How to Hire in the Netherlands
Understanding how to hire in the Netherlands is an important step in your international growth journey. Hiring in any country typically requires a legal entity so that the business can be properly regulated, taxed and operated.
The good news is, now you don’t necessarily have to establish an entity in order to start hiring. Businesses can leverage global PEO to accelerate the hiring process, while they establish their own legal entity.
We’ve outlined some things to know about Hiring in the Netherlands.
1. Use a Global PEO
When it comes to hiring in the Netherlands, one of the first things you’ll need to decide is whether you want to do your own recruiting or solicit some assistance. While DIY could save you money in the short-term, a PEO can help with services in hiring, payroll, HR, and recruitment efforts.
PEOs often have access to databases of qualified candidates all over the world. This can help speed up the search process and get the right person hired for the position. They also support during the candidate screening to ensure your time isn’t wasted.
Hiring Netherland employees requires some sort of legal entity, and a PEO already has them established in the country. If you want to set up your own entity, it can take over six months to setup. You can still start the hiring process by leveraging a PEO while your own entities are established.
2. Leverage Online Networks
A lot of hiring is done online. Although the job market is very competitive in the Netherlands, businesses can still leverage online job platforms. Employers can make listings for local employees in the Netherlands using sites like Vacaturekrant, Werk.nl, Monsterboard.nl, or Nationale Vacaturebank.
Keep in mind that one of the challenges of online hiring is availability. With a competitive market, there may not be qualified candidates for your listing. This is where recruitment becomes a valid strategy to lure away workers from their current positions.
With that said, online advertisements can help you see what talent is available for a relatively low cost. Also consider using social media, especially LinkedIn, during your search. Just remember, when it comes to personal information, the Netherlands operates under the EU’s GDPR laws.
3. Provide a Great Experience
A positive interaction with your company could be the difference in hiring the best candidates for your Netherlands job search. When possible, speak Dutch to your candidates, even if they know English. In some cases, this is more than a courtesy as some unions require businesses to have employment contracts in the employee’s native language.
From recruitment to onboarding, your business should have a very clear structure and processes for new hires. Developing an onboarding plan will help new global employees learn the ropes and integrate with the team. An effective plan will start before the employee ever starts their first day of work. Use technology to your advantage so you can schedule your interviews quickly and save time for other important initiatives.
Collective Labor Agreements
Trade unions are an integrated part of the Dutch economy. Employers must adhere to the terms of a collective labor agreement, in addition to national employment laws. Often employers can negotiate the terms with the trade unions before entering an agreed upon arrangement. About 20% of all Dutch employees are part of a trade union, with over 80% covered by a labor agreement called Collectieve Arbeidsovereenkomst (CAO).
Depending on the circumstances of employment, the Minister of Social Affairs can determine whether an agreement applies to an entire industry. This is an important distinction as your company may be part of a collective agreement by default. Terms of a CAO usually get reviewed and negotiated every few years with updated terms.
Even when a company is not subject to a CAO, they should establish legally compliant employment terms within an employment contract. This protects both the employer and employee from potential disagreements.
The Netherlands operates a bit differently from the U.S., ensuring employees are not overworked. For people 18 and over, they can only work a maximum of 12 hours per day and 60 hours per week. However, these employees cannot work the maximum hours over consecutive weeks, for instance:
- 48 hours over a 16-week period, or
- 55 hours in up to 4 consecutive weeks.
With that said, most CAOs limit this to a 40-hour maximum working week. There are often exceptions for seasonal work, peak times, or unforeseen circumstances. During such exceptions, employees can temporarily work more hours per day as needed.
The Working Hours Act outlines requirements for breaks at certain intervals and other regulations for working on Sundays and other nonstandard times. If applicable, review your CAO to see if any other additional restrictions apply to your business.
Time Off Requirements
Paid holiday leave is directly correlated to an employee’s working hours. By law, employees are entitled to four times their weekly hours on an annual basis. Meaning an employee working 40 hours per week is entitled to 160 hours of vacation leave throughout the year. Any unused time can roll over into the next year but must be used within the first half of the next year.
Additionally, the Netherlands has 10 public holidays. Although employers aren’t necessarily required to give these days off to employees, some CAOs may call for specific holidays off.
Employers may also be required to pay time off for employee illness or pregnancy. For illnesses, employers are required to pay 70% of wages for up to two years. For pregnancy, employers must pay 100% of the employee’s wages, which will later be reimbursed through the governmental Employee Insurances Institute (UWV).
As part of the European Union, the Netherlands uses the euro as its currency. The government adjusts the minimum wage rates biannually, so it’s important to stay up to date on any changes. In the regulatory language, the rates are defined in terms of pay for a day, week or month, rather than hourly pay.
Just like the other sections, CAOs may determine their own minimum payment rates for workers in a particular industry. Because there are no legal policies regarding overtime, employees must refer to their CAO or employment contract for the standard.
In some CAOs, end-of-year bonuses are required, by as much as an extra month’s worth of pay. Dutch workers are also entitled to an annual holiday allowance, which is typically paid out in May. When employers agree on an annual gross salary, the employees should be told whether the total includes the allotted holiday allowance.
Taxes and Social Insurances
Employers are responsible for withholding salaries tax on employee paychecks as an advance payment of income tax. They also must withhold other taxes for things such as:
- National insurance
- Employee insurance
- Healthcare insurance contributions
- Pension plans
These taxes help cover Netherlands’ unemployment benefits, work and income, and invalidity insurance. These rates are reviewed by the government on a biannual basis.
Global PEO Services, a Safeguard Global company, is constantly monitoring international HR trends for businesses. We help companies expand globally without setting up legal entities or dealing with related talent acquisition, HR, benefits, payroll, tax, and compliance issues.
Hire employees fast, test new markets, and respond to growing business needs quickly while leaving the compliance and operational burden to us. With our Professional Employer Organization (PEO) or Employer of Record (EOR) services, you get full control. All without taking on legal entity liabilities, contractor risks, or sacrificing on talent and speed to market.