Hiring in the Netherlands: The EOR Advantage

Dutch labor laws and tax systems are detailed and structured, placing a strong emphasis on employee rights, transparent payroll, and clear contract terms. These rules can differ from those in other countries, so it’s important for employers to understand the local framework to ensure smooth hiring and long-term compliance.

Employment Contracts

Employment contracts in the Netherlands are regulated by the Dutch Civil Code, and often by sector-specific collective labor agreements (CLAs). They can add extra requirements, like higher wages or more vacation days. While verbal contracts are legally valid, you’d be wise to go with written ones. They’re the preferred and widely accepted method that can save you headaches if disputes arise.

Main Contract Types:

• Temporary Contracts: Handy for short-term needs like internships, project-based roles, or seasonal work (e.g., extra staff during peak periods). However, the Dutch "chain rule" limits renewals to 3 times or 3 years total, whichever comes first, and if you exceed this or have less than a 6-month break between contracts, it automatically converts to a permanent contract. ‍
• Fixed-Term Contracts: These have a set end date, like 6 months or a year, and can last up to 3 years total, including renewals. The Dutch “chain rule” caps them at 3 renewals or 3 years—whichever comes first. If you go beyond that, or if the break between contracts is less than 6 months, it automatically becomes a permanent contract. So, if you hire someone for a 1-year project, renew twice, and hit 3 years, they’re permanent unless you’ve had a 6-month gap. ‍
• Open-Ended Contracts: These are permanent contracts with no end date. They’re common in the Netherlands because they give employees stability. Offering one can also make you more attractive to talent in a competitive market.

Key Elements to Include:

• Names and roles of both parties
• Start date and contract duration
• Job responsibilities and title
• Work location(s), hours, and flexibility terms
• Salary and payment cycle
• Secondary benefits (holiday pay, bonuses, pension)
• Notice periods and termination clauses
• Reference to any CLA, if applicable

You must provide a written statement of contract details within 1 month of the employee’s start date—it’s mandatory. English contracts are fine for international businesses, but Dutch courts may require a Dutch translation in disputes, so keep one handy.

Dutch employees also have strong protections to note: fixed-term contracts over 6 months can’t have a trial period, but longer or open-ended ones can, up to 2 months. Termination usually requires UWV or court approval unless mutually agreed. Also, you owe a transition payment (1/3 of a month’s salary per year of service) when a fixed-term contract ends, unless it’s under 6 months or due to serious misconduct.

Payroll, Taxes, and Employer Contributions  

Handling payroll in the Netherlands involves managing a range of statutory contributions and taxes, which significantly increase your labor costs. Below is an updated breakdown to help you plan accordingly.

Employer Contributions

These mandatory social security contributions are calculated on gross salaries and remitted to the Dutch Tax and Customs Administration (Belastingdienst):

Employee Deductions  

As an employer in the Netherlands, you’ll need to withhold the following from your employees’ gross salary:

• National Insurance (AOW, WLZ, ANW):
  24.65%, applied to income up to €41,200. This covers the state pension, long-term care, and survivor benefits. ‍
• Income Tax (after tax credits):
• 36.94% on income up to €38,250
• 36.81% on income from €38,251 to €75,000
• 49.5% on income above €75,000

Additional Employer Costs

In addition to standard payroll contributions, Dutch employers typically cover:

• Pension Contributions:
  Often sector-mandated, typically 6% to 12% of gross salary. Employers usually pay around 70% of the total contribution. ‍
• Holiday Allowance:
  A mandatory 8% of annual gross salary, paid out in May or June. ‍
• 13th Month Bonus:
  Optional but widely practiced, especially in CLA-covered sectors. Usually equal to 8.33% of annual salary, paid in December.

These additional costs generally add 18% to 27% on top of gross salary.

Key Considerations

Hiring in the Netherlands adds roughly 34% to 49% on top of an employee’s gross salary. To manage these costs effectively while staying compliant, keep the following in mind:

• Permanent contracts (2.94% WW) save costs over temporary ones (7.94%).
• High ZW/WGA rates (up to 4.88%) can be reduced with wellness initiatives.
• Confirm your sector’s pension rate—non-compliance risks fines.
• Payroll is monthly, typically on the last working day. Use a reliable system or an Employer of Record (EOR) to ensure compliance.
• Check Belastingdienst for final 2025 figures, as caps and rates may adjust mid-year.

Salaries in the Netherlands

Salaries in the Netherlands stand out with a mandatory 8% holiday allowance, a common 13th-month bonus, and a strong social benefits system, setting them apart from many countries with fewer built-in perks.

Minimum Wage

The Netherlands uses an hourly minimum wage system, adjusted twice yearly (January 1 and July 1). The estimated statutory minimum wage rates are:

• Ages 21 and over: €14.21/hour.
• Age 20: €11.37/hour.
• Age 19: €8.53/hour.
• Age 18: €7.11/hour.
• Age 17: €5.61/hour.
• Age 16: €4.90/hour.
• Age 15: €4.26/hour.  

These rates apply to all employees, with severe penalties for non-compliance—fines up to €10,000 per employee, plus repayment of underpaid wages. Check the Ministry of Social Affairs and Employment for the latest rates, as they may adjust with inflation.

Payroll and Payslips

Salaries are typically paid monthly, often on the last working day of the month, via direct deposit to the employee’s bank account (the standard method). Employers must provide payslips (paper or electronic) detailing:

• Gross salary and net pay after deductions.
• Hours worked (for hourly employees).
• Deductions for taxes, social security, pensions, and health insurance.
• Vacation allowance (at least 8% of annual gross salary, often paid in May).
  

Foreign employers can manage payroll by setting up a local branch and hiring financial staff, or by partnering with an Employer of Record (EOR) to handle compliance, taxes, and payments, allowing you to focus on your core business.

Bonuses

Bonuses aren’t legally required in the Netherlands but are common to attract talent. A “13th month salary” (8.33% of annual salary) is optional, often set in contracts or CLAs, and typically paid in November or December. Performance bonuses, tied to goals or evaluations, are also widespread.

These bonuses must be clearly outlined in contracts, paid fairly per anti-discrimination laws, and reported as taxable income with deductions. Additionally, employees receive a statutory vacation allowance of 8% of annual gross salary, usually paid in May or June.

Industry Salaries (Annual)

Below are typical salary ranges for popular industries in 2025, based on recruitment data and market trends:

These ranges include base salaries and may increase with bonuses or benefits. Tech sectors like SaaS and Internet often offer higher salaries due to demand.

Tips for Employers

• Check if a CLA applies to your industry—it may raise wage standards or require bonuses.
• Ensure payslips and payments align with Dutch tax and social security laws; consult the Tax Administration or an EOR for support.
• Opt for direct deposit, the preferred and most reliable payment method in the Netherlands.

Leaves in the Netherlands

Dutch labor law provides employees with various types of leave to support work-life balance, health, and personal circumstances.  

Annual Leave

Employees in the Netherlands are entitled to a minimum of 4 times their weekly working hours in annual leave. Many collective labor agreements (CLAs) offer more, usually 25–30 days. Statutory leave must be used by July 1 of the next year or it expires, unless the employee couldn’t take it due to valid reasons.  

Additional leave above the statutory minimum expires after 5 years, unless otherwise specified. Employees, including those on sick leave, accrue leave at the same rate. Employees also receive a holiday allowance of at least 8% of their annual gross salary, typically paid in May.

Sick Leave

Employers must pay at least 70% of an employee’s salary during the first 2 years of illness (104 weeks). In the first year, this must not fall below the minimum wage; in the second year, the minimum wage floor no longer applies. This ensures financial support while employees recover.

Maternity and Birth Leave

• Maternity Leave: Pregnant employees are entitled to 16 weeks of leave: 4–6 weeks before the due date and at least 10 weeks after birth. If the baby is born late, the total leave extends accordingly. For multiple births (e.g., twins), leave extends to 20 weeks. If the baby is hospitalized, the 10 weeks post-birth start when the baby comes home. Employees receive 100% of their daily wage (capped at around €230/day), paid by the Employee Insurance Agency (UWV) via the employer. Notification is required 3 weeks in advance. ‍
• Birth Leave for Partners: Partners get 1 week of fully paid leave (by the employer) within 4 weeks of the birth, plus up to 5 additional weeks at 70% salary (paid by UWV) within 6 months of the birth.

Adoption and Foster Leave

Both parents adopting or fostering a child are entitled to 6 weeks of leave, with 100% of their salary (capped as above), paid by UWV. Employees must apply 3 weeks in advance, and employers can only refuse if the business faces serious operational issues.

Parental Leave

Parents of children under 8 are entitled to up to 26 weeks of parental leave. Since 2022, the first 9 weeks are partially paid (70% of salary, via UWV) if taken in the child’s first year; the remaining 17 weeks are unpaid. This applies per child, for both parents.

Special Leaves

• Bereavement Leave: Employees receive 5 days of paid leave for the death of a spouse, partner, or child, and 2 days for a parent, grandparent, or sibling, to attend the funeral and mourn. ‍
• Short-Term Care Leave: Employees can take up to 2 weeks per year to care for a sick child, partner, or parent at home, receiving at least 70% of their salary (not below the minimum wage in the first year). ‍
• Long-Term Care Leave: For serious illnesses (e.g., life-threatening conditions), employees can take up to 6 weeks of unpaid leave per year to care for a child, partner, or parent. ‍
• Emergency Leave: Employees are entitled to 1–2 days of paid leave for unforeseen emergencies (e.g., a family member’s sudden illness or a home crisis), with 100% salary. ‍
• Other Leaves: Leaves for events like marriage or a family member’s wedding are not statutory but often provided (e.g., 2–4 days for an employee’s wedding) via contracts or CLAs. Check applicable agreements for details.

Public Holidays in 2025

The Netherlands recognizes public holidays, but there’s no legal requirement for paid days off—whether employees get the day off depends on their contract or CLA. Common holidays include:

• New Year’s Day: January 1
• Good Friday: April 18
• Easter Sunday: April 20
• Easter Monday: April 21
• King’s Day: April 26 (shifts to April 26 as April 27 is a Sunday)
• Liberation Day: May 5 (a paid day off every 5 years, including 2025)
• Ascension Day: May 29
• Pentecost Monday: June 9
• Christmas Day: December 25
• Boxing Day: December 26
  

Many businesses remain open, though schools and government offices typically close. Check your sector’s CLA or company policy.

Employee Benefits  

Dutch law mandates certain benefits, while additional perks can help your company stand out. Here’s an overview:

Mandatory Employee Benefits

The Dutch social security system ensures employees receive essential benefits, funded through employer and employee contributions via payroll taxes. Mandatory benefits include:

• Sickness Benefits: Employers must pay at least 70% of an employee’s salary (not below the minimum wage in the first year) for up to 2 years of illness, including work-related injuries. ‍
• Unemployment Insurance: Employees are covered for unemployment benefits through the Unemployment Insurance Act (WW), managed by the Employee Insurance Agency (UWV). Employers contribute via payroll taxes. ‍
• Health Insurance Contribution: All employees must have basic health insurance (basisverzekering). Employers contribute by paying an income-related contribution (around 7% of gross salary, capped at a maximum income) to the Dutch Tax and Customs Administration. ‍
• Pensions: Most employees are enrolled in mandatory occupational pension schemes through their sector’s pension fund (e.g., ABP for government workers). Employers typically contribute 60–70% of the premium, with employees covering the rest. Additionally, the state pension (AOW) provides a basic retirement income for all residents at age 67, funded through taxes. ‍
• Holiday Allowance: Employees receive a mandatory holiday allowance of at least 8% of their annual gross salary, typically paid in May, under the Minimum Wage and Minimum Vacation Benefits Act.

Note: Childcare subsidies (kinderopvangtoeslag) are a government benefit that parents apply for directly, not an employer obligation, though some companies offer voluntary childcare support.

Non-Mandatory Employee Benefits

To enhance your compensation package, consider offering additional benefits, which are common in the Netherlands and can help attract talent:

• Transportation Allowance: Subsidize commuting costs, such as public transport tickets or a tax-free allowance of up to €0.23/km (2025 rate) for using personal vehicles. ‍
• Flexible Working: Allow employees to adjust their hours or work remotely. Employees with 26 weeks of service can request flexible arrangements under the Flexible Working Act, and employers must consider these requests fairly. ‍
• Supplementary Pension Plans: Offer additional pension contributions or plans beyond the mandatory sector scheme, providing better retirement benefits for employees and their dependents (e.g., survivor pensions). ‍
• Extra Insurance: Provide supplementary disability, accident, or health insurance to cover gaps, such as extended disability benefits or additional healthcare (e.g., dental or physiotherapy). ‍
• Employee Stock Options: Grant stock options to allow employees to buy company shares at a preferential price, tying their rewards to your company’s growth (common in tech or multinational firms). ‍
• Training and Development: Offer budgets for professional growth, such as courses or certifications, to support employee career development. ‍
• 13th Month Salary: Provide an extra month’s salary, typically paid in December, as a year-end bonus (often stipulated in CLAs but not legally required). ‍
• Wellness Perks: Include benefits like gym memberships, mental health support, or extra leave days beyond the statutory minimum of 20 days (for full-time employees).

It is advised to verify if a collective labor agreement (CLA) applies to your sector, as it may mandate benefits like a 13th-month salary or extra leave. Next, ensure your payroll systems account for mandatory contributions—such as pension, health insurance, and the 8% holiday allowance—to meet legal requirements seamlessly. To attract international talent, you should also consider offering expat-friendly perks like housing allowances or the 30% ruling and enhance your strategy by consulting the Dutch Tax and Customs Administration or a local HR expert to navigate tax implications, particularly for complex benefits like stock options.

Work Visas and Immigration

Expanding your company to the Netherlands requires ensuring that non-EU/EEA employees have the appropriate work visas to live and work legally. The Immigration and Naturalisation Service (IND) oversees visa and residence permit applications, while the Employee Insurance Agency (UWV) handles certain work permits.  

Who Needs a Work Visa?

EU/EEA and Swiss citizens can work in the Netherlands without a visa or permit due to freedom of movement. Non-EU/EEA citizens need a work visa and/or residence permit:

• Short Stay (≤90 days): A Schengen short-stay visa and a work permit (TWV) from UWV may be required, depending on the work type. ‍
• Long Stay (>90 days): A combined residence and work permit (GVVA) or separate permits are needed, depending on the role.

Work Visa Application Overview

If a GVVA or EU Blue Card application is denied, employers (or employees) may formally object. The IND outlines the procedure for submitting objections or appeals.

All submitted documents must also be translated into Dutch, English, French, or German and may require legalization or apostilles depending on the country of origin.

Timelines can vary depending on the completeness of the application and the IND’s current workload. Being a recognized sponsor typically shortens the processing time.

Company Registration in the Netherlands

Companies looking to operate in the Netherlands can either register a local entity—typically a BV (private limited company)—or explore alternatives like using an Employer of Record (EOR) for a faster, lower-risk entry.

Business Entity Types in the Netherlands

Steps to Register a Private Limited Liability Company (BV)

1. Choose and Check a Company Name: Select 1–3 names ending with “BV.” Use the KVK website to ensure the name is unique and complies with naming rules (e.g., no misleading terms). ‍
2. Appoint Directors and Shareholders: At least one director is required (no residency requirement). Shareholders can be individuals or entities. ‍
3. Secure a Registered Address: A physical Dutch address is mandatory (virtual offices may suffice if they meet KVK standards). ‍
4. Prepare Articles of Association: A Dutch notary drafts these in Dutch (English translations are optional), detailing the company’s purpose, share structure, and governance. ‍
5. Register with KVK: The notary submits the Articles of Association and registration details to the Netherlands Chamber of Commerce (KVK). You’ll receive a KVK number and certificate. The process typically takes 1–2 weeks, including notary scheduling. Costs include notary fees (€500–€1,500) and KVK registration (€75 in 2025). ‍
6. Register with the Tax Administration: The KVK automatically forwards your details to the Dutch Tax and Customs Administration (Belastingdienst) for tax registration (e.g., corporate income tax, payroll tax). ‍
7. VAT Registration: If your annual turnover exceeds €20,000 (2025 threshold), register for VAT via the Tax Administration. You’ll receive a VAT number for invoicing. ‍
8. Open a Bank Account: A Dutch bank account isn’t legally required but is practical. Provide your KVK extract, Articles of Association, and director IDs. Remote opening is possible with some banks, though in-person visits may be requested. ‍
9. Obtain Licenses (if applicable): Certain industries (e.g., banking, healthcare, catering) require specific permits. Some sectors (e.g., dairy, horticulture) mandate registration with industry associations. Check KVK’s permit tool for requirements.
   

Compliance with Dutch Company Law

• Governance: The Dutch Civil Code (Book 2) governs companies. Directors must act in the company’s interest, and shareholders hold voting rights at general meetings (AGM), deciding on major issues like appointing directors or approving financials. ‍
• Financial Reporting: File annual financial statements with KVK within 5 months of the financial year-end (extendable to 10 months). Audits are required if you meet 2 of 3 criteria for 2 consecutive years: assets >€6 million, turnover >€12 million, or 50+ employees (2025 thresholds). ‍
• Tax Obligations: Comply with Dutch tax laws, including corporate income tax (20% on profits up to €200,000, 25% above, as of 2025), VAT, and payroll taxes if you have employees. ‍
• Labor and Data Protection: Follow Dutch labor laws (e.g., contracts, wages) and GDPR for data protection, overseen by the Dutch Data Protection Authority. ‍
• Annual Filings: Submit annual updates to KVK (e.g., changes in directors, address) and maintain accurate records.

Alternative: Employer of Record (EOR)

If you prefer not to register a company, an Employer of Record (EOR) can hire employees on your behalf, handling payroll, taxes, benefits, and compliance with Dutch laws. This allows you to focus on business development while avoiding the setup process.

How does an EOR operate?

An Employer of Record is a locally registered entity that takes on the legal responsibilities of employment in the country where you're hiring. They use in-country HR and legal experts to draft compliant contracts, run local payroll, and file taxes on your behalf. While your team manages the employee’s role and performance, the EOR handles all the behind-the-scenes legal and administrative work to ensure full compliance.

Tasks that an EOR can do for you

• Hire employees abroad without setting up a local entity
• Manage compliant employment contracts in the local language
• Handle payroll, tax withholdings, and social security contributions
• Ensure labor law compliance across countries
• Provide benefits administration (e.g., health insurance, pensions)
• Support onboarding and offboarding processes
• Act as the legal employer on record while you manage the day-to-day work

How to find the EOR company for you?

Look for an EOR with local expertise, transparent pricing, and responsive support. A partner like Knit is designed to make global hiring simple—offering a single platform for onboarding, payroll, and compliance, with a team that understands both your business needs and the local laws. If you're expanding across borders, Knit can help you hire with confidence and speed.