Expand your organization into the Netherlands even without a Dutch entity
The small Western European country of the Netherlands punches above its weight in the business world, and is the home of major offices and headquarters of some of the world’s most prominent businesses. The developed economy, excellent English language skills of the population, and a favorable business environment, among other factors, all contribute to it being an attractive place for foreign organizations to expand.
The process of expanding into the Netherlands can, however, take some time, with organizations having to follow a range of strict criteria and comply with complex legislation. These things can be very time-consuming and potentially cause loss of revenue.
A popular way of bypassing the complex administrative procedures is to outsource the legwork to a global professional employer organization (PEO). At Horizons, our comprehensive Netherlands PEO, employer of record, and payroll services are designed specifically to help businesses of all kinds expand abroad faster and more efficiently, including into the Netherlands.
With a dedicated in-house recruitment team, we can also handle your hiring and HR in the Netherlands. We can use our Dutch subsidiary as employer of record so you don’t even need an established entity in the Netherlands to hire locally. Our services can save you thousands of Euros in expansion costs and kickstart your expansion into the Netherlands.
Our Netherlands PEO simplifies your expansion
Horizons enables your business to expand its operations into the Netherlands, without needing to set up a legal subsidiary.
Employment & Labour Laws in Netherlands
📝 Employment contracts in the Netherlands
The Netherlands has extensive employment laws, and your business may also be affected by EU regulations, so it’s vital that you understand your specific situation and the relevant laws before commencing operations.
We strongly recommend drawing up a formal contract of employment in writing whenever hiring in the Netherlands. These contracts should clearly detail all necessary information about the role and employment agreement, such as salary/wage, benefits and entitlements, and termination terms. Any references to compensation should be in Euros.
If you have negotiations with trade unions as part of the employment process, then be sure to include any agreed terms in the contract as well.
By partnering with our Netherlands PEO, Horizons’ team of local experts can provide assistance for drafting strong employment contracts that are compliant with local regulations.
⏰ Working hours in the Netherlands
The upper limit of working hours in the Netherlands is 12 hours per day and 60 hours per week. However, the normal working week is only around 40 hours. This can be longer in some circumstances and if agreed upon by the employee.
📅 Public holidays in the Netherlands
There are several annual public holidays in the Netherlands, and many employees will receive some of these off as paid leave (although this is not legally mandated).
🏖 Vacation leave in the Netherlands
In the Netherlands, employees are legally entitled to a minimum of 20 days of paid vacation leave. Some may negotiate more than this, and many employers choose to offer more days as part of their benefit packages.
😷 Sick leave in the Netherlands
Workers in the Netherlands are entitled to up to two years of paid sick leave, covered by their employer. For the first year, employees receive at least 90% of pay, and in the second year the rate is at least 80%, within predefined limits. Employers can choose to offer more as part of a benefits package.
👶 Parental leave in the Netherlands
Mothers are legally entitled to at least 16 weeks of paid leave, with six weeks before the birth and ten weeks after. Male parents can take two days paid and three days of unpaid leave.
Parents can take additional unpaid parental leave until their child is eight years old. They are both entitled to take this separately, and it is limited to 2600% of normal weekly working hours. Commonly, parents will work reduced hours for a few months before returning to work full time.
💰 Terminations and severance in the Netherlands
The procedure for terminations in the Netherlands is highly complex and can be difficult to navigate for foreign organizations. In short, employers have several options:
- – Terminating the employment by mutual agreement between employer and employee.
- – Taking the case to the UWV (Employee Insurance Agency)
- – Taking the case to the cantonal court.
- – Urgent dismissal
The majority of employers aim to terminate by mutual consent, as this is the simplest and fastest route in most cases.
Sometimes, severance payments may be necessary. For example, if an employee has been with a company for over two years, they are entitled to one-sixth of monthly salary per half-year of employment for the first ten years. For ten years or more of service, employees are entitled to one-quarter of monthly salary per half-year of employment. Older employees (over 50 years old) may be entitled to even larger severance payments. The limit is generally €75,000, but additional payments may be awarded by the court if the dismissal is deemed to be unjust.
Due to the complexity of Dutch terminations and severance laws, and the potentially large payouts, it is important that you fully understand the relevant laws when expanding into the Netherlands.
Navigating employee terminations and handling severance packages can be complicated for companies expanding overseas for the first time. Horizons’ Netherlands PEO can mitigate risk for foreign companies and provide guidance through this process.
🏦 Taxation in the Netherlands
The Netherlands has expansive social benefits programs in place for the public, and these are partially funded by both employees and their employers. Generally, employers can expect to pay a little over 20% on top of salaries in these social contributions.
The corporate tax rate in the Netherlands is 19%, rising to 25% on taxable earnings over €200,000. These rates are set to fall in 2021.
The country operates a progressive income tax system, with rates between 9.7% and 49.5% depending on income level.
🏥 Health coverage in the Netherlands
The healthcare system in the Netherlands is quite complex. While people are covered automatically, most are also required to arrange private health insurance for short-term healthcare needs. However, the insurance system is heavily regulated, and significantly cheaper than countries such as the US, costing roughly €100 per month.
The healthcare system is partially funded by employer and employee contributions.
💳 Compensations & benefits in the Netherlands
Compensation laws in the Netherlands
As of July 2020, the minimum wage for workers over the age of 21 is €1,680 per month. The minimum wage can be lower for younger employees.
Benefit management in the Netherlands
Organizing a Dutch benefits system for your employees can be a long and difficult process as a foreign company. You should be prepared to spend a significant amount of time setting up the system and keeping it compliant, which can cause delays in the hiring process.
Alternatively, you could use a payroll outsourcing firm to handle your Dutch payroll. At Horizons, our Netherlands payroll experts can set up and manage your benefits system for you, freeing you to focus on your successful expansion.