Netherlands PEO & Employer of Record

WeHG provides an International PEO and global Employer of Record service in the Netherlands to companies aiming to enter the Netherlands market or hire local/expat employees in this country.

Traditional approach requires establishing a subsidiary in Canada.  However, our solution offers you opportunity to start the operations in Canada within days therefore saving time and money.  WeHG would hire candidates on your behalf leaving you the full right to maintain all the operational control of their work. So legally they would be our employees, on our local payroll, 100% compliant but will work on your behalf. 

Netherlands fast facts

Population, million: 17,4
Land area: 41,865 km²
Capital: Amsterdam
Local currency: EUR

Hiring, Negotiating and Doing Business in Netherlands

Written employment contract

The employer must confirm the following to the employee electronically or in writing (Article 7:655, Civil Code):

• Name and residence of the parties.
• Place where the work will be carried out.
• Position and a description of it.
• Hiring date.
• If the employment contract is for a definite period, the time period.
• Holiday rights.
• If a notice period applies, the duration of the notice period.
• Salary and payment intervals and, if the remuneration depends on the results of the work to be performed, the amount of work to be rendered per day or per week, the price per item, and the reasonable time required to perform the work.
• Customary number of working hours per day or per week.
• Employee’s pension rights (if applicable).
• If the employee will work outside The Netherlands for a term exceeding one month, the:
  • duration of the employee’s work;
  • details of their accommodation;
  • application of Dutch social security legislation, or the bodies enforcing the legislation;
  • currency in which payments will be made;
  • allowances to which the employee is entitled; and
  • arrangements for his return, on condition that all this is done before the employee leaves.
• The application of a collective bargaining agreement (CBA) (if any).
• Whether the employment contract is a temporary employment contract, within the meaning of Article 7:690 of the Civil Code.

The employer must give these particulars within one month of the start of the employment, or earlier if the employment contract terminates earlier. An employer who fails to provide this or includes incorrect particulars is liable to the employee for any damage caused. The employer must sign the written particulars.

If a person performs work for three consecutive months, either weekly or at least for 20 hours per month for payment, the person is deemed to be performing the work on the basis of an employment contract (Article 7:610a, Civil Code).

Different forms of engagement: employment, contracting, work with private entrepreneur

Temporary and agency workers are often subject to different terms and conditions of employment under an applicable CBA for temporary workers. If not, temporary and agency workers must, in principle, be treated equally with permanent employees. The employer also has more flexibility in terminating the employment contracts of temporary and agency workers, compared to permanent employees.

Depending on the applicable CBA, after a certain period or number of contracts, a worker may be deemed to be a permanent worker of the temporary employment agency.

An employee who is misclassified as a temporary worker may in fact be entitled to receive full dismissal protection.

Netherlands Employment Contract

Types of employment agreements

An employment contract (arbeidscontract) is an agreement between an employee and an employer, containing working arrangements. It contains the rights and duties of the employer and employee.

There are two types of employment contract:

• fixed term contract (a temporary contract)
• contract for an indefinite period (a permanent contract)

Contracts can be agreed in writing or verbally. In the employment contract, you indicate whether a Collective Labour Agreement (CAO) applies.

Netherlands working hours

Employers must comply with the Working Hours Act of 23 November 1995. In brief, it stipulates that for an employee of 18 years and over the:

• Maximum length of a shift is 12 hours.
• Maximum length of a working week is 60 hours.
• Average working week must be 48 hours in every period of 16 consecutive weeks.
• Employee can at most work for 55 hours on average per week, in every period of four consecutive weeks.

It is possible to agree, through a CBA, that the employee will work longer.

In the event of a five-day work week, an employee must have 36 consecutive hours of non-work time after the end of the work week.

A longer work week is also possible, provided the employee has at least 72 consecutive hours of non-work time in a period of 14 days. This period can be split into two periods of at least 32 hours each.

Rest breaks

The following rules apply to rest breaks:

• If an employee works for more than five-and-a-half hours, they are entitled to at least 30 minutes of break time. This can be split into two 15-minute breaks.
• If an employee works for more than ten hours, they must have at least 45 minutes of break time. This can be split into several breaks, each of which must be at least 15 minutes.

Vacation leave in the Netherlands

The main rule is that an employee, for each year in which they are entitled to remuneration in the agreed work period, is entitled to holiday of at least either:

• Four times the weekly work period.
• If the work period is expressed in hours per year, a corresponding period.

For example, if the employee has agreed to a 40 hour working week (five days), they are entitled to at least four weeks holiday (20 days).

If the employee is employed for only part of the year, they acquire a proportionate amount of holiday. In the case of full or partial incapacity to work, employees still accumulate holiday in full.

Parties are free to negotiate more days’ holiday per year.

Netherlands Maternity Leave

A female employee is entitled to at least 16 weeks of pregnancy and maternity leave. She is entitled to continued payment of 100% of her salary, up to the maximum daily wage, for at least 16 weeks. In practice, employers usually, where appropriate, continue paying 100% of the salary of the female employee.

Netherlands Severance Laws

Termination of employment under Dutch law by mutual consent

In the vast majority of the cases, employers first try to solve the dismissal amicably by mutual consent by means of a settlement agreement. In this case you do not need prior approval of a public authority and this could save time and money.  

A settlement agreement contains among others the date on which the employment agreement ends and the severance to be paid out by the employer after this date. The settlement agreement should also contain supplementary arrangements about the termination of the employment.

Severance payment for the terminated employee under Dutch law

If an employer wishes to terminate an employment agreement that exists for two or more years, a mandatory transition fee (in Dutch: transitievergoeding) must be paid regardless of the applicable procedure of termination. The number of months of salary due is calculated based on the age of the employee and the number of service years.

• during the first 10 years of service, the transition payment amounts to 1/6 monthly salary per half year of employment
• after 10 years of service, the transition payment amounts to 1/4 monthly salary per half year of employment
• the total transition payment is maximized to EUR 75,000.–, or if the annual salary is higher than EUR 75,000.– the maximum amount equals the annual salary
• employees at age 50+ with more than 10 service years are entitled to one monthly salary per year of employment (transitional arrangement until 2020 that does not apply for small employers (less than 25 employees)
• no transition payment needs to be paid if an employee acted culpably
• collective labour agreements may deviate from this rule
• the subdistrict court may award an additional payment in case the termination of the employment amounts to culpable conduct or omission of the employer

Netherlands Taxation on Employment Income

The Netherlands has a progressive tax system for employment income. Taxes consist of income tax and national insurance (NI) premiums. As of 2024, the tax brackets are as follows:

• Up to €20,000: 36.93% (includes 27.65% NI)
• €20,000 to €38,000: 38.10% (includes 27.65% NI)
• €38,000 to €70,000: 42% (tax only)
• Above €70,000: 49.5% (tax only)

Employers also contribute approximately 21% towards social security for unemployment and disability coverage.

Health Insurance and Sick Leave

By law, Dutch employers must pay 70% of an employee’s gross salary during illness, up to two years. Special agreements can be made for holiday compensation during illness, as long as it doesn’t interfere with the employee’s recovery process.

Additional Benefits

• General Tax Credit (Algemene Heffingskorting): A tax reduction depending on your income level.
• Labour Tax Credit (Arbeidskorting): Available to all employed persons in the Netherlands, calculated based on income.

Public Holidays

The Netherlands has eight public holidays, which are not included in the statutory minimum leave entitlement:

• New Year’s Day (1 January)
• Good Friday and Easter Monday
• King’s Day (27 April)
• Ascension Day
• Whit Monday
• Christmas (25-26 December)

Why Choose WeHireGlobally?

WeHireGlobally (WeHG) simplifies your business expansion in the Netherlands by managing onboarding, payroll, tax filings, benefits, and employee termination. Our Employer of Record (EOR) services minimize risk and reduce costs while ensuring full compliance with local regulations. Whether you are looking for payroll management or employment support, WeHG takes care of everything, leaving you free to focus on growing your business.

FAQs About Netherlands Working Hours

Dutch labor law stipulates:

• Maximum shift: 12 hours
• Maximum workweek: 60 hours
• Average over 16 weeks: 48 hours per week
• Average over 4 weeks: 55 hours per week

For detailed compliance and tailored support in the Netherlands, request a proposal.