10 Things You Need to Know About Dutch Employment and Labor Laws


Jun 2, 2023

In the Netherlands, employee rights are of the utmost importance. From holiday allowance and termination regulations to employee benefits and personal data access, the process of hiring in the Netherlands requires understanding local Dutch laws and European Union regulations. Protecting your company’s reputation and confidentiality is essential, but are non-disclosure agreements explicit in the Netherlands? There are many details to stay on top of.

Fortunately, hiring through an Employer of Record (EOR) can help you comply with strict Dutch employment laws. This guide will help you understand how to navigate Dutch labor laws so you can hire and onboard Dutch talent without issue.

1. Worker misclassification could cost you millions

In the Netherlands, an employee does their own work, is paid regularly by an employer through a permanent contract, and is under the employer's authority. Employees receive statutory benefits and have tax deductions taken from their paychecks. A contractor, on the other hand, is a self-employed individual with a temporary contract and a limited number of hours with the employer.

In the past, Uber has had several run-ins with Dutch authorities for multiple cases of worker misclassification—in one case, a court ordered Uber to pay a fine of €50,000 ($58,940) after misclassifying nearly 4,000 drivers in Amsterdam and ordered them to reimburse back pay in some instances.

2. Non-compete clauses are enforced under Dutch law (under one condition)

Non-compete clauses can only be included in a permanent contract to safeguard the employer's business interests and signed at the offer letter stage. The clause includes reasonable, specific language that prevents the employee from working for a competitor or starting at a similar company for a specific period.

If a company has a dominant position in its field, meaning they have no competitors or very little competition, it can’t require its employees to sign a non-compete agreement.

3. The Netherlands has a unique termination of employment process

The Dutch labor code has some of the strictest employee protections, so employees can’t be fired without cause. There are four ways to terminate an employee, including two where you must ask for a dismissal permit from the Dutch government. You must comply with the mandatory notice periods based on length of service and provide severance and transition payments when applicable.

4. A work permit approval process can take up to 90 days

Two available work permits are available in the Netherlands:

  • TWV work permit for under 90 days
  • Single permit (a combined permit for residency and work) for employment lasting over 90 days

As an employer, it is essential to know that if you’re hiring a lot of Dutch talent, you’ll need to register as a recognized sponsor. Registering will reduce work permit waiting times to seven weeks (from 90 days) via the Immigration and Naturalisation Service.

5. If end-of-year bonuses are given to one employee, it must be given to everyone

In the US, it’s common for employees to receive an end-of-year bonus based on high performance. In the Netherlands, it works a bit differently. Employers can give an end-of-year bonus or 13th-month bonus, but can’t gatekeep it to just the high performers. If one employee in the company receives a bonus, all employees must receive it for equal treatment—regardless of performance.

6. Personal data privacy is a priority in the European Union

While running background checks on prospective employees and contractors is legal, you must adhere to Article 88 of the General Data Protection Regulation (GDPR). Following consent from the individual, you must request only the personal data necessary to hire the individual. As part of the European Union, in the Netherlands, background checks are closely monitored by the GDPR.

7. The Netherlands has late tax filing penalties

In the Netherlands, employers are responsible for paying payroll taxes to the Dutch government once a month. Payroll taxes include income tax, social security contributions, and mandatory private healthcare. Employers must pay the appropriate payroll taxes by the end of the following month. However, if you miss a deadline, you’ll be charged a 3% administrative fee on the outstanding balance—which can be hefty, as it applies to all your Dutch employees in the country.

8. Meet the mandatory employee benefit requirements

Under the Dutch Civil Code, the government has set mandatory employee benefits that employers must offer. Those who don’t meet the requirements will be fined and penalized. Employee statutory benefits include holiday allowances, sick leave, vacation leave, parental leave, pension contributions, and more. Contractors are not entitled to these benefits.

Keep reading to find out the minimum required employee benefits you must offer your employees to stay compliant in the Netherlands.

9. Non-disclosure clauses are not default in contracts

Under Dutch employment law, confidentiality at work isn’t an implicit obligation nor is it a default clause in employment contracts. The employer's responsibility is to prioritize the employee signing a non-disclosure agreement (NDA) at the time of hiring. To put together a strong NDA, include a penalty clause, clarify the confidential and relevant exclusions, and determine a time period for the NDA, usually valid two years after the employee leaves the company.

10. Probationary periods can’t last more than two months

Under Dutch labor laws, if an employee undergoes a trial/probationary period, it must be included in the initial offer letter in writing. However, only contracts 6 months or longer are allowed to have a probationary period. This probationary period will help the employer and employee determine their suitability for the role. However, the period allowed is shorter than in other countries: It is usually one month for fixed-term (temporary) employment contracts longer than 6 months and for indefinite contracts  it’s capped at two months.

Frequently asked questions about Dutch labor laws

What are the minimum wages in the Netherlands?

Per Dutch law, employees who are 21 years of age or older must be paid a minimum daily wage which is indexed two times per year (on 1 January and 1 July) of €1,995 per month/ €460.40 per week/€92.08 per day (per 1 July 2023).

What are the overtime laws in the Netherlands?

In the Netherlands, the maximum number of working hours is 60 hours per week and 12 hours per day shift under the Working Hours Act. However, the maximum cannot occur every week and must stay under:

  • 48 hours over 16 weeks, or
  • 55 hours up to four consecutive weeks.

The Dutch employment law does not indicate a specific amount of extra pay that the employee must receive for overtime. Most employers will establish a 50-100% of pay rate for overtime pay, and it must come with an order from the supervisor. Any overtime pay details must be written in the employment contract at the beginning of the employment relationship, or if applicable in a collective bargaining/labor agreement.

What are the required benefits in the Netherlands?

Any employee benefits package offered in the Netherlands must meet statutory requirements under Dutch employment law. Under Book 7 of the Dutch Civil Code, if the mandatory employee benefits are not met, the employer will face penalties from the government. The benefits include:

  • Employee pension scheme. The Dutch State Pension System contributions, similar to social security contributions, are taken from the employee's paycheck. The Private Pension is optional for employees to contribute to. The Workplace Pension is optional but standard practice for the employer and employee to contribute monthly. Employers must contribute 16% to the fund on a monthly basis.
  • Vacation allowance. The Dutch government requires all full-time employees to receive at least 20 paid statutory vacation days off annually. This requirement also applies to part-time employees as they are entitled to receive four times the amount of working hours during one week as vacation time. It's also common for unused days to roll over to the following year.
  • Statutory public holidays. No law requires employers to give public holidays off to their employees, but it is standard practice unless mentioned otherwise in the employment contract or if applicable in the collective bargaining/labor agreement.
  • Sick leave. In the Netherlands, there is no set number of sick days. If the employee is sick, they must contact the employer and let them know. They’re not required to give a reason, but employers are required to provide paid sick leave for up to two years and pay at least 70% of the employee's salary. The amount of salary the employee receives during illness is mentioned in the employment agreement. Employees in the Netherlands continue to build up holiday entitlement while on leave.
  • Health insurance. Employers are required to contribute to the Health Insurance Act (ZVW), which as of 2023, the contribution rate is 6.68%, capped at a wage of €66,956. The statutory contribution is based on the employee's base salary and is then paid to the Dutch tax authorities. Employees take responsibility for paying for and managing separate private health insurance.
  • Long-term care contributions. Under the Long-term Care Act (WLZ), employers must contribute to this fund to make sure that their employees are covered. There is no set contribution for employers.
  • Parental leave. Fathers are allowed six weeks of parental leave; one of which is paid at full salary and 5 weeks at 70%  salary capped up to the  maximum daily wage designated by the government and indexed 2x per year (EUR 264.57 per day or EUR 5754.40 per month) for paternity leave.

    Mothers have the right to four to six weeks of pregnancy paid leave before their due date and 10 to 12 weeks of maternity leave after childbirth. As an employer, you can apply for maternity benefits reimbursement through the Employee Insurance Agency (UWV) for reimbursement.

How do I terminate employees in the Netherlands?

There are a couple of ways to involuntarily terminate employees in the Netherlands. As an employer, you must follow all steps carefully, as the Dutch labor code has rigorous employee protections.

All employees dismissed involuntarily (regardless of reason) are eligible for a statutory transition payment as involuntary termination is seen as not mutual. 

  • Ask the Dutch Employee Insurance Agency for a dismissal permit. You must apply for a dismissal permit if you let an employee go due to company financial hardship, long-term illness for the past two years, or an overall disagreement over the decision. You must acquire this dismissal permit to dismiss the employee from the agency.
  • Through the cantonal court. Ask a Dutch sub-district court or cantonal court for a dismissal permit to terminate an employee due to issues, misconduct, and other employment agreement violations.
  • Termination of employment by mutual decision. If both parties involved agree to end the working relationship and employment agreement, no permit is necessary, and both parties can discuss the final severance package via a mutual termination agreement.
  • Termination of employment by instant, summary dismissal (in Dutch: ‘Op staande voet ontslag’). In an instant dismissal,  the employer terminates the employment contract immediately, without notice. In that case, the employer does not need permission from the sub-district court or the UWV. The employer  can, however, only dismiss an employee with immediate effect if there is an urgent reason.

    Urgent reasons for dismissal include:
  • Theft 
  • Gross misconduct
  • Fraud
  • Mistreatment
  • Work refusal

    An instant dismissal procedure has timely and specific statutory protocols that need to be followed in order to execute this type of dismissal procedure successfully.  During an instant dismissal, the employer must immediately give the summary dismissal to the employee as soon as the urgent reason is clear. When the instant dismissal is communicated to the employee, the employer must state the reason. 
  • Termination of employment during probationary period.  An employee can be terminated without notice being required during the probationary period. 
  • By not renewing a fixed-term employment contract.

Employees in the Netherlands are entitled to notice periods before termination based on the length of service at the company.

You can learn more about termination in the Netherlands in our guide.

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Rippling and its affiliates do not provide tax, accounting or legal advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any related activities or transactions.

last edited: May 4, 2024

The Author

Muriel Vega

A freelance tech and B2B writer based in Atlanta, Muriel focuses her work on human resources and workplace trends and creating engaging content for SaaS companies. She has traveled the world, but her favorite place to work is Mexico City.