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Employment Law In The Netherlands

Any entrepreneur or global employer may hire skilled talent in the Netherlands after making a complete sense of the local employment rules or labor laws. 

Multiple authorities and bodies demand that employers comply with labor codes in the Netherlands. There may be consequences for businesses violating these laws, usually government fines or even license revocation.

This comprehensive employment law in the Netherlands guide for global employers highlights the core facets of hiring and managing employees. 

Who Is Covered by the Netherlands Labor Law?

Dutch labor law balances the legal and professional relationship between the employer and the employee. It applies to both native and ex-pat employees working in the Netherlands. The terms and conditions of the labor code in the Netherlands apply to all employees with an employment contract, whether permanent or fixed-term. However, freelancers and civil servants are not covered under the labor law. 

According to Dutch employment law, employees engaged in blue-collar and white-collar jobs enjoy equal protection. Various labor regulations in the Netherlands cover employees irrespective of the mode of payment – hourly, daily, monthly, or pro-rata.

Employment Contract

An employment contract (arbeidscontract) is an agreement defining the employer-employee relationship. In principle, the employment contract can be either written or verbal agreement. 

Under Dutch employment law, there are five principal types of employment contact employers can offer to an employee:

Fixed-Term contract (tijdelijk)

As the name suggests, a fixed-term contract (temporary contract) is for a specific period. It has a predetermined date after which the employees end their work agreement. 

No dismissal procedure is required in the temporary contract as it terminates after the predetermined date. Moreover, employers often offer second temporary contracts to employees. Employees receiving more than three successive temporary contracts or working with the same employer for more than three years automatically get a permanent contract.

Permanent contract (vast)

In a permanent contract, there is no predetermined period of work. Such agreements are terminated if the employee resigns or the employer ends the contract. 

Zero-hour contract (nul uren)

A zero-hour contract has no fixed working hours, providing flexible working hours to the employees. It can exist either as a temporary or permanent contract. A nul uren also provides facilities like sick leave, holiday allowance, etc. 

Recruitment Agency contract (uitzendcontract)

In this type of contract, employees enter into an agreement with the recruitment agencies. These agencies become the employers legally and provide salary even if the employee works for a third party. A uitzendcontract is not common amongst employees as it offers limited dismissal protection. 

Freelancer contract (DBA modelovereenkomst)

People working as freelancers are also bound to sign a specific contract called DBA modelovereenkomst. This contract specifies the working relationship between the freelancer and the employer. 

Employment contracts in the Netherlands must specify the following employment details: 

  • Contact details of the employer and the employee
  • Place of the work
  • Type of contract
  • The employee’s joining date 
  • Job role or nature of the work
  • Standard working hours 
  • Detailed salary breakdown 
  • Payment method and cycle 
  • Holiday allowance
  • Entitlements for sick, pregnancy, maternity, or paternity leaves
  • Notice period
  • Terms and conditions for termination of employment

The following information is optional and depends on the legal structure of the registered employer in the Netherlands:

  • The contract term for temporary employees
  • Duration of probation period 
  • Pension
  • Non-compete or non-solicitation clause

A registered company in the Netherlands may have to work with a collective labor agreement (Collectieve Arbeidsovereenkomst, CAO) formed between trade unions and employer’s organizations per the labor act regulations in the Netherlands. In case of conflicts, the provisions in the CAO will prevail if the ruling contradicts the employment contract.

Key Provisions of the Act

The sources of Dutch employment rules primarily include the Dutch Constitution, civil law, CAO, and numerous labor regulations in the Netherlands like the minimum wages and holiday allowance Act, the Work Hours Act, the Work Council Act, and the Collective Dismal Act. 

The key provisions of this act:

Working hours 

The Dutch working hours law  states the following: 

  • Employers must determine the work schedule after considering the personal circumstances of employees, for instance, their care duties, education and training, and volunteering.
  • Employees can work a maximum of 12 hours per day and 60 hours per week. Over four weeks, the maximum working hour limit is 55 hours per week. Over 16 weeks, the maximum working hours is 48 hours per week. 
  • Changes in the work schedule must be communicated at least 28 days before it takes effect.
  • Working hours in Dutch labor law apply to every professional 18 years and above. 

Holiday entitlements

Some standard practices regarding holiday entitlements under the Dutch employment rules involve:

  • Employees are entitled to take at least 20 paid holiday leaves annually
  • Employers must calculate the statutory leave hours per year at least four times the number of weekly working hours
  • Employers must also offer a holiday allowance per year which generally equals 8% of their yearly salary
  • While employers may offer leaves on official public holidays, they aren’t legally obliged to do so. The public holidays are:
    1. New Year’s Day
    2. Good Friday
    3. King’s Day
    4. Easter Sunday
    5. Easter Monday
    6. Liberation Day 
    7. Ascension Day
    8. Whit Sunday
    9. Whit Monday
    10. Boxing Day
    11. Christmas

Leave schemes

Employers are bound by various statutory leave schemes in the Netherlands, like the Work and Care Act. Some of the prominent leave schemes include:  

Pregnancy leave

  • Pregnant employees are entitled to up to six weeks of pregnancy leave before the due date and another ten weeks of maternity leave after childbirth.
  • If an employee takes less than six weeks of leave before birth can use the remaining leaves after the birth.
  • Maternity leave in the Netherlands for foreigners is also transferable to a partner in case of unforeseen circumstances like a mother’s death after childbirth. 
  • A female employee has the right to take at least 20 weeks of maternity leave in case of multiple births, along with maternity pay.

Shared paternity leave in the Netherlands

  • The employer must offer one week of paid paternity leave within the first four weeks after the child’s birth.
  • Effective from August 2022, the Dutch employment law will allow partially paid shared paternity leave for nine weeks. It must be taken in the child’s first year of life; after that, it becomes invalid.
  • Employees will be entitled to 50% of the maximum daily wage during this period. 

Adoption leave and foster leave

  • Employers must offer six weeks of adoption or foster leave to employees who have adopted a child or brought home a foster child.
  • Employees must apply at least three weeks in advance to take adoption or foster leave.
  • Employees may spread this leave over an extended period.

Short-term care leave

  • Employees are entitled to short-term care leave if they need to take care of their children or grandchildren, partner, parents or grandparents, resident members of the household, friends, neighbors, or even acquaintances. 
  • Employee entitlement to care leave is twice the number of hours worked per week in a year and must be specified in the employment contract. 
  • Employees can seek up to 70% paid short-term care leave. Employers can pay the statutory minimum wage if it is less than the minimum wage.

Long-term care leave

  • The employee is entitled to a long-term care leave if their child, partner, or parent is seriously ill and requires care. 
  • Employers need not pay their employees during long-term care leaves. 

Special leaves 

  • Special leaves do not have any basis in the Dutch employment law. 
  • A few examples of special leaves include attending a marriage, funeral, moving house, consulting a doctor, a work anniversary, taking an exam, and likewise.
  • Employers are not obliged to pay during the leave period.  
  • Special leaves may be specified in the employment contract. 

Unpaid leaves 

  • Employees can take unpaid leave on a full-time or part-time basis only in prior consultation with the employer.
  • The employment contract will continue during the leave.
  • Employers are not legally obligated to pay their employees during unpaid leave. 
  • Exceptions may arise depending on the collective labor agreement (CAO) decisions, work councils, or employee representatives. 

Emergency leaves

  • Emergency leaves relate to unforeseen personal circumstances for which an employee is required to take time off immediately. 
  • Employers must pay the employee during the leave period unless specified otherwise in the employment contract. 

Minimum wage

Any employee aged 21 and over is entitled to at least the statutory minimum wage. Employees aged between 15 to 20 years are entitled to youth minimum wage. The minimum wage under the Netherlands labor law applies to:

  • Permanent or fixed-term contracts
  • On-call employees
  • Payrollers 
  • Posted workers
  • Foreign personnel
  • Contractors or subcontractors

The statutory minimum wage is revised every six months. It happens each year on January 1 and July 1. As per a recent revision, the statutory minimum wage is increased to €1,725.00 per month. 

Pension fund

In addition to the voluntary company and individual pensions, the Netherlands has a mandatory state pension system.‍

Dutch State Pension System (AOW)

  • People are insured automatically under the AOW pension scheme if they live or work in the Netherlands. 
  • Employers pay AOW contributions to the Dutch Tax and Customs Administration in addition to withholding a part of the contribution from the employee’s base salary.
  • The pension amount will depend on the number of years of work in the Netherlands. However, in most cases, employers may witness a need to offer supplementary pension schemes. 
  • Effective from January 01, 2021, employers are obligated to offer payroll employees an adequate pension scheme. A registered company in the Netherlands willing to hire employees can join a company pension fund. An entrepreneur looking to hire staff in the Netherlands can offer their employees an individual pension scheme. ‍

Workplace pension 

  • In some business sectors, employers in the Netherlands must offer a pension scheme to their employees through a compulsory sector pension fund (Bedrijfstakpensioenfonds, Bpf).
  • For instance, Pension Fund for the Engineering, Mechanical, and Electric Contracting Sector (Pensioenfonds Metaal en Techniek, PMT) apply to an IT employer hiring many payroll employees who work in the engineering, mechanical, and electric contracting sector. 
  • Employers may withhold contributions based on the employee’s salary and even contribute a percentage of base salary on behalf of the employee towards the pension scheme.  
  • Any change in the pension scheme must have prior approval from your employees. 

Private insurance 

  • These pension funds are a product of banks or insurance companies. 
  • Employer contributions to such funds are optional and are not covered by any of the Netherland labor laws. 

Payroll tax and employer registration

Employers in the Netherlands are obliged to deduct payroll tax from their employees’ wages. 

The components of payroll tax include

  • Wage tax (wage withholding tax)
  • Social security contributions (employee and national insurance contributions)
  • An income-dependent employer’s health care insurance contribution (Health Care Insurance Act contribution).

Withholding payroll taxes may increase your administrative obligations. You must make arrangements for the following adhering to the Netherlands labor law:

  • Register as an employer
  • Establish the identity of your employee, viz. a citizen service number (BSN) 
  • Obtain the data required for the payroll taxes
  • Maintain payroll records
  • Calculate the payroll taxes
  • Pay premiums for employee and national insurance contributions
  • File payroll tax returns and pay the payroll taxes


Employers must issue either a hardcopy or digital payslip to employees only the first time. After that, employees can request a payslip when there is a change in their salary or deductions.

The payslip must contain the following items:

  • Salary breakdown like gross salary, basic salary, bonus related to performance
  • Minimum youth wage
  • Additional allowance like holiday allowance, specification allowance
  • Deductions 
  • Name of the employer and the employee
  • Contract type (whether permanent/freelancer/on-call contract)
  • Working hours 
  • The pay period for which payment is made

The Social Affairs and Employment Inspectorate (Inspectie SZW) can impose fines upon the employer for incorrect data. 

Trial period

An employer can dismiss employees in the Netherlands during their trial period without grounds. The Dutch labor act rules provide that a trial period is only valid when agreed upon in a written employment contract for at least six months.

The duration of the employment contract determines the trial period duration. Employees having temporary agreements of more than six months and less than two years must serve one month as a trial period. Those with permanent employment or a temporary contract of more than two years must serve a two-month trial period. 

Dismissal rules

The Balance Employment Market Act regulates flexible work, dismissal, and the financing of unemployment benefits. Employers usually find it more feasible to offer a fixed contract than a flexible one.

Notice period

  • Employers must give the notice to dismiss an employee having a permanent employment contract. This is also applicable in case your employee wants to resign. 
  • The length of the notice period depends on the duration of the employment contract, with a maximum of 4 months.
  • Employers need not give the notice to dismiss employees during the trial period, in cases of summary dismissal due to gross misconduct, or when the employee resigns, effective immediately.
  • Employers also need not give a notice period for fixed-term contracts as it ends on a predetermined date. However, employers must inform employees if they do not want to renew the contract. 

Dismissal procedure

  • Employers in the Netherlands must have a valid reason for dismissing employees, like refusal to perform work, culpable conduct, excessive sickness absence, reorganization, or company closure.
  • The Dutch employment rules do not require employers to offer a social plan. However, employers need a social plan if it involves dismissing 20 employees or more within three months. 
  • The major provisions in a social plan regulate matters such as the transition payment, workplace changes, or any other aspects, as mandated by the CAO. 
  • When the employer and the employee mutually agree to dismiss the employment contract, the employers do not have to agree on a transition payment
  • In such cases, the notice period must be taken into account and a final settlement is reached for instance on unused vacation days.
  • It is optional for employers to offer severance pay. 
  • When the employer decides to terminate the contract, and the employee agrees, the employer must make a transition payment.

Data protection and employee privacy

Any employer hiring an employee in the Netherlands is bound by Article 88 of the European Union’s General Data Protection Regulatory (GDPR). This rule ensures data processing in the context of employment.  

EU directive on transparent and predictable working conditions

Effective August 1, 2022, all EU member countries are expected to align their national labor codes along with the new EU directive on transparent and predictable working conditions

In this case, the labor code in the Netherlands will add a few employment conditions and stipulations like

  • The employer must pay for compulsory training of their employees
  • An employer cannot stop their employee from working for another employer outside their work schedule without an objective justification
  • Employers must extend predictable work patterns to benefit on-call employees

Note: The effective date of this measure is yet to be finalized. Its implementation depends on its passing in the upper and lower houses of parliament or proclamation of the Order in Council (Algemene Maatregel van Bestuur, AMvB) or ministerial decree and publication in the Staatsblad or Staatscourant(Government Gazette, in Dutch).


When hiring employees in the Netherlands, it is mandatory to pay statutory minimum wage. Employees can lodge a complaint to the Netherlands Labor Authority (Nederlandse Arbeidsinspectie, NLA). It ensures compliance with employment rules concerning statutory minimum wage and holiday allowance rate. 

Not complying with these labor act rules in the Netherlands could attract the following penalties

  • Not following minimum wage: NLA may impose a fine of up to €10.000 per underpaid employee if the employer does not comply with the statutory minimum wage rate. 
  • Not paying holiday allowance: NLA may impose a fine of up to €2.000 per underpaid employee if the employer does not reimburse the holiday allowance.
  • Physical cash transaction: NLA may impose a fine of up to €1.250 per employee if the minimum wage is paid in cash.
  • Incorrect payslip or information: A fine of €12.000 is imposed if the employer cannot prove total wages, total hours worked, and the holiday allowance paid to the employee. The same fine is charged if the employer furnishes an incorrect payslip. 
  • Non-compliance penalty: Employers must pay what they own within four weeks after the payment becomes due. Otherwise, they may attract a maximum fine of €500 per day per employee and a maximum of €40.000 per employee.
  • Repeat offenders: Repeatedly violating minimum wage rules within five years may attract hefty fines or suspension (part of) employer activities.

Compliance Strategies for Employers

Here are some commonly followed Dutch labor law compliance strategies for entrepreneurs with staff or registered employers:

  • Issue employment contracts based on standard templates

A registered entrepreneur in the Netherlands can issue high-quality employment documents, including offer letters, work contracts, employment records, and a termination notice to protect the employer-employee relationship.  

  • Hire an HR manager

Human Resource (HR) management is yet another practical approach to complying with the labor code in the Netherlands.

A dedicated HR manager must oversee the design of employee benefits, employee recruitment, training, and development. Employers can also involve them in performance appraisals & reward management, managing pay, dealing with organizational change, and industrial relations.

  • Use an outsourced firm

There are innovative third-party solutions for outsourcing employment relations compliance audits, preparing the necessary labor documents, and preventing your firm from incurring penalties. Multiplier is one such firm that ensures 100% compliance with the Netherlands labor law through solutions like legal contract drafting and managementmandatory benefitssalary payment, and more. 

Recent Changes in the Dutch Employment Law

  • Work permit for foreigners 

The maximum period for a work permit was extended to three years from one year in 2022.  

  • Higher retirement age

The retirement age rises in 2022 from 66 years and four months to 66 years and seven months.

  • Tax-free home-work allowance 

Employers can offer a tax-free home working allowance of up to EUR 2 per day for their employees working from home. 

If an employee works part of the day at home and part of the day on location, they are eligible for either a tax-free home office allowance or a travel allowance.

  • More balanced gender representations in the top management

Balanced Gender Relations in Management and Supervisory Boards Act that entered into force in 2022 aims to make the ratio of men to women in the top ranks of large companies more balanced. 

Large public and private companies can use a growth quota to create an equal ratio of men to women on company boards. 

  • More representation for flex workers in work councils

Notable changes are made in terms of active and passive voting rights.

Employees can vote and stand for election to works councils after only three months. 

Temporary agency workers have participation rights after 15 months instead of 24 months.

How Multiplier Can Help Businesses Stay Compliant?

Partnering with Multiplier could help employers comply with the Dutch labor act rules. We help businesses by offering innovative global employment products and solutions adhering to the local labor and employment laws.

Global employers can take advantage of Multiplier’s powerful employer of record (EOR) product to offer their international employees mandatory benefits as applicable under the labor code in the Netherlands. Employers may even use our multi-lingual contract drafting services or payroll services with complete global compliance.

Frequently Asked Questions

The multi-faceted sources of employment laws in the Netherlands include the Dutch constitution, numerous Acts, labor regulations, and collective labor agreements. Also, the case laws arising out of the court of labor disputes contribute to the primary sources of employment laws. Additionally, the Netherlands is bound by the legislation of the European Union (EU) and the jurisdiction of the European Court of Justice.

When you are not established in the Netherlands and employ personnel who live or work in the Netherlands, in most situations, you must withhold payroll taxes.

When hiring temporary staff in the Netherlands through an intermediary or contractor/subcontractor, they must pay the payroll tax. However, if they fail to do so, the Dutch Tax and Customs Administration may hold you liable.

Dutch labor law is vocal on the matters of direct and indirect distinctions. A direct difference is a kind of discrimination by employers based on gender, race, religion, etc. The employment laws in the Netherlands attach penal provisions to employers violating it unless the specific provision in the law prescribes otherwise.

Indirect distinctions are discriminations by employers based on theoretically neutral traits but may practically stereotype a specific population group. However, it is lawful when based on an objective justification.

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