The Netherlands is one of Europe’s most attractive destinations for international hiring. With a highly educated, multilingual workforce, strong digital infrastructure, and a business environment consistently ranked among the best in the EU, it offers a stable and strategically well-positioned base for companies expanding across Europe.

Dutch employees benefit from some of the strongest labour protections on the continent, including generous leave entitlements, long-term sick pay obligations, and robust termination procedures. For employers, this means compliance is non-negotiable. Worker classification, payroll obligations, collective agreements, and dismissal rules are all strictly enforced, and the consequences of getting them wrong are significant.

Whether you are hiring a single remote employee or building a full local team, this guide covers everything you need to know to hire compliantly and competitively in the Netherlands.

How to Hire Employees in the Netherlands

Before hiring in the Netherlands, it’s important to choose the right employment setup for your business goals. The method you select will impact your legal obligations, time to hire, and long-term operational flexibility. Companies can hire in the Netherlands through one of the following models:

Establish a Local Entity

Setting up a Dutch legal entity, such as a BV (Besloten Vennootschap), enables you to hire employees directly. This route offers full operational control but requires significant time, administrative effort, and ongoing compliance with Dutch corporate, tax, and labor laws.

For companies with long-term plans in the Netherlands, this is often the right path. However, establishing an entity includes registering with the Dutch Chamber of Commerce (KvK), setting up a local bank account, hiring local representatives, and enrolling in social security and tax systems. You’ll also need to manage local accounting, tax filing, and employment law updates.

If you’re not ready to commit to a permanent presence, you may want to consider alternatives. Depending on your business type, setting up a branch may also be an option, though this structure typically offers fewer tax and legal advantages than a private limited company (BV). 

In either case, you will be subject to Dutch employment law from day one, so working with local legal or HR consultants is highly recommended.

Working with an Employer of Record (EOR)

An Employer of Record (EOR) is a third-party service that legally employs workers on your behalf. In this model, the EOR becomes the legal employer in the Netherlands, while you retain full control over the employee’s daily tasks, performance, and team integration.

This setup allows you to:

  • Hire in the Netherlands without opening a legal entity
  • Start onboarding within days, not months
  • Remain fully compliant with Dutch tax and labor laws
  • Avoid payroll setup and local registrations

This option is ideal for companies testing the Dutch market, scaling a distributed team, or hiring quickly without legal and administrative overhead. It also provides greater agility if you need to pivot hiring plans based on market response.

EORs are particularly helpful for businesses entering multiple European markets at once, enabling centralized coordination while adhering to local compliance in each jurisdiction. This makes them an effective tool for companies that need to scale rapidly across borders. Read about possible restrictions coming into place this year. 

Learn more about Employer of Record services

Hiring Independent Contractors

Hiring contractors offers flexibility and reduced overhead, particularly for short-term or project-based work. However, the Dutch Tax Authority (Belastingdienst) has significantly increased enforcement since the lifting of the enforcement moratorium in 2025, and misclassification is now an active compliance risk.

Under the Wet DBA (Deregulation Assessment of Employment Relationships Act), if a contractor operates under conditions resembling employment, such as fixed hours, direct supervision, or long-term exclusive engagement, they may be reclassified as an employee. This can result in backdated payroll taxes, social security contributions, penalties, interest, and liability for statutory benefits including holiday pay, sick leave, and pension.

Well-defined agreements that clearly establish the contractor’s independence, scope of work, deliverables, and billing terms remain essential. Remote People can help assess existing contractor relationships and support transitions to employee status where needed.

Learn about hiring contractors in the Netherlands

Hire in the Netherlands

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Using an Employer of Record in the Netherlands

An Employer of Record acts as the legal employer on your behalf, allowing you to hire in the Netherlands without registering a local entity. The EOR manages employment contracts, payroll, social security contributions, tax filings, and statutory benefits, while you retain full control over the employee’s day-to-day work and performance.

This is particularly valuable in the Netherlands, where employment law is detailed and strictly enforced. CAO obligations, transition payment rules, sick leave requirements, and dismissal procedures all carry real compliance risk for employers unfamiliar with the local framework. The EOR absorbs that risk and handles the administrative burden end to end.

It works well for companies entering the Dutch market for the first time, scaling a distributed team quickly, or running short-term projects without committing to a permanent local presence.

Key Benefits of Partnering with a Netherlands EOR:

  • Quick Market Entry: Hire compliantly in the Netherlands within days, without entity setup or local registrations.
  • Legal and CAO Compliance: Stay aligned with Dutch labour law, sector-specific collective agreements, and evolving regulatory requirements.
  • Payroll and Tax Management: The EOR handles gross-to-net calculations, tax filings, holiday allowance, and social contributions accurately and on time.
  • Risk Mitigation: From worker classification to termination procedures, the EOR manages compliance risk so you don’t have to.

Employment and Labor Laws in the Netherlands

Employment Contracts

Contracts must comply with the Dutch Civil Code and, where applicable, a collective labour agreement (CAO). CAOs are sector-wide agreements negotiated between employer organisations and trade unions. When one applies, it takes precedence over the individual contract and may impose higher minimum wages, additional leave, pension obligations, and other benefits. Employers should confirm whether a mandatory CAO exists in their sector before setting employment terms.

Under the chain rule (Ketenregeling), employers may offer a maximum of 3 consecutive fixed-term contracts over no more than 3 years. After this, the contract automatically converts to indefinite status. A gap of more than 6 months resets the chain. Some CAOs permit deviations from these limits. This rule has direct implications for workforce planning, particularly for project-based hiring through an EOR.

Contracts may also include confidentiality clauses, intellectual property provisions, and GDPR-compliant data protection measures. An EOR ensures all agreements meet Dutch legal requirements and reflect applicable CAO obligations.

Working Hours & Overtime

In the Netherlands, full-time work is typically defined as 36 to 40 hours per week. Employees may not exceed an average of 48 hours per week over a 16-week period. Daily work is limited to 12 hours. Employees are entitled to:

  • 11 consecutive hours of rest every 24 hours
  • 36 consecutive hours of rest each week
  • Paid breaks during shifts exceeding 5.5 hours

Overtime isn’t regulated by national law but is often covered in collective labor agreements. Employers should define overtime rates (commonly 150% or 200% of normal pay) or time-off-in-lieu terms in the employment contract.

Public Holidays

The Netherlands observes 11 public holidays in 2026. However, unlike most countries, there is no statutory obligation for employers to grant employees time off on these days. Entitlement to public holiday leave is governed entirely by collective labour agreements (CAOs) and individual employment contracts.

New Year’s Day, Good Friday, Easter Sunday, Easter Monday, King’s Day (27 April), Liberation Day (5 May), Ascension Day, Whit Sunday, Whit Monday, Christmas Day, and Boxing Day are the recognised holidays. Liberation Day is commonly granted as a day off only once every five years, with 2025 being the most recent and 2030 the next. Employers not bound by a CAO should ensure their contracts explicitly address public holiday entitlements to avoid ambiguity.

Social Security

The Netherlands operates a split social security system. Employee national insurance contributions are embedded within the Box 1 income tax rate and apply to income up to €38,883. Employer contributions are paid separately on top of gross salary, subject to a maximum contribution wage ceiling of €79,412 per year.

Pension

Pension provision in the Netherlands is strongly embedded in employment practice and, in many sectors, legally mandatory. Where a sector pension fund (bedrijfstakpensioenfonds) exists, employers are required to enrol employees automatically. Even outside mandatory sector funds, most CAOs require employers to offer a pension scheme as part of the standard employment package.

Contributions are typically shared between employer and employee, with the employer covering roughly two thirds and the employee one third. Both employer and employee contributions are tax-deductible within statutory limits.

The Dutch pension landscape is undergoing significant reform. From 2027, the Netherlands will transition to a new defined contribution system under the Wet Toekomst Pensioenen (Future Pensions Act). Pension funds and employers have until 1 January 2028 to adapt their schemes to the new framework. Employers with existing pension arrangements should be aware of the transition obligations and plan accordingly.

Probation Period

Probation periods are not permitted for contracts of 6 months or less. For contracts between 6 months and 2 years, the maximum probation period is 1 month. Indefinite contracts or fixed-term contracts of 2 years or more allow a maximum of 2 months.

The probation clause must be agreed in writing and must apply equally to both parties. During probation, either party may terminate the employment relationship immediately, without notice or reason.

Works Councils

Companies with 50 or more employees in the Netherlands are legally required to establish a works council (ondernemingsraad) under the Works Council Act (Wet op de ondernemingsraden). The works council represents employee interests and has formal rights to information, consultation, and in some cases consent on decisions affecting the organisation, including restructuring, major policy changes, and working conditions.

For companies scaling through an EOR, this threshold is worth monitoring. Once 50 employees are reached, the obligation applies regardless of whether staff are employed directly or through an EOR arrangement. Failure to establish a works council when required can expose the employer to legal challenges and delays on business decisions that would otherwise require council approval.

Payroll and Employment Taxes in the Netherlands

Payroll in the Netherlands involves multiple components:

Minimum Wage & Pay Structure

As of 1 January 2026, the Netherlands sets a statutory minimum hourly wage of €14.71. Since 2024, the monthly equivalent is no longer fixed by law and depends entirely on contracted working hours. Common monthly approximations are €2,304 for a 36-hour week, €2,427 for a 38-hour week, and €2,550 for a 40-hour week.

The rate is reviewed and adjusted twice annually, on 1 January and 1 July, in line with inflation. Reduced rates apply to employees under 21. In addition to the hourly minimum, employers must pay an annual holiday allowance of 8% of gross salary, typically paid out in May or June.

Employer Social Security Contributions

Employers in the Netherlands are responsible for paying social security contributions on top of gross salary. The rates vary depending on contract type and employer size, with permanent contracts attracting a lower unemployment fund rate than flexible arrangements. All contributions are subject to a maximum wage ceiling of €79,412 per year.

Source: Belastingdienst; Dutch Budget Day 2025 announcements.
ContributionRateNotes
AWf Unemployment Fund (permanent contracts)2.74%Applies to indefinite written contracts
AWf Unemployment Fund (flexible contracts)7.74%Applies to all other employment relationships
Aof Disability Fund (small employers)6.28% 
Aof Disability Fund (large employers)7.64% 
ZVW Health Insurance6.10%Capped at income of €79,409
Estimated Total Employer Burden18%–25%Above gross salary, depending on contract type and employer size

The differentiated AWf premium rates are a direct result of the Wet Arbeidsmarkt in Balans (WAB / Balanced Labour Market Act), which introduced a lower rate for permanent contracts and a higher rate for flexible arrangements to discourage excessive use of temporary employment. The WAB also introduced a broader definition of on-call work and stricter rules on payroll employment constructions.

For EOR arrangements, this means higher social security costs apply where employees are on flexible contracts, along with additional compliance requirements. The Dutch government has indicated that further restrictions on EOR and payroll arrangements may follow, which employers should monitor closely.

Employer Social Security Contributions

Employee national insurance contributions in the Netherlands are not collected separately. They are embedded within the first Box 1 income tax bracket and apply to income up to €38,883. This means employees do not see a separate social security line on their payslip; the combined rate of 35.75% already includes the 27.65% national insurance component.

Source: Belastingdienst. Contributions are embedded in the Box 1 first bracket rate and capped at income of €38,883.
Contribution Rate
AOW (General Old Age Pensions Act) 17.90%
ANW (General Surviving Relatives Act) 0.10%
WLZ (Long-Term Care Act) 9.65%
Total Employee National Insurance 27.65%

Income Tax

The Netherlands operates a box system for personal income tax. Employment income falls under Box 1, which applies the following progressive rates in 2026:

Annual Taxable Income Tax Rate Notes
Up to €38,883 35.75% Includes 27.65% national insurance premiums (AOW 17.9%, ANW 0.1%, WLZ 9.65%)
€38,883 – €78,426 37.56%
Above €78,426 49.50%

Two key tax credits reduce the effective tax burden. The general tax credit is worth up to €3,115, and the employed person’s tax credit up to €5,712. Investment income is taxed separately under Box 3 and is not covered here.

The 30% ruling is a tax advantage available to qualifying expatriate employees recruited from outside the Netherlands. It allows up to 30% of gross salary to be paid as a tax-free allowance to cover extraterritorial costs, significantly reducing the employee’s effective tax burden.

From 2024, the benefit is phased over 60 months: 30% for the first 20 months, reducing to 20% for months 21 to 40, and 10% for months 41 to 60. The tax-free allowance is capped at the Balkenende norm, set at €233,000 in 2026. To qualify, the employee must be recruited from abroad and possess specific expertise that is not readily available in the Dutch labour market.

For international employers, the 30% ruling is a meaningful tool for attracting and retaining foreign talent, as it improves net take-home pay without increasing gross salary costs.

Work Permits and Visas in the Netherlands

EU and EEA nationals may work freely in the Netherlands without a permit. For non-EU and non-EEA nationals, employers must secure the appropriate authorisation before the employee can begin work. The main routes are:

  • Highly Skilled Migrant Visa is the most common route for professional hires. The employer must be recognised as a sponsor (erkend referent) by the IND. Salary thresholds apply: €5,688 per month for candidates aged 30 and over, and €4,171 per month for those under 30 in 2026.
  • EU Blue Card is designed for highly qualified non-EU professionals and requires a salary of at least 1.5 times the average gross salary. It offers additional mobility rights within the EU.
  • GVVA (Combined Permit) combines a residence and work permit for stays exceeding 3 months where the Highly Skilled Migrant route does not apply.
  • TWV (Short-Term Work Permit) covers temporary work arrangements of shorter duration, with salary set at market rate for the position.
  • ICT Permit applies to intra-company transfers from outside the EU.

All applications are submitted to the Dutch Immigration and Naturalisation Service (IND), which publishes updated salary thresholds annually. Employers sponsoring highly skilled migrants must hold recognised sponsor status with the IND before submitting applications.

Time Off and Leave in the Netherlands

Mandatory Leave Entitlements

Employees are entitled to a minimum of 20 vacation days per year (based on a 5-day workweek). Most full-time employees receive 25 days or more under collective agreements. Unused statutory leave expires six months after the end of the year, unless otherwise agreed.

Maternity Leave

Mothers are entitled to 16 weeks of fully paid maternity leave, funded through the UWV at 100% of salary, capped at the maximum daily wage. The employer advances the payment and reclaims the cost from UWV.

Leave must begin between 4 and 6 weeks before the expected delivery date, with the employee choosing when within that window to start. Any days not taken before birth are automatically added to the post-birth period. Regardless of when leave begins, a minimum of 10 weeks must be taken after birth.

Paternity Leave

Partners are entitled to 1 week of birth leave at 100% salary, funded by the employer and to be taken within 4 weeks of the birth. They may additionally take up to 5 weeks of extended birth leave within 6 months of the birth, paid at 70% of the daily wage by the UWV, capped at 70% of the maximum daily wage. The additional leave is not unpaid; it is a social security benefit paid directly through UWV.

Parental Leave

Each parent is entitled to take up to 26 times their weekly working hours in parental leave per child. Of this, 9 weeks are partially paid at 70% of the daily wage, capped at 70% of the maximum daily wage, funded through the UWV. The remaining weeks are unpaid. Leave must be granted by the employer, though scheduling may be coordinated to minimise operational disruption. Parental leave must be taken before the child turns 8.

Holiday Allowance

Employees are entitled to a statutory holiday allowance (vakantiegeld) of 8% of gross annual salary, accrued monthly and paid out as a lump sum, typically in May or June. The 8% is calculated on all regular pay components but generally excludes overtime and variable bonuses. Employees who leave mid-year are entitled to a prorated payment.

The 8% is a statutory minimum. Many employers and CAOs provide a higher percentage as part of their standard employment package.

Sick Leave

Employers are required to continue paying at least 70% of salary for up to 104 weeks during illness. In practice, most CAOs and employers pay 100% in the first year, with 70% applying in the second year.

Alongside the salary obligation, employers must comply with the Wet Verbetering Poortwachter (Gatekeeper Improvement Act). This requires engaging a certified occupational health service (arbo-dienst), producing a reintegration plan within 8 weeks of the employee’s absence, and actively supporting the employee’s return to work. Non-compliance is treated seriously. Failure to meet these obligations can result in a mandatory third year of salary payment, making proper case management not just a legal requirement but a significant financial consideration.

Employee Benefits in the Netherlands

Dutch employees expect a competitive benefits package, and the bar is set relatively high. The statutory minimums are well-established and non-negotiable, but in practice most employers go further to remain competitive in a tight labour market.

Beyond what the law requires, the most commonly offered benefits in the Netherlands include 25 or more days of annual leave, supplementary pension contributions above the mandatory minimum, commuting or travel allowances, private health or dental insurance, remote work stipends or home office budgets, and professional development funding. Performance bonuses and year-end payments are not statutory but are widely expected, particularly in financial services, technology, and professional services sectors.

Sector norms vary considerably. Employers bound by a CAO may have specific benefit obligations that go well beyond the statutory baseline. Those without a CAO should benchmark against sector peers to avoid losing candidates to more competitive offers.

An EOR can help you structure a benefits package that meets legal requirements, aligns with sector expectations, and remains cost-efficient as your Dutch team grows.

Terminations and Severance in the Netherlands

Termination Process

Termination in the Netherlands is strictly regulated. Dismissal requires valid legal grounds, proper documentation, and in most cases approval from either the Dutch Employee Insurance Agency (UWV) or the subdistrict court, depending on the reason for termination.

There are three main routes:

  • UWV Route applies to economic redundancy or long-term incapacity where an employee has been ill for more than 2 years. The employer applies to the UWV for a dismissal permit before proceeding.
  • Subdistrict Court Route applies to performance issues, misconduct, a seriously disturbed working relationship, or other personal grounds. The employer petitions the court for contract dissolution rather than seeking UWV approval.
  • Mutual Agreement is the most common route in practice. The employer and employee negotiate and sign a settlement agreement (vaststellingsovereenkomst). The employee retains a 14-day cooling-off period during which they may revoke consent without giving reasons.

In all cases, proper notice periods must be observed and the transition payment obligation applies where relevant.

Notice Periods

Notice periods in the Netherlands are statutory and based on the employee’s length of service. Notice must be given in writing and cannot be reduced below the statutory minimum, though it may be extended by agreement or under a CAO.

Payment in lieu of notice is permitted by mutual agreement and does not affect the employee’s entitlement to a transition payment. During the notice period, the employee is generally expected to continue working unless the employer agrees otherwise.

Source: Dutch Civil Code, Book 7.
Length of Service Employer Notice Employee Notice
Up to 5 years 1 month 1 month
5 to 10 years 2 months 1 month
10 to 15 years 3 months 1 month
15 years or more 4 months 1 month

Severance Pay (Transition Payment)

Employees are entitled to a transition payment of 1/3 of one month’s gross salary per year of service, pro-rated for partial years. The calculation is based on gross base salary plus fixed pay elements such as holiday allowance and structural bonuses. The payment is capped at €102,000 in 2026, up from €98,000 in 2025, or one year’s gross salary, whichever is higher. This cap is reviewed and adjusted annually on 1 January.

The transition payment obligation applies from the first day of employment, regardless of contract type, duration, or seniority. This includes employees dismissed during probation and fixed-term employees whose contracts are not renewed at the employer’s initiative. In both cases, a pro-rated transition payment is due.

Expand into Netherlands Easily with Remote People’s Employer of Record in the Netherlands

The Netherlands offers access to one of Europe’s most skilled and productive workforces, but its employment framework is among the most detailed on the continent. CAO obligations, transition payments, dismissal procedures, and sick leave requirements all demand close attention. Getting any of these wrong carries real financial and legal consequences.

Remote People’s EOR service gives you a straightforward path to hiring in the Netherlands without the overhead of a local entity. We handle contracts, payroll, social contributions, and compliance, so your team is set up correctly from day one and stays that way as regulations evolve.

If you’re ready to hire in the Netherlands, get in touch with Remote People. Our EOR services help you stay compliant, competitive, and confident from day one.

Frequently Asked Questions

No. An Employer of Record allows you to hire compliantly in the Netherlands without registering a Dutch entity. The EOR acts as the legal employer, managing contracts, payroll, social security contributions, and CAO compliance on your behalf.

The transition payment is a statutory severance entitlement of 1/3 of one month's gross salary per year of service. It applies from the first day of employment, regardless of contract type or duration. This includes probationary dismissals and fixed-term contracts not renewed at the employer's initiative. The payment is capped at €102,000 in 2026 or one year's gross salary, whichever is higher.

A CAO is a sector-wide collective labour agreement negotiated between employer organisations and trade unions. When applicable, it takes precedence over individual employment contracts and may impose higher wages, additional leave, and pension obligations beyond statutory minimums. Employers should confirm whether a mandatory CAO exists in their sector before setting employment terms.

Employers are required to continue paying at least 70% of salary for up to 104 weeks during illness. In addition, they must comply with the Wet Verbetering Poortwachter, which requires engaging an occupational health service and actively supporting the employee's reintegration. Failure to meet these obligations can result in a mandatory third year of salary payments.

Yes, but with caution. The Dutch Tax Authority has significantly increased enforcement of misclassification rules since 2025. If a contractor operates under conditions resembling employment, they may be reclassified, resulting in backdated taxes, social security contributions, and benefit liabilities. Well-structured agreements and genuine independence are essential.

On top of gross salary, employers typically pay an additional 18% to 25% in social security contributions, depending on contract type and employer size. The 8% holiday allowance adds a further cost on top of base salary. Pension contributions, where applicable, add approximately an additional third of the employee's contribution amount. Total employer burden can reach 30% or more above gross salary when all statutory obligations are factored in.