Dutch Employee Benefits
Happy and satisfied employees make your business thrive and lead to even better profits. However, the specific benefits for employees in the Netherlands might not all be familiar to you yet. By using our PEO and EOR service we can provide compliant labour contracts for employees in Italy including local benefits.
When expanding your company’s presence in a new country, you need to ensure compliance both in your employment contracts and benefit guarantees. These involve social security contributions, sick leave, health insurance, and unemployment, to name a few. In Holland, benefits are guaranteed by national legislation as well as collective agreements with trade unions or workers’ councils.
What Compensation Laws exist in The Netherlands?
In the Netherlands, a wide-ranging and daunting framework of employment laws and regulations guarantee employees enjoy protection throughout their working life and into retirement. Legislation covers such as minimum wages, social insurance, redundancy, termination, and severance, working hours, vacation leave, maternity, and paternity benefits and more. Statutory and mandatory minimums cannot be undercut by collective or trade union agreements, although these can improve entitlements for employees.
Drawing up contracts is complex enough, but in the Netherlands, it is vital to fulfil responsibilities to your employees over benefits, compensation, and minimum requirements. Do not take the risk of ignoring them. Compensation and benefits include:
- National Minimum Wage: Minimum wages paid to full-time employees over the age of 21 increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The new weekly rate is €392.55 (US$460) and €78.51 (US$92) per day.
- Working Hours: These are between 36 and 40 hours weekly, or seven to eight hours per day usually between 6am and 6pm, five days a week. The maximum number of hours is 60 per week with a maximum of 12 hours per shift.
- Health Care: All Dutch residents must be covered for basic public health insurance (ZVW). Private healthcare is funded both by contributions from employees, starting at around €100 (US$117) annually, and from employers paying an amount that depends on employees’ salaries.
- Notice Periods: Minimum periods of notice must be given both when a company releases staff or an employee terminates their employment. Employees on a permanent contract must always be given notice. Dutch law provides for the following terms of notice: Fewer than five years’ service – 1 month; more than five years, fewer than 10 years – two months; more than 10 years, fewer than 15 years – three months; 15 years’ service or more– four months. If the employee’s notice period is more than one month, the employer’s reciprocal notice period must be twice as much up to a maximum of six months.
- Redundancy, Termination and Severance: Regulations for dismissals are strictly applied in the Netherlands. Employers must have a valid reason for terminating employment. If dismissals are mutually agreed the employer must make a written statement of the terms. If the employer terminates employment and the employee agrees with the reason in writing, they receive a transition payment. This is like a severance payment and applies if the employee has been in position for a minimum of two years. However, employees have a 14-day ‘reconsideration period’ to revoke their agreement and do not need to give a reason. If termination is not mutual, the employer needs approval from the Employee Insurance Agency (UWV).
Social Security in The Netherlands
While all social security and benefits apply to people living and working in the country, exceptions may apply depending on the contract conditions and the employees’ country of origin
There are two types of compulsory social insurance for eligible expat workers. They are:
- National insurance schemes (Volksverzekeringen)
- Employees insurance schemes (Werknemersverzekeringen)
Newly arrived workers must attend the registration office (Dienst Burgerzaken) in the (Gemente) municipality where they live to obtain a BSN number and enroll with the tax and social insurance system.
EU and EEA-nationals need only to take their ID (passport or national identity card), but non-EEA nationals need a work permit stating they are permitted to work in the EU or EEA.
Statutory Employer Costs in The Netherlands
Employer Payroll Taxes
- 2.70% or 7.70% – Unemployment Insurance (WW)
- 7.03% – Health Insurance
- 0.5% – Child Care Premium
- 10.23% or 15.23% – Total Employment Cost
Unemployment Insurance depends according to type of contract. The lower rate is applicable to employees with a contract of indefinite duration, whilst the higher rate applies to employees with a temporary contract.
Other statutory employer costs include:
- National Minimum Wage: The minimum wages paid to employees over the age of 21 in full-time employment increased from €1,684 to €1,701 (US$1,997) from July 1, 2021. The new weekly rate is €392.55 (US$460) and €78.51 (US$92) per day.
- Corporate Tax: The standard rate is 25% with 16.5% applying to the first €200,000 (US$234,500) of taxable income for Small and Medium Enterprises (SMEs), and 9% to some categories of intellectual property. Resident companies are taxed on their worldwide income, whether private or public limited companies. Foreign companies are considered resident if incorporated under foreign law but managed in the Netherlands.