Employer of Record in Netherlands

An Employer of Record (EOR) in the Netherlands is a company that legally hires employees on your behalf. This means you can build a team in the Netherlands without setting up a local entity. An EOR handles all the local HR tasks, like payroll, taxes, benefits, and compliance with Dutch labor laws. This lets you focus on managing your team and growing your business. If you are looking for an EOR provider, you can check out Rivermate.

How an Employer of Record (EOR) Works in Netherlands

Using an EOR in the Netherlands simplifies hiring and managing employees. Here is how it works:

• You Find the Candidate: You recruit and select the person you want to hire in the Netherlands.
• The EOR Hires Your Candidate: The EOR legally hires the employee through a local, compliant employment contract.
• Onboarding and HR Management: The EOR manages all HR functions. This includes payroll, tax withholding, benefits administration, and ensuring compliance with Dutch labor laws.
• You Manage Your Employee: You manage your employee’s day-to-day work and responsibilities. The EOR handles the legal and administrative side of employment.

Why use an Employer of Record in Netherlands

Using an EOR in the Netherlands offers a practical way to expand your business and hire talent without the complexities of establishing a legal entity. It saves you time and resources, allowing you to focus on your core business operations.

Here are some key benefits of using an EOR:

• Faster Market Entry: You can hire employees and start operations in the Netherlands much faster than if you had to set up your own company.
• Compliance with Dutch Law: EORs are experts in Dutch labor laws and regulations. They ensure that your employment practices are fully compliant, reducing your legal risks.
• Simplified Payroll and Taxes: The EOR handles all payroll processing, tax deductions, and social security contributions. This saves you from navigating a complex foreign system.
• Attractive Benefits Packages: EORs can often provide competitive benefits packages for your employees, helping you attract and retain top talent.
• Cost Savings: You avoid the high costs associated with setting up and maintaining a legal entity in the Netherlands.

Rivermate's transparent pricing model eliminates complexity with a single, competitive monthly fee per employee. Unlike traditional PEO providers, our pricing in Netherlands includes comprehensive HR support, benefits administration, compliance management, and access to our proprietary dashboard for real-time workforce analytics. No hidden costs, no setup fees—just straightforward pricing that scales with your business needs while ensuring full legal compliance in Netherlands.

Hiring in the Netherlands is an attractive option for many businesses, thanks to its highly skilled, multilingual workforce and thriving economy. The Dutch job market is rich with professionals in sectors like IT, engineering, and finance. To successfully hire in the Netherlands, you need to understand the local employment laws and cultural norms. The Dutch value direct communication, punctuality, and a healthy work-life balance.

Employment contracts & must-have clauses

When you hire an employee in the Netherlands, you must provide a written employment contract. This ensures clarity for both you and your employee. Dutch law requires that certain essential information be included in the contract.

Types of Employment Contracts:

• Indefinite contract: This is a permanent contract with no end date. It offers the most job security.
• Fixed-term contract: This contract has a specific end date. A fixed-term contract can automatically become an indefinite contract after three consecutive contracts or if the employment relationship exceeds 36 months.

Must-Have Clauses:

Your employment contracts must include the following details:

• Parties' details: Your company's name and address, and the employee's name and address.
• Job description: A clear outline of the employee's role and responsibilities.
• Start date: The date the employment begins.
• Working hours: The number of hours the employee is expected to work per week.
• Salary: The gross salary and when it will be paid.
• Holiday entitlement: Employees are entitled to a minimum of four times their weekly working hours in paid leave per year.

Probation periods

You can include a probation period in an employment contract to assess a new employee's suitability for the role. During this time, either you or the employee can terminate the contract without notice.

Here are the rules for probation periods in the Netherlands:

A probation period is only valid if it is agreed upon in writing by both you and the employee.

Working hours & overtime

The Working Hours Act in the Netherlands sets limits on how many hours your employees can work. This is to protect their health and well-being.

• Maximum working hours: An employee can work a maximum of 12 hours per day and 60 hours per week.
• Long-term average: Over a 16-week period, an employee cannot work more than an average of 48 hours per week.
• Overtime: Dutch law does not have specific rules for overtime pay. Any arrangements for overtime compensation should be detailed in the employment contract or a collective labor agreement.

Public & regional holidays

The Netherlands has a number of official public holidays. However, there is no law that states employees must have a day off on these days. Whether an employee gets a day off is determined by their employment contract or collective labor agreement.

Public Holidays in 2025:

• New Year's Day: 1 January
• Good Friday: 18 April
• Easter Sunday & Monday: 20 & 21 April
• King's Day: 26 April
• Liberation Day: 5 May
• Ascension Day: 29 May
• Whit Sunday & Monday: 8 & 9 June
• Christmas Day & Boxing Day: 25 & 26 December

Hiring contractors in Netherlands

Hiring independent contractors, or ZZP'ers, in the Netherlands can be a flexible way to bring in specialized skills. However, you need to be careful about worker misclassification. Dutch authorities are strict about ensuring that contractors are genuinely self-employed and not "disguised employees."

Misclassification can lead to significant financial penalties, including back payment of taxes and social security contributions. The key distinction between an employee and an independent contractor lies in the level of authority and supervision. A contractor should have autonomy over their work and how they perform it.

An Employer of Record (EOR) can help you avoid the risks of misclassification. An EOR legally employs the worker on your behalf, taking on all employer responsibilities. This ensures compliance with Dutch labor laws while you still benefit from the contractor's expertise. Using an EOR removes the ambiguity of the worker's status and protects you from potential legal issues.

Navigating compensation and payroll in the Netherlands is straightforward when you understand the key components. The system is well-regulated, ensuring fairness for both you and your employees. It's built on principles of timely payment, clear deductions, and shared contributions to social security. This guide breaks down what you need to know to manage payroll confidently.

Payroll cycles & wage structure

In the Netherlands, the payroll cycle is typically monthly. You'll pay your employees for their work between the first and last day of the month, with payment usually processed on the last day.

A unique aspect of Dutch compensation is the mandatory holiday allowance. You must pay your employees a bonus of at least 8% of their gross annual salary. This is usually paid out in May.

Overtime & minimums

The Dutch government sets a minimum hourly wage. For employees 21 and older, this is the standard rate. Younger employees have their own lower minimum wage rates. These rates are regularly updated, so it's important to stay current.

While there are no universal, legally mandated overtime rates, any overtime agreements are typically outlined in an employee's contract or a collective labor agreement (CLA).

Employer taxes and contributions

As an employer, you are responsible for withholding and paying several taxes and social security contributions. These are calculated on your employee's gross salary. The main contributions fund unemployment, disability, and healthcare benefits.

Employee taxes and deductions

Employees also contribute to the system through deductions from their pay. The primary deduction is the payroll tax, which combines income tax and national insurance contributions.

The income tax system is progressive, meaning higher earners pay a larger percentage.

In the Netherlands, you'll find a strong emphasis on work-life balance. This is reflected in the country's approach to employee benefits and leave. The system is designed to give you peace of mind, with a solid foundation of mandatory benefits and the flexibility for companies to offer more. You can expect a generous amount of paid time off, support during illness, and leave for important life events.

Statutory leave

Dutch law sets out the minimum leave you are entitled to.

• Annual leave: You get at least four times your weekly working hours in paid vacation days per year. So, if you work 40 hours a week, you have a right to 20 days of paid leave.
• Holiday allowance: You will receive a holiday allowance, which is at least 8% of your gross annual salary. Most employers pay this out in May or June.
• Sick leave: If you are unable to work due to illness, you are entitled to up to two years of sick leave. Your employer must pay at least 70% of your salary during this time.
• Maternity leave: Expectant mothers are entitled to at least 16 weeks of paid maternity leave.
• Paternity leave: Partners receive one week of paid leave after the birth of their child.
• Parental leave: Each parent can take up to 26 weeks of parental leave per child. Nine of these weeks are partially paid if taken within the child's first year.
• Emergency leave: You can take a short paid leave for urgent, unforeseen personal situations.

Public holidays & regional holidays

The Netherlands has a number of public holidays, but a day off is not always guaranteed by law. Your right to a paid day off on a public holiday depends on your collective labor agreement or employment contract.

While some regional events like Carnival in the south are widely celebrated, they are not official public holidays.

Typical supplemental benefits

Many companies in the Netherlands offer more than the legal minimum to attract and retain employees.

How an EOR can help with setting up benefits

Setting up a competitive benefits package in a new country can be complex. An Employer of Record (EOR) simplifies this process for you.

An EOR already has a legal entity in the Netherlands. They understand the local laws and employee expectations. They can advise you on what makes a competitive benefits package and handle the administration. This includes everything from payroll and holiday allowances to pension contributions and health insurance. Using an EOR helps you offer attractive benefits to your employees in the Netherlands without the headache of navigating the local system yourself.

When your business in the Netherlands needs to part ways with an employee, the process is more structured than you might be used to. Dutch law outlines specific rules for termination and offboarding to ensure fairness for both you and your employee. You can't simply let someone go. You generally need a valid reason and, in many cases, permission from a government agency or court. The process involves clear notice periods, potential severance pay, and specific documentation.

Notice Periods

When you decide to terminate an employment contract, you must provide the employee with a statutory notice period. The length of this period depends on how long the employee has worked for your company. Think of it as a runway, giving your employee time to prepare for their next step.

The notice periods are straightforward:

• Less than 5 years of service: 1 month
• 5 to 10 years of service: 2 months
• 10 to 15 years of service: 3 months
• More than 15 years of service: 4 months

You must give this notice in writing, and it typically starts at the beginning of the next calendar month.

Severance Pay

In the Netherlands, severance pay is called "transition compensation" (transitievergoeding). If you initiate the termination, you are generally required to pay this to your departing employee. This payment is intended to help them transition to a new job.

Here’s how it works:

• Eligibility: An employee is entitled to a transition payment from their very first day of employment. This applies whether they have a permanent or fixed-term contract. The key is that you, the employer, are ending the relationship.
• Calculation: The amount is based on the employee's length of service and gross monthly salary. For each year of service, the employee gets one-third of their gross monthly salary.
• Maximum Amount: There is a cap on the transition payment. For 2025, this is €98,000, or a full year's salary if that amount is higher.

There are some exceptions. For example, you typically don't have to pay transition compensation if the employee is dismissed for serious misconduct.

How Rivermate Handles Compliant Exits

Navigating the details of Dutch employment law can be complex. That's where we come in. At Rivermate, we handle the entire offboarding process to ensure everything is done correctly and respectfully.

Here’s how we simplify compliant exits for you:

• Clear Process: We manage all the necessary steps, from determining the correct notice period to calculating the final payments.
• Proper Documentation: We prepare all required documents, such as the final payslip and a written termination letter that clearly states the reasons for dismissal.
• Transition Payments: We calculate and process the correct transition compensation, ensuring you meet your legal obligations.
• Local Expertise: Our team understands the nuances of Dutch labor laws, including the requirement to get approval from the Employee Insurance Agency (UWV) or the subdistrict court for certain types of terminations.

We take care of the administrative burden so you can focus on your business and your team. We ensure the process is smooth, compliant, and fair for everyone involved.

Navigating the world of visas and work permits in the Netherlands can feel complex. This guide breaks down what you need to know, whether you're looking to hire someone for the long term or just planning a short business trip. We will walk you through the essentials of employment visas, how an Employer of Record (EOR) can help, and the rules for short-term business travel.

Employment visas & sponsorship realities

When hiring non-EU/EEA citizens in the Netherlands, you will generally need to secure a work permit. The two main types are the single permit (GVVA) for stays longer than 90 days and the short-term work permit (TWV) for stays up to 90 days. Your role as the employer is crucial in this process, as you are responsible for applying for these permits on behalf of your employee.

An Employer of Record (EOR) can be a practical solution, especially if you don't have a legal entity in the Netherlands. An EOR can legally employ and sponsor workers on your behalf. This is particularly useful for hiring highly skilled migrants.

However, be aware of some important realities:

• Recognized Sponsorship: To sponsor highly skilled migrants, an employer (or EOR) must be a "recognized sponsor" with the Dutch Immigration and Naturalisation Service (IND). This status streamlines the application process.
• Upcoming Changes for EORs: The Dutch government is introducing new rules that will impact EOR arrangements. These changes, expected in 2025, include:
  • A two-year limit on EOR-sponsored work permits, with no option for renewal.
  • A new requirement for the company where the employee actually works (the "de facto employer") to also become a recognized sponsor.
• What an EOR typically can't sponsor: While EORs are a flexible solution, they may have limitations. For example, they may not be able to sponsor interns or certain types of trainees, as these often fall under different immigration categories with specific requirements that an EOR structure may not accommodate.

Business travel compliance

For short-term business visits of up to 90 days within a 180-day period, a Schengen visa is usually required for individuals from non-Schengen area countries. This visa allows travel throughout the Schengen zone.

Here are the key points for business travel:

• Purpose of Visit: The trip must be for business purposes, such as meetings, negotiations, or attending conferences. You cannot perform work that would otherwise require a work permit.
• Required Documents: When applying for a business visa, you will typically need:
  • A valid passport with at least two empty pages.
  • A completed Schengen visa application form.
  • An invitation letter from the Dutch company you are visiting.
  • Proof of accommodation and sufficient funds for your stay.
• Orange Carpet Visa Facility: If you or your employees travel frequently to the Netherlands for business, you may be eligible for the Orange Carpet Visa Facility. This program simplifies the visa application process, requiring fewer documents and offering longer-term visas.