How to Hire Remote Employees In

The Netherlands

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The Basics

Currency
Euro (EUR)
Employer Taxes
27.65%
Payroll Frequency
Monthly
Official Language
Dutch
OVERVIEW

Employment in

The Netherlands

Hire Independent Contractors

Independent contractors or freelancers are self-employed individuals who provide services to companies as a non-employee. This is one of the most common ways companies tend to hire non-local designers, engineers, support reps, etc.

For legal and tax purposes, independent contractors are not classified as employees. They may work for multiple clients, set their own work hours, negotiate their pay rate, and decide how a job gets done.

For example, the IRS says that if an independent contractor or freelancer does work that can be controlled (what will be done and how it will be done) by an employer then they are, in fact, classified as an employee.

As you can imagine, hiring someone as an independent contractor versus an employee is a fine line to tread.

While there are benefits when you choose the contractor route, there are quite a few drawbacks to consider and you’ll need to weigh them carefully to determine the best fit for your company.

Benefits of Hiring Independent Contractors

  • Reduced overhead: Lower cost in expenses, payroll, benefits, and more.
  • Greater flexibility: Contractors can be brought on as-needed. If not a good fit, you simply don’t have to move forward with the contract.
  • Reduced legal risk: Contractors aren’t usually protected by employment anti-discrimination and workplace safety laws.

Disadvantages of Hiring Independent Contractors

  • Risk of Misclassification: Not only does this deny workers their proper protections, it can also result in steep penalties and damage to your company. If the IRS determines that employee misclassification has occurred, you will be liable for a percentage of the employees wages, FICA contributions, penalty fines, unpaid taxes, up to a year in prison, and more.
  • Lack of Control: Contractors are drawn to being independent because it gives them greater control over the work they perform and who they work with. Because they’re not employees, you can’t tell them what to work on and how it should be done.
  • Lack of Loyalty: Contractors come and go as-needed. Many companies hire contractors for short-term work, which makes it difficult to cultivate loyalty.
  • Increased Scrutiny: Using Independent Contractors typically leads to an increased risk of being audited.
EMPLOYMENT IN
The Netherlands

Set up a subsidiary in

The Netherlands

A foreign subsidiary is a company that operates overseas as part of a larger company who’s HQ is in another country.

Establishing a foreign entity is great for having an international presence and accessing new markets. Though, setting up a subsidiary in Netherlands can be expensive, stressful, and time-consuming. It's not for the faint of heart.

To set up a subsidiary in Netherlands, you have to:

  1. Register your business name and file articles of incorporation
  2. File for local bank accounts
  3. Learn and keep track of the local employment laws
  4. Set up local payroll
  5. Hire local accounting, legal, and HR people

If you're lucky, this process can take months. If you're not so lucky, it can take up to a year. And on average, it costs about $50k-$80k, all-in-all, to get setup. And that's just for Netherlands.

EMPLOYMENT IN
The Netherlands

Use an Employer-of-Record (EOR)

An employer-of-record (EOR) is a company that hires and pays an employee on behalf of another company.

An EOR is typically used to overcome the financial and regulatory hurdles that often come with employing remote workers.

Each country has its own payroll, employment, and work permit requirements for non-resident companies doing business in their jurisdiction. Meeting those demands can be a huge obstacle when it comes to hiring remotely.

At Panther, we help companies employ and pay people in over 160 countries, without having to set up a foreign subsidiary. Payroll, benefits, taxes, compliance, and more are all handled by us, at a fraction of the cost.

Outside of saving you months and tens of thousands of dollars, other advantages of using Panther are:

  • Ability to attract talented and motivated employees from all over the world.
  • Full legal compliance: There is no risk of violating local employment laws.
  • Transparency: Employees are still your employees. All the work, processes, operations and day-to-day business belong to you, the company, just like with any other employee. Panther just takes on all of the responsibilities, obligations and admin work related to your team's employment.
  • No risk of misclassification

Because you no longer have to set up your own subsidiary, you’ll save a ton of time and tens of thousands of dollars using Panther.

Hire with Panther

Paying Remote Employees

Paying employees in Netherlands is not the same as paying workers in your own country. Employees have to be paid using Netherlandss employment and payroll standards.

This means that you have to know, understand, and keep up with 1) fluctuating currency changes, and 2) local payroll and tax laws in the countries you’re looking to hire in.

Outside of the laws and regulations around payroll, there may be different conditions surrounding leave, overtime, termination, and more. As you can imagine, maintaining this kind of regulatory knowledge can be challenging. But it is crucial and necessary to follow local legislation.

After, you’ll have to determine the best way to pay your international employees. This can be done in a number of ways, including but not limited to:

Pay through a local entity

One of the most challenging (and expensive) parts of paying international employees is setting up the infrastructure to do so.

Before you start to run payroll, you have to register your company as the local employer in the country the worker resides in. As you can see in the “Set up a subsidiary” section, this is a multi-step process that can take up to a year and put you on your way to bankruptcy.

Work with an EOR

Outside of EORs acting as the full admin employer, many also provide remote payroll.

For example, at Panther, in just 1-click, you’re able to pay your entire global team, anywhere in the world. We send you an invoice each month, charge you in US Dollars, and pay your employees the same amount in their local currency.

We factor in currency fluctuations and use the mid-market rate plus any applicable fee passed on by our provider at cost at the time of billing.

The Netherlands

 Specific Information

Working Hours

The majority of full time (voltijd) jobs in the Netherlands are between 36-40 hours a week, or seven to eight hours a day, five days a week.

Overtime

Dutch law does not provide a national standard for overtime; it is usually agreed upon by individual employment contracts and collective agreements.

What’s a Rich Text element?

The rich text element allows you to create and format headings, paragraphs, blockquotes, images, and video all in one place instead of having to add and format them individually. Just double-click and easily create content.

Static and dynamic content editing

A rich text element can be used with static or dynamic content. For static content, just drop it into any page and begin editing. For dynamic content, add a rich text field to any collection and then connect a rich text element to that field in the settings panel. Voila!

How to customize formatting for each rich text

Headings, paragraphs, blockquotes, figures, images, and figure captions can all be styled after a class is added to the rich text element using the "When inside of" nested selector system.

Taxes

Payroll Tax

Employer

27.65% - Employer Contributions
- Employer Contributions

Minimum Wage

The minimum monthly wage is €1,684.80 per month for any employee over the age of 21.

Payroll

Pay Cycle

Monthly salaries must legally be paid before the end of the following month.

Where there is a Collective Labour Agreement in place a different payment deadline might be agreed.

13th Salary

Not required by Dutch law.

Leave

Paid Time Off (PTO)

PTO is calculated by the length of employment:

Full-time employees (40 hours per week) in the Netherlands are legally entitled to a minimum of 20 days (four weeks) of paid holiday leave per year. This is based on a calculation of four times the number of hours worked per week. Many companies offer more than the minimum number of days, with 24 and even 32 days of annual leave being fairly common.

Employers are obligated to provide a holiday bonus of at least 8% of the employee’s gross salary. The bonus is usually paid in May or June.

Public Holidays

The Netherlands have 8 official public holidays.

Sick Days

Sick leave pay varies based on the length of service:

The minimum sick leave entitlement in the Netherlands is a payment of 70% of their most recent wage level, up to a maximum period of two years. This is a generous benefit and does reflect the Netherlands’ social policy. Some employers will even pay 100% of the wages.

Maternity Leave

Expecting mothers are entitled to 4-6 weeks leave before birth, and 10 weeks of leave after birth.

If an employee takes less than 6 weeks of pregnancy leave before the birth, she is entitled to add the remaining amount (up to 2 weeks) to her maternity leave after the birth.

If the baby is born later than the due date, the employee’s maternity leave begins after the actual birth and the total may, therefore, be longer than 16 weeks.

Employers can apply for a maternity allowance on behalf of their employees to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).

Paternity Leave

If the partner of an employee gives birth, the employee has a right to 1 week of paternity leave following the birth. Paternity leave is the number of working hours in one week.

This paid leave can be taken any time in the first 4 weeks after the birth of the child. During this period of leave, the employer must continue to pay 100% of the employee’s salary.

As of 1 July 2020, employees will also be entitled to 5 weeks of unpaid leave in the first 6 months after birth.

Employees who take unpaid leave will be able to claim benefits from the Employment Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV) for up to 70% of their salary.

Parental Leave

Parents of children up to the age of eight are entitled to parental leave in order to be able to spend more time with their children.

Parental leave is generally unpaid; however, some employers may partially cover some of the salary. Each parent may take off 26 times their weekly working hours.

Other Leave

Adoption leave: 6 weeks: Employers can apply for an adoption leave allowance on behalf of their employee to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).

Emergency leave and other short absence leave: intended for unforeseen personal circumstances for which an employee has to take time off immediately, for instance, when making arrangements for the care of a sick family member or in the event of a death in the family.

You must always grant a reasonable request for emergency leave. During this period of leave, the employee is required to continue paying the employee’s salary.

Short-term care leave: Maximum of 2 x the working hours of an employee in 12 months: During the period of leave, the employer continues to pay 70% of the employee’s salary. If this is less than the minimum wage, they pay the minimum wage.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

In The Netherlands, the employer has generally five ways to terminate the employment agreement:

Termination by mutual consent – by means of a settlement agreement;

Termination proceedings before the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV);

Termination proceedings before the cantonal court;

Termination with the consent of the employee;

Urgent dismissal.

Notice Period

The length of the notice period for an employer depends on the duration of the employment contract, with a maximum of 4 months.

Less than 5 years: 1 month

Between 5 and 10 years: 2 months

Between 10 and 15 years: 3 months

15 years or more: 4 months

The statutory notice period for an employee is 1 month.

Severance Pay

From the first day of employment, an employee is entitled to a severance payment (called a transition payment) in the event of dismissal at the initiative of the employer.

The amount of the transition allowance for a Dutch employee is 1/3 monthly salary per entire year of service from the first working day.

Probation Period

The duration of a trial period depends on the duration of the employment contract. However, it may never exceed a 2 month period. The same period applies to both employer and employee. Maximum of 1 month.

Temporary employment contracts of more than 6 months, but less than 2 years.

Temporary employment contracts without an end date. Maximum of 2 months.

Permanent employment contracts.