Global PEO Services (GPS) helps companies hire employees in the Netherlands without establishing a legal entity. All human resources, benefits, payroll, and tax needs for the employees are managed by the Global PEO, while the new hires and headquarter teams focus on your business goals.
When hiring employees in the Netherlands, establishing a subsidiary or branch office is not always the best route, as it’s often a lengthy and expensive process. Hiring via a Professional Employer Organization (PEO), or Employer of Record (EOR), is a faster and often more effective option – especially when starting up in a new country.
Global PEO Services hires the employees on your behalf, legally contracting them through our subsidiary in accordance with Netherlands labor laws. As a result, the burden of compliance is on us and the employees can begin work for your company in a matter of days. PEOs/EORs provide you with a streamlined option for hiring employees, testing markets, and responding to growing business needs in the Netherlands. With Global PEO Services, you get control without taking on legal entity liabilities, contractor risks, or sacrificing on talent or speed to market.
Netherlands - Country Overview
The Netherlands’ open economy is competitive, and thrives through it openness to global trade and investment. Also, the country’s independent judicial system provides strong protection of property rights and fosters the rule of law.
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. The country is also the second biggest agricultural exporter (after the US), and its combined value of exports and imports is equal to 161.2% of GDP.
Amsterdam, The Hague, Rotterdam, Utrecht
Employment Contracts in the Netherlands
Employers and employees can implement either a verbal 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.
Working Hours in the Netherlands
Under the Working Hours Act, the maximum workday has 12 hours and the maximum workweek is 60 hours. Over a 4-week period, an employee’s average workweek cannot be more than 55 hours. Over a 16-week period, the average work hours cannot exceed 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 receive 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.
The 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.
Employee Leave in the Netherlands
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 before the child is due 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 3 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.
Employee Benefits in the Netherlands
According to the Dutch law, the current legal retirement age is 66 years, and will be 67 years and 3 months by Jan.1, 2022. The General Old Age Pensions Act outlines that Dutch residents, who reach the 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 the 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 aged less than 65 years 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.