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Netherlands

Payroll and Benefits Guide

Last updated:
Dec 8, 2022

Table of contents

Overview Contributions Minimum Wage Payroll Working Hours Leave Termination Common Benefits VISA VAT

Overview

Capital
Amsterdam
Currency
Euro (EUR)
Date Format
dd/mm/yyyy
Fiscal Year
1 January- 31 December
Payroll Frequency
Monthly
Employer Taxes
13.46% to 25.72%

Contributions

Employer

Employer Payroll Contributions

5.49% to 7.05% WAO/WIA Aof : Invalidity Insurance Fund 5.49% (small employers %) to 7.05% (medium to large employers)
0.34% to 5.34% WW premium: Unemployment Fund (0.34% AWf layer to 5.34% Awf high)
6.75% ZVW : Healthcare Insurance Act (maximum contribution income 59,706 EUR)
0.21 % to 3.36% Whk: Work Resumption Fund
0.17% to 2.72% Sickness Benefits Act
0.50% Child Care Premium
13.46% to 25.72% Total Employment Cost

Employee

Employee Payroll Contributions

17.90% Old Age Pension (AOW)
0.10% Orphans and widow/widower pension (ANW)
9.65% Long Term Care (WLZ)
Up to 2.70% General Unemployment Fund (Awf: for employees with permanent contract for an indefinite period)
27.65% to 30.35% Total Employee Cost

Employee Income Tax

37.07% Up to 69,398 EUR
49.50% Over 69,399 EUR

Minimum Wage

General

In The Netherlands, the minimum wage (wettelijkbrutominimumloon) for employees 21 years and over is 1,725.00EUR per month.

 

Payroll

Payroll Cycle

In the Netherlands, the payroll frequency is monthly.  Work between the first and last day of the month is typically paid on the last day of the month.

13th Salary

A 13th-month salary is not mandatory, it’s up to the employer to give any additional salary/ bonus.

 

Working Hours

General

The standard working week in the Netherlands can be no longer than 45 hours, with an average being 40 hours per week/9 hours per day.

Overtime

If work time limits are passed, overtime compensation is compulsory. The maximum number of overtime hours is per the employee’s collective agreement/employment contract.

Working Week

Monday-Friday

 

Leave

Paid Time Off

A full-time employee is entitled to 20 days of paid annual leave per year. However, in the Netherlands, it is common practice to offer 24 and even 32 days of paid annual leave.

Also, in the Netherlands, any leave accrued from the previous year must be used by July, and the employer must inform the employee if this is about to expire (although this requirement is only for the statutory minimum number of days).

Public Holidays

The Netherlands has 11 official public holidays.

Sick Days

If an employee is unfit to work due to sickness, they are entitled to 70.00% of their last earned salary for one year. For sickness that surpasses the year, the WULBZ (legal duty to continued payment of salary at sickness) becomes effective. This law enables the ongoing payment of salary for up to 104 weeks of sickness at (a minimum of) 70% of the salary. Some employers supplement this to provide 100% of the salary. However, this is only permitted in the first sickness year, and should the sickness continue into a second year the maximum paid is up to 70% of the salary.

Maternity Leave

A pregnant employee is entitled to 16 weeks of paid Maternity leave; Maternity leave consists of two periods: prenatal leave and postnatal leave.

  • Prenatal leave: An employee must take 4-6 weeks leave before the expected due date (zwangerschapsverlof)
  • Postnatal leave: A employee must take the remaining 10-12 weeks (bevallingsverlof)) which starts from the date of the birth of the child.

The Maternity pay can be paid by the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV). However, it is common practice for the employer to continue paying the salary and the UWV, in turn, pays the employer. Suppose pregnancy or childbirth results in incapacity for work. In that case, the employee is eligible for benefits equivalent to 100.00% of her salary for the maximum of a year after the date of birth.

Paternity Leave

The father/partner is entitled to 1 week of paid Paternity leave after the child’s birth.

Employees are also entitled to 5 weeks of unpaid leave in the first six months after birth; even though this is unpaid by the employer, they can claim up to 70.00% of their salary from the Employment Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).

Parental Leave

New parents are entitled to 50 % of their wages for the first nine weeks of leave, guaranteeing all parents at least nine weeks of paid parental leave, paid for by the government, as long as the leave is taken during the first year of the child’s life. 

Other Leave

Depending on the collective agreement/employment contract terms, an employee may be allowed additional leave types, on approved between the employer and employee, for the following:

  • Short-term care: employees are entitled to up to two days of paid leave per year, although the payment will be 70.00% of the regular salary.
  • Adoption leave: employers can apply for an adoption leave allowance of up to six weeks on behalf of their employee to the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen, UWV).
 

Termination

Termination Process

The termination process varies according to how the Employment Agreement and Collective Agreement are in place and is based on the type of contract and reason for termination. However, no termination due to economic reasons or long-term disability can occur without the Employee Insurance Agency (UWV).

Notice Period

The statutory minimum notice period for termination in The Netherlands is one month however it is dependent on the employee’s length of service as below:

less than 5 years – 1 month notice

Between 5 & 10 years – 2 months’ notice

Between 10 & 15 years – 3 month’ notice

More than 15 years – 4 months’ notice

Severance Pay

Severance pay in The Netherlands is referred to as transition payment and stipulated in the employment contract/collective agreement. In general, employees are entitled to a payment from their first day of employment when an employer terminates their employment agreement.  The amount due for payment is calculated per the contract but at least at a rate of one-third of the regular salary income per year of service up to a maximum of 84,000 EUR.

Probation Period

Probation or Trial periods are generally set within the collective agreements and contracts of the employee; however, standard practice in the Netherlands is two months.

 

VISA

VISA

There is no formal requirement for EU/EEA/Swiss nationals to obtain a residence or work permit. Still, they do need to obtain a residence permit to be eligible for social security benefits.

Nationals of the USA, Canada, Japan, Australia, New Zealand, and all non-EU/EEA/Swiss foreign nationals who wish to stay longer than three months in the Netherlands must obtain an “authorization temporary stay” (MVV) from the Dutch embassy or consulate in their home country before entering the Netherlands.

The employer must submit a work permit application to the Social Security Office (UWV), providing evidence that they have made every effort to recruit a Dutch/EU/EEA/Swiss national in the first instance. No applicant is allowed to work in the Netherlands until their work permit has been approved.

 

VAT

General

The standard rate of VAT in The Netherlands is 21.00%.

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