If you’re looking to expand your team in Europe, the Netherlands is an excellent destination to consider. The country boasts a high standard of living, ranks highly in global innovation, and has an impressive digital infrastructure. Moreover, the Dutch labor market is filled with a highly educated and skilled workforce, making it an ideal place to find top talent.

However, hiring employees in the Netherlands involves establishing a local legal entity, which can be time-consuming and costly. An alternative is partnering with an Employer of Record (EOR) in the Netherlands.

An EOR allows you to hire employees in the Netherlands without needing to set up a local office or take on the associated legal responsibilities. You won’t have to worry about tax compliance, labor law adherence, or managing payroll in the local currency. An EOR can handle everything from payroll and benefits to HR and compliance, making it easier for you to hire globally, including in the Netherlands.

5 Steps to Hiring in the Netherlands Using an Employer of Record

Here are the five steps to hiring in the Netherlands with an EOR:

Step 1: Select a Suitable EOR
Start by understanding your business needs and researching available EOR services. Each provider offers slightly different services, so it’s crucial to understand their offerings and review the pros and cons.

Step 2: Think About Security
Choose an EOR service provider that prioritizes safeguarding your intellectual property and data security. Inquire about the software and processes they use to ensure compliance and high levels of security.

Step 3: Ensure a Best-in-Class Employee Experience
Your EOR should provide an excellent employee experience throughout the hiring, onboarding, and payment process. Look for services that offer smooth onboarding, an easy-to-use payroll interface, and attractive employee benefits.

Step 4: Check Reviews and Testimonials
After shortlisting EOR partners, check what others are saying about them. Look for reviews and testimonials on the EOR’s website, third-party review sites, and possibly contact their clients directly for insights.

Step 5: Decide on a Compensation Package
Before hiring, determine your compensation and benefits package. A good EOR will help you create an equitable package based on local labor laws, the employee’s role, and experience level.

What Are the Benefits of Using an Employer of Record in the Netherlands?

Using an EOR in the Netherlands offers several benefits, whether you’re hiring an entire team or just one employee. The main advantage is that you can hire talent without establishing a legal entity in the country, saving you time and money.

An EOR ensures compliance with Dutch labor laws by providing an employment contract that covers remuneration, payroll, working hours, location, benefits, and termination details. Additionally, an EOR manages HR and administrative processes, including:

• Onboarding procedures
• Managing global workers on a single platform
• Making tax and payroll deductions
• Paying workers in the local currency
• Staying up-to-date with evolving labor laws

How Much Does It Cost to Use an EOR in the Netherlands?

The cost of using an EOR in the Netherlands varies depending on the company and its payment structure. Traditional EOR companies might charge more than newer alternatives, and some cheaper options may not offer the same level of compliance or security. Costs are typically calculated based on:

Payment Structure:
Some EORs charge a percentage of each employee’s salary, usually between 15% to 18%. Others charge a flat monthly fee per employee, which can range from $599 to over $2,000, depending on the country and payment frequency.

Minimum or Maximum Employee/Contractor Requirements:
Check if the EOR has a minimum or maximum employee requirement, as this can impact your overall cost.

Onboarding Fees:
Some EORs may also charge additional onboarding or setup fees.

Hiring in the Netherlands

The Netherlands is one of the happiest countries in the world, with a high standard of living. Its strong economy and talented workforce make it a popular location for businesses looking to expand in Europe. However, hiring in the Netherlands requires a commitment to labor laws and employee welfare.

Minimum Wage: €1,995 per month for employees aged 21 and older, typically paid monthly.
Standard Working Week: 36 to 40 hours.
Paid Holiday Entitlement: At least 20 days per year.
Employer Contributions: Around 16.5% of an employee’s salary.

Employment Contracts and Agreements in the Netherlands

A legally compliant employment contract in the Netherlands must include:

• Names and addresses of both employer and employee
• The employee’s work location and job details
• Standard working hours
• Salary and payroll details
• Contract start date and duration
• Length of the probationary period
• Holiday entitlement
• Notice period
• Pension contributions (if applicable)

Labor Law Compliance in the Netherlands

Working Hours:
Employees cannot work more than 60 hours per week. The average working week should not exceed 48 hours over a 16-week period, or 55 hours for up to four consecutive weeks.

Equality:
Dutch law prohibits discrimination based on religion, politics, race, gender, age, or disability. Employers must offer equal working conditions and pay scales to all employees.

Penalties:
Employers face fines and penalties for non-compliance with minimum wage laws or labor regulations. Late filing and payment of income tax can also result in penalties and interest payments.

Payroll and Payroll Taxes in the Netherlands

Through Remote, all employees are paid monthly, with payments made after the work period is completed. Employer contributions include various insurance premiums and childcare allowances, which are paid up to a maximum base salary of €59,706 (approximately $67,700 USD). Employee contributions cover old age pensions, long-term care, and orphan and widow/widower pensions, with income tax rates ranging from 0% to 49.50%.

The Netherlands Employee Benefits and Compensation

Minimum Wage: €1,995 per month for employees over 21 years of age.
Leave Entitlement:

• 20 days of paid holiday leave annually, with many companies offering more.
• 16 weeks of paid maternity leave, with 4 to 6 weeks before the due date.
• One week of paid paternity leave, with up to five weeks of unpaid leave in the first six months.
• Employees can also take unpaid parental leave for children up to 8 years old.
• Sick leave entitles employees to 70% of their last paycheck for up to one year.

The Netherlands Severance Pay and Employee Terminations

Probationary Period:
Cannot exceed two months. Employers can terminate an employee’s contract within the probationary period if they are not meeting the required performance standards.

Terminations and Notice Period:
Dutch labor laws enforce a notice period when terminating an employment contract, with employers needing to give double the notice period of employees. The notice period for employees ranges from one to six months, depending on the length of service.

Severance Pay:
Known as a transition payment, severance pay is calculated as a third of the employee’s gross monthly wage per year of service.

What Are the Risks of Employee Misclassification in the Netherlands?

Misclassifying employees as contractors can have serious consequences in the Netherlands. Employees are entitled to benefits and protections under Dutch labor laws, while contractors are not. Misclassification can lead to fines, retrospective social security payments, and other penalties.

An EOR like Remote has the expertise to help you navigate Dutch employment laws and avoid the risks associated with employee misclassification.

Get Started with an EOR in the Netherlands

Expanding your business globally has many benefits, including access to new markets and international talent. However, hiring employees in the Netherlands involves navigating complex labor laws and tax regulations. Partnering with an EOR like Remote can simplify the process, ensuring compliance and allowing you to focus on building your international team.

Ready to start hiring in the Netherlands? Contact us to learn more about how we can help you expand your business globally.

For any sales inquiries, feel free to reach out to us:

Europe: +44 (0) 330 380 0161
US: +1 800 910 7847
Email: sales@stipenda.com