Contract Types

Contracts in the Netherlands can be Indefinite or Fixed Term. Contracts are often governed by a Collective Bargaining Agreement (CBA).

Probation

Probation periods should be stated in the contract and the term will depend on the length of the contract. The maximum length is 1 month for contracts over 6 months in duration and 2 months for those over 2 years. The probation period must be mutually agreed on.

Working Hours

The normal working week is 38 to 40 hours over a 5 day week, which can be increased to 45 hours. Maximums are a 12 hour day and 60 hours per week.

Overtime

Overtime is usually agreed upon by individual employment contracts or collective agreements. It is usually capped at 55 hours per 4 week period.

Other Financial

Salaries must be paid before the end of the month. There is no legal requirement for a 13th salary but a holiday allowance of 8% is paid in addition to gross salary.

Foreigners moving to the Netherlands and who meet the criteria (including minimum salary of Eur 46,107) can receive 30% of their income tax free for 20 months, 20% tax free for the following 20 months and 10% tax free for 20 months thereafter.

Corporation Tax 2024: 25.8%

Consumption Tax: 21%

Employers’ Social Security: 18.46 – 25.72%

Employees’ Contributions: 27.65 – 30.35%

Income Tax Rates: 

Up to 38,098 EUR – 9.32%

38,098 to 75,518 EUR – 36.97%

Over 75,518 EUR – 49.5%

Notice

For the employer, the notice period depends on the duration of employment:

• Less than 5 years requires 1 month’s notice
• 5 to 10 years requires 2 months’ notice
• 10 to 15 years requires 3 months’ notice
• Over 15 years requires 4 months’ notice.

A longer notice period can be agreed in the employment contract, with a maximum of 6 months for the employee. Generally in the Netherlands, employee notice is 1 month.

Payment in lieu of notice can be made with the employee’s consent, but is rarely done. Dismissal without notice will lead to additional compensation being awarded of the amount of potential employee earnings during the perceived notice period. No notice is due during probation.

Process

In the event of a mutual termination agreement, the employee has a two weeks reflection period prior to making the decision. Any termination must be in writing or it is invalid. Terminations due to redundancy or disability must involve the Employee Insurance Agency. For dismissals, the employer should have a valid reason. The employee can either be dismissed by mutual consent, recorded in a written settlement agreement, or terminated with consent which needs a transition payment.

Severance Pay

This is known as a transition payment. This payment is one third of 1 months’ salary, including holiday allowance, and any commissions and bonuses, for each calendar year of employment, prorated for part years. It is paid up to a capped amount.

Paid Public Holidays: 9

New Year’s Day – 1st January, no day given in lieu

Good Friday – 29th March, day given in lieu n/a

Easter Monday – 1st April, day given in lieu n/a

King’s Day – 27th April, no day given in lieu

Liberation Day – 5th May, no day given in lieu

Ascension Day (Thursday 40 days after Easter) – 9th May, day given in lieu n/a

Pentecost Monday – 20th May, day given in lieu n/a

Christmas Day – 25th December, no day given in lieu

Boxing Day – 26th December, no day given in lieu

All leave entitlement based on 5 day working week. Public holidays falling on Sunday not included. Number of days quoted are working days unless stated otherwise.

Paid legal entitlement (working days)

The statutory minimum is 20 days but many employers will offer 25 days or more.

Carry over permitted

Statutory leave can be carried over for 6 months, additional leave may be carried over for up to 5 years. It is the employer’s responsibility to inform the employee that his statutory leave is about to expire.

Payment in lieu allowed

Yes

Holiday Allowance

Employees in the Netherlands are entitled to a holiday allowance in addition to the stated gross salary (unless specified otherwise in the contract). Holiday allowance is 8% of gross annual salary if salary is less than 3 times the minimum wage. Above this a lower percentage may be negotiated. The allowance is usually paid in May.

Sick

The employer pays at least 70% of the most recent gross salary plus holiday allowance for up to 2 years. Some employers will pay 100% of wages for one year, only 70% is allowed thereafter.

A sick note is not needed. The employer should register the employee’s sickness with the Employee insurance Agency.

Maternity

New mothers are entitled to 16 weeks’ maternity leave and a right to return to work. Maternity leave should be taken 4 to 6 weeks before and 10 to 12 weeks after the birth. The employer pays full salary (up to a capped amount) and the Employee Insurance Agency reimburses a part of the regular salary to the employer.

Should the employee be unable to work after the birth for medical reasons, she is entitled to 100% of salary for a year after the birth.

Paternity

Fathers are entitled to 5 days of paid paternity leave paid by the employer which must be taken within the first 4 weeks after the birth. An additional leave entitlement of 5 weeks during the first 6 months of the child’s life is available for ‘partner leave’ which can be taken in one block or spread over the 6 months. For those in full time employment this is paid for by state benefits at up to 70% of the daily wage (based on prior earnings, capped at a certain level).

Parental

Parental leave is available for up to 26 weeks (technically 26 times the length of the working week). Of this, 9 weeks’ leave is paid at 70% and must be used during the child’s first year. Parents are then entitled to un-paid parental leave until the child is 8, of the remaining 17 weeks. It is up to the employee how they rearrange their working hours. Some employers will partially cover the salary.

Adoption leave is 6 weeks.

Employers apply for leave allowance on behalf of their employee to the Employee Insurance Agency.

Other

Employees are entitled to emergency leave and other short absence leave intended for unforeseen personal circumstances for which an employee has to take time off immediately, with a reasonable request. The employer is required to continue paying the employee’s salary. 

Short-term care leave is also available, up to a maximum of 2 days per year. The employer pays 70% of the employee’s salary.

Long-term care leave is unpaid and is a maximum of 6 times the working weekly hours. The employer does not have to pay the employee’s salary.

Medical

In the Netherlands all employees must purchase a government approved private medical insurance policy. These cost between Euro 90 and 1,250 per month. It is rare for employers to provide additional insurance but they may provide reimbursement.

Life

Life cover is normally provided by the employee’s pension plan but competitive employers will provide Long Term Disability and Short Term Disability plus insurance to plug the gap between statutory sick pay and the actual salary.

Pension

Typical employer pension contribution to a workplace pension is 15 to 16%. This is considered the most important benefit in the Netherlands.