The Netherlands’ open economy is competitive, and ranked 4th in the 2016-17 Global Competitiveness Index, right behind the U.S. The Netherlands has thriving start-up businesses. In fact, the surge of successful entrepreneurial ventures has made the country one of the sought-after start-up hubs in the Europe. It is the 17th largest economy in the world and the second biggest agricultural exporter (after the US).
The 2017 Index of Economic Freedom shows total foreign direct investment to the Netherlands is expected to be $72.6 billion. The country is well-connected within Europe with an excellent logistics infrastructure.
Principal language: Dutch
Government: Constitutional Monarchy
Capital City: Amsterdam
Major Cities: Amsterdam, The Hague, Rotterdam, Utrecht
Employers and employees can implement either an oral or written employment contract. However, within a month of work commencement, employers must provide a written contract which includes the following:
- Salaries / Wages
- Hours of work
- Job description
- Location of work
- Beginning and duration of the contract
- Duration of probationary period
- Pension benefits, and
- Details of the collective labor agreement, if there is any.
Most agreements contain a probationary period, though it is not mandatory for employers to include this. The duration of probationary periods in employment contracts and collective bargaining agreements are usually for 1 to 2 months, depending on the type of contract.
Employers cannot hire the same employee to fulfill their temporary work requirements for more than 2 consecutive years. After 2 years of temporary contracts, the subsequent contract must be permanent. It is only possible to prevent a change from a temporary to a permanent contract if there is a minimum gap of 6 months between the 2 contracts. Otherwise, it is legally considered as 1 contract with consecutive days.
Under the Working Hours Act, the maximum workday is 12 hours and the maximum workweek is 60 hours. Over a 4 week period, on average an employee's workweek cannot be more than 55 hours, and over a 16-week period, the average work hours cannot be more than 48 hours.
Any work done for more than an hour between midnight and 6:00 a.m. is considered as a night shift. Night-shift jobs have rules that are more stringent for employers. These rules are listed below:
- The maximum duration of night shift is 10 hours
- The average workweek must not be more than 40 hours over a 16-week period
- After a night shift, employees must have at least a 14 hour gap between their shifts
- If employees work 3 or more night shifts consecutively, they must be given at least 46 hours off before their next shift.
In the case of a general shift, after a shift is completed, an employee’s next shift cannot start for at least 11 hours. However, it can be shortened to 8 hours once per week. Employees are entitled to 36 consecutive hours of rest after a 5-day work schedule. Workers may work longer in a week, provided they have a minimum rest period of 72 consecutive hours every 14 days.
Dutch law does not specify any national standard as overtime rules. Overtime pay rates are typically included in employment contracts or collective bargaining agreements.
If employees work beyond the normal weekly work schedule under the Working Time Act, they may be entitled to overtime pay at a higher rate or receive compensatory time off in lieu of that time. The typical work hours per week are between 36 and 38 hours.
In the Netherlands, there are 2 national holidays: the King's birthday, April 27, and Liberation Day, May 5, celebrating the end of World War II. Liberation Day is celebrated every 5 years; the next celebration will take place in 2020.
Other observed public holidays are:
- New Year's Day
- Good Friday
- Easter Monday
- Ascension Day - the 40th day after Easter Sunday
- Whit Monday (the day after Pentecost, which is the seventh Sunday following Easter)
- Dec. 25: Christmas Day
- Dec. 26: Boxing Day
Public holidays that fall on weekends are not moved to a weekday.
Employees receive annual vacation at least 4 times the number of days they work every week. For example, an employee who works 5 full-time days per week receives 20 days or 4 weeks of paid vacation every year. Many collective bargaining agreements provide more than the minimum vacation allowance, which is often 25 days. In addition, employees are paid a holiday allowance each year that amounts to 8% of their gross annual salary. Unused leaves can only be carried over for 6 months.
Under the Work and Care Act, female employees are entitled to a minimum of 16 weeks as maternity leave. The leave may commence up to 6 weeks and should start no later than 4 weeks before the child is born and can continue for at least 10 weeks after birth. The Working Time Act of 1996 provides mothers who resume working after giving birth the right to feed the infant on the job site for up to 9 months after birth.
Nursing mothers in the workplace will receive full pay. Women who are self-employed can receive pregnancy and maternity benefits through the Social Security Agency (UWV) for up to 16 weeks, usually beginning 6 weeks before the child’s birth.
According to the Work and Care Act, an employee whose wife or partner gives birth is entitled to 2 days of paid leave and three additional days of unpaid leave within the 4 weeks after the child has been brought home from the hospital. The employee can take emergency leave for the childbirth. Employers cannot deny a request for paternity leave.
According to the Dutch law, the legal retirement age is 65 years and will increase to 66 years in 2018, and 67 in 2021. With effect from 2022, an employee’s retirement age will be linked to average life expectancy. The General Old Age Pensions Act outlines that Dutch residents who reach retirement age are eligible to start receiving a flat-rate pension benefit based on the net minimum wage and the person's living situation.
Both employees and employers contribute to the social insurance system which includes a workers' compensation system administered by the Work and Income According to Labor Capacity Act. An injured employee is entitled to paid sick leave for up to 2 years under the Work Plan for the Partially Disabled (WGA). If it is determined that an employee will be able to earn no more than 20% of pre-injury wages and there is no chance of recovery, the person will be placed under the Income Provision Plan.
Terminated employees under age 65 may be entitled to an unemployment insurance allowance through the Institute for Employee Benefit Plans. To qualify for this allowance, a former employee must have worked for a minimum of 26 of the 36 weeks preceding the first day of unemployment.
How GPS can Help
With our Global PEO/Employer of Record services, companies can expand into Netherlands and hire their employees without having to establish a branch office or subsidiary in Netherlands.
- Your candidate is hired via our Netherlands PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
- Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Netherlands laws.
- Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
- With no contractor risks, pass on the compliance burden to Global PEO Services.
Spin Off/M&A Support
- Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.
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- Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
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With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and managements. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcounts.
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When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Lean more about our end-to-end international expansion services.