefits in the Netherlands is the paid leave all employees are entitled to. A full-time workweek in the Netherlands is most often 40 hours. If an employee works a 40-hour workweek, they are entitled to at least 20 days of paid time off per year.

The minimum holiday days are based on a calculation, so if your employee in the Netherlands is not working 40 hours, they get fewer days off. The amount of holiday is calculated in hours. If you multiply the working hours in a week by four, you get the hours of holiday your employee is entitled to. This will generally allow an employee to take four weeks off.

See also: How to manage an unlimited PTO policy

If an employee does not use up all their holiday days in a year, they can use their leftover days for up to six months into the new year. After that, they expire. You can’t pay out unused PTO days in the Netherlands, so it’s in your employees’ best interest to use them. If an employment contract expires or an employee is let go with the remaining days, you are required to pay them out at normal wage.

Please note that 20 holiday days is a legal minimum. Many employers in the Netherlands offer 25 days or more. Public holidays are not included in this number of PTO days.

“Vakantiegeld” Netherlands holiday allowance

The Dutch prize their holidays. On top of the minimum of 20 days of paid time off, every employee has a right to a holiday allowance, or “vakantiegeld.” This allowance gives people that extra bit of cash to make the most of their holidays.

The minimum holiday allowance is 8% of the employee’s gross yearly wage for as long as they have been employed. So if an employee has been employed for three months, they are only entitled to a holiday allowance of 8% of their gross wages over that time.

The holiday allowance should not be confused with the “13th month’”or the “13th wage” benefit. Even though the holiday allowance often ends up around one month’s extra wage, not every employee gets a 13th month of salary in the Netherlands.

Most employers pay the holiday allowance in a lump sum in May or June. This is at the employer’s discretion: some employers choose a different date or pay in installments. If you wish to differ from the usual timing, though, you need the written consent of your employee.

Sick leave in the Netherlands

Everyone gets sick sometimes. Employees need to inform their employers promptly to take a sick day, most often before the start of the working day. However, they are not required to tell their employer what they have.

If an employee becomes sick for an extended period of time due to disability or a burnout, they are entitled to 70% of their income for 2 years. The minimum wage applies for the first year of chronic illness, meaning you need to pay your employee at least the minimum wage for that year.

See also: Experts reveal the best ways to reduce stress for remote workers

Maternity leave in the Netherlands

Dutch Maternity leave is split up into pregnancy leave and maternity leave. The total leave amounts to 14-16 weeks.

An expecting employee can go on pregnancy leave four to six weeks before their due date. If the employee chooses to work until four weeks before the due date, the difference of two weeks is added to the maternity leave.

Maternity leave is a minimum of 10 weeks after giving birth. If the baby is born after the due date, these days get added to the maternity leave. If a baby is born before its due date, the established maternity leave stays the same.

Businesses may apply for a maternity allowance to the Dutch Employee Insurance Agency (UWV). This allowance covers 100% of the daily wage of your employee for the duration of the maternity leave.

Paternity leave in the Netherlands

Partners of pregnant Dutch employees are entitled to paternity leave. New fathers or partners get a full week (or five working days) of paternity leave after the birth of their child at full wages.

New rules and regulations regarding paternity leave went into effect on July 1st, 2020. Since that date, partners of employees who give birth are entitled to take up to five weeks of additional paternity leave at 70% of their daily wage.

The additional paternity leave can only be taken if the father has taken the first week of paternity leave. The additional five weeks can be spread over the first six months after the baby is born. As an employer, you can apply for an allowance for the paternity leave of your employee as well.

The Netherlands recognizes LGBT relationships and mandates maternity, paternity, and parental leave benefits accordingly.

Dutch parental leave

On top of maternity and paternity leave, parents with children under the age of 8 years old are entitled to parental leave of 26 weeks per child.

Parental leave is unpaid leave, but you cannot deny your employee the right to use it. You can discuss when they take this leave, which can be spread out over those 8 years. Parents are entitled to take parental leave for each child.

The first nine weeks of parental leave will be paid at 50% of the daily wage beginning in August 2022 if they are taken in the child's first year of life. As an employer, you’ll be able to apply for an allowance for the parental leave of your employee.

Social security contributions in the Netherlands

The social welfare system in the Netherlands is extensive. All employees get automatic social insurance through a contribution that is partly withheld from their salary and partly paid by the employer. The contributions go toward the National Old Age Pension (AOW), the Chronic Care Act (WLZ), and the National Survivor Benefits Act (ANW). The total state social security rates come down to 27.65% of the gross yearly income of your employee in 2021.

These acts are to ensure a basic level of wellbeing when someone hits retirement age, becomes chronically ill. They also provide a basic income for unemployed widowed spouses or dependents under 18. The rates are set each year, as are the allowances.

Contribution to the Health Insurance Act in the Netherlands

Health insurance in the Netherlands is mostly managed by employees themselves (more detail on Netherlands health insurance below). There is, however, a contribution that employers are required to contribute towards the Health Insurance Act (ZVW).

The contribution to the ZVW for 2021 is 7% of the gross yearly wage. It is capped at a wage of €58,311. This means that no matter how much more an employee makes a year, you won’t be required to pay more than €4,081.77 yearly.

Want to see a full breakdown of employment costs for new hires in the Netherlands? Check out our free Employee Cost Calculator tool.

Popular supplemental employee benefits in the Netherlands

Statutory employee benefits in the Netherlands are just the beginning. To help you make a truly competitive offer when you’re hiring in the Netherlands, here are a few non-statutory benefits that high-caliber Dutch employees would like to see in their contracts.

Travel expenses

Most companies in the Netherlands reimburse their employees for travel expenses if they live further than 5km from their office. Covering the costs of public transport is a common way for companies to cover the travel costs of their employees. You can find more about Netherlands train subscriptions here.

You can also reimburse employees for traveling with their own transportation. The rate is set by the Tax and Customs administration at €0.19 per kilometer. Another popular way to cover travel expenses is to provide a company car. This is most often done through a leasing company, and the employee is charged separately for its private use.

Pension plan in the Netherlands

Everybody who's worked in the Netherlands for long enough is entitled to the state general old-age pension (AOW). The age people receive this is gradually increasing until it will be set at 67 in 2024.

On top of the state pension, people can build their pension in a pension fund. They can either do this privately or have it arranged by the employer. The maximum contribution to their pension is legally set depending on income.

Providing a pension plan can be required if your employee falls under a specific Collective Labor Agreement (CAO). Even then, having a pension plan is a major selling point for your company.

13th month’s salary

The number 13 is a lucky number when it comes to employee benefits in the Netherlands. It’s basically an end-of-year bonus set at a month’s gross wage and paid at the end of the year. The 13th month’s salary shouldn’t be confused with the holiday allowance, which is mandatory according to Dutch Law.

Even though some sectors have the 13th month salary (in Dutch) in their Collective Labor Agreement (CAO), it’s not something every employer has to offer. If you decide to offer one employee a 13th month’s salary, you have to offer it to all your employees in the Netherlands.

Additional paid leave

Even though the minimum of holiday days in the Netherlands is set at 20, many employers offer their employees 25 days of paid leave or more. It’s also not uncommon for overtime to be paid as holiday days, basically promising the extra hours an employee works as paid time off in the future. Some companies now offer employees unlimited time off in lieu of set time banks. If you choose to do so, be sure to set expectations to make sure people take the time they need, as you are responsible for ensuring your employees take enough time off.

Another increasingly popular benefit is extended paternity leave. The Dutch government has recently extended the paternity leave of five days to five weeks at 70% of the full wage. If you’d like to offer your male employees more time at full wage, you can.

The Netherlands work-from-home stipend

Much of the Dutch workforce was forced to go remote in 2020. This led many employees to work in an environment not set up as an ideal workplace, which led to increases in cost of living for many.

Increasingly, Dutch companies are setting up programs to give remote employees a stipend to cover the cost of an optimized work environment and help cover some of the extra costs of living.

See also: Post-pandemic remote work is different. Here’s what companies should know.

Other employee allowances

If your company hires employees remotely, you can set your employees up for success by providing them with setup expenses to fulfill their job to their best ability. Employers can choose to provide allowances that go towards a stable internet connection, IT equipment for work, or even further education.

These allowances come with no tax liability, according to the work-related costs scheme (WKR). According to this scheme, you may reward employees up to a maximum percentage of the company’s entire salary costs. The discretionary scope amounts to 1.7% over the first €400,000 of the wage costs and 1.18% for any amount over €400,000.

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Extra employee benefits in the Netherlands to consider

Some benefits that are considered normal elsewhere are very uncommon in the Netherlands. Here are the employee benefits that few Dutch employees will expect to see in their benefits package that will help you save where you can.

Overtime

Contrary to what you might think, you don't have to pay your employees for overtime in the Netherlands. It's quite a common clause for overtime to be expected, especially for knowledge workers.

The maximum of 60 working hours a week protects employees from working too much overtime. It's also quite a common practice for overtime to be taken as free time at a later date. People working for governmental organizations have a mandatory 36-hour workweek, so those who work 40 hours accumulate an additional half-day per week.

Private health insurance

Having healthcare insurance is mandatory in the Netherlands. As mentioned above, there is a part of health insurance that’s paid by the employer. The other part is paid privately by employees themselves. Since the employer already has to contribute towards health insurance by law, this is not included as an extra employee benefit in the Netherlands.

Even though the amount varies per health insurance company, the premiums are all subject to rules and regulations by the government. It's something every person provides for themselves and their families.

Child care benefits in the Netherlands

Having child care for employees with children ensures that they can spend their energy on helping you build and grow your business. Child care in the Netherlands is subsidized by the government to increase participation in the labor market by both mothers and fathers. It’s not a benefit commonly supplied by employers.

The maximum for which employees can get childcare benefits is 230 hours per month per child, depending on the working hours of the parent who works the least. The amount of childcare benefits is dependent on salary. The more someone earns, the less childcare benefit they receive.

Offer your employees in the Netherlands better benefits with Remote

There's a lot of top talent to be found in the Netherlands. When you find your next employee, it's crucial to offer the right benefits package that will convince them to choose your company. With this guide in hand, you know the biggest dos and don’ts to hire in the Netherlands.

To learn more about employing workers in the Netherlands, be sure to check out our Netherlands Country Explorer for facts and figures regarding payroll taxes, public holidays, and more.

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