Employer of Record the Netherlands

Working with an Employer of Record in the Netherlands can help you hire remote teams without having to set up a physical entity there. 

Build, pay, and manage your remote team in the Netherlands successfully with the support of Skuad's unified and automated platform. 

This page describes our platform features in greater detail. Get in touch with Skuad’s team of experts to ‍learn how our solutions can streamline your business's onboarding, payroll, and compliance.

The Netherlands at a Glance

• Population size: 17.7 million
• Currency: Euro €
• Capital city: Amsterdam 🇳🇱
• Languages spoken: Dutch, English
• GDP: USD 1.01 billion

How To Hire Employees

You can hire employees in the Netherlands using one of three main processes:

1. Direct hiring without the help of EOR services in the Netherlands.
2. Hiring via Professional Employer Organizations (PEOs).
3. Hiring with Skuad’s Employer of Record Netherlands solutions.

Direct Hiring: Setting Up a Subsidiary

The first step to hiring employees directly in the Netherlands is registering your company in this country. The duration for the full registration procedure usually lasts between 2-4 weeks. Business owners must follow these six essential steps to open a subsidiary company in the Netherlands:

1. Select a unique business name that has not been previously used as a registered trademark in the Netherlands.
2. Have your articles of association notarized, whether you wish to set up a privately or publicly held company in the Netherlands. 
   
   • At this stage, you will need the services of a civil law notary to draft and execute deeds of incorporation.
3. Register the name and the business at the Dutch Chamber of Commerce.
   After selecting a name for your company, you must register with the Dutch Chamber of Commerce. You should also submit a trading name that abides by the regulations of the Trade Name Act. 
   
   • Your details will be passed to Tax and Customs Administration. Post-registration, they will generate a unique number, called the KVK number, for your business. 
   • This number will be used in all your invoices and outgoing posts.
4. Open a corporate bank account.
   Establishing an account with a commercial Dutch bank will make payments and transactions smoother, even though accounts in foreign banks are also allowed by the new Single Euro Payments Area (SEPA) rules. 
   
   • The bank may ask you to produce documents related to the company's Chamber of Commerce registration, articles of association, and proof of the board members' and directors' responsibility.
5. Employee Insurance: Before you start hiring employees, register with the Dutch Tax and Customs Administration. 
   
   • You will receive a payroll number that you’ll use to submit returns. 
   • You are required to pay contributions on behalf of your employees to the National Insurance Scheme and Employee Insurance Agency.
6. Before starting the business, conduct a risk inventory and evaluation. This evaluation must be completed to answer the following questions:
   
   • What are the risks to which you and your employees are susceptible?
   • What measures have been taken to prevent or mitigate these risks?
   • What action are you planning to take?

Once the registration process is complete, you’ll need to take the next steps as follows:

1. Perform a thorough screening of prospective employees and ideal candidates. Recommend rigorous background checks and identity verification of original documents.
2.  Register as an employer with the Dutch Tax and Customs Administration to ensure you meet the payroll tax obligation for employing in the Netherlands.
3. Draw up an employment contract with them and ask whether a Collective Labour Agreement applies, what pension schemes are, details about the working hours, and so on. 
   
   • The minimum wage should be determined according to the type of employee hired, and they should also receive a holiday allowance.
4. Provide healthy and safe working conditions for your employees. They are also entitled to certain types of paid leave and a number of days off each year. 
5. Conduct a risk assessment and evaluation for your employees so that you can be transparent about the risks they face and how you, as an employer, are addressing them.
6. For permanent employees from the Netherlands, ensure that you deduct social insurance premiums from their pay. Another option is to become a self-insurer and pay the Dutch Tax and Customs Administration premiums. 
7. Make sure that your employee has a Dutch Health Insurance policy.
8. Try to find potential candidates from the European Economic Area first. You can recruit from other countries if you don’t find suitable candidates in this region.
9. Make sure to apply for a work permit from the Employee Insurance Agency for the employee.
10. If you employ people on a work permit, you are required to find suitable accommodations for them.

Some of the popular job platforms you can use for hiring in the Netherlands include:

• Indeed.nl
• LinkedIn
• Nationale Vacaturebank
• Monsterboard.nl
• Randstad
• Werk.nl

Hiring With Professional Employer Organizations (PEOs)

A Professional Employer Organization (PEO) acts as your co-employer and handles multiple – though not all – employee-related liabilities, including payroll, compensation, benefits, taxes, and administration. 

In contrast, an EOR acts on your behalf as a full legal employer for your payroll employees and has complete liabilities of workers. Working with a PEO requires that you carry your own insurance; with an EOR, employees are part of their insurance.

A PEO handles State Unemployment Tax and Federal Unemployment Tax Act rates, while an EOR offers insurance coverage for all. Working with a PEO may require business owners to weigh in frequently on decisions. In contrast, an EOR makes all HR-related decisions and processes the paperwork, giving you more time to grow your business.

Employer of Record Services in the Netherlands: Skuad

As you can see in the previous sections, the process of starting a subsidiary for direct hires involves a great deal of time and effort. Even if you work with a PEO, you must gather all the essential documents and check in constantly with your partner organization to ensure compliance.  

Working with an employer of record in the Netherlands makes all of this much simpler. Skuad’s solutions provide smooth and compliant processing of all your employment task obligations without creating a new unit in the Netherlands. 

See what Skuad’s employer of record services in the Netherlands can do for your business. Learn more.

Onboarding and Agreements

The first step of employee onboarding is to draft a formal employment contract, which can take one of two different forms in the Netherlands:

Contracts may be enacted verbally or in writing. You must specify whether a Collective Labour Agreement (CAO) applies in the employment contract.

Within one month of starting work, employers must sign an employment contract that includes details of the following conditions that apply to employees:

1. Place of work
2. Parties' identities and places of residence 
3. Employee's function or nature of work 
4. Length of the employee's typical working day or week 
5. Initial base salary and any other pay components, holidays, and applicable notice periods 
6. Pension arrangement 
7. Starting date of employment 
8. Duration of the employment contract (if applicable) 
9. Daily/weekly working hours
10. Probationary period duration
11. Details of paid annual leave

Once the employment contract is in place, employers must complete additional tasks that are crucial to the onboarding process. These fall into two main category types:

Contact Skuad for expert guidance on the hiring process in the Netherlands.

Taxes in the Netherlands

Worldwide income in the Netherlands is divided into three types of taxable income, each taxed separately under its own schedule, known as a 'box.' 

Each box has a different tax rate. The total income in these three categories determines an individual's taxable income.

In addition, the following taxes apply to employees/employers, which must be taken into account as an employer of record in the Netherlands:

Employer Taxation

Employee Taxation

Other types of tax requirements in the Netherlands include:

Compliance

Employment law In the Netherlands includes regulations laid out in the Dutch Civil Code, Collective Labour Agreement, internal company regulations, and individual company employment contracts.

It’s important to note that an employer of record in the Netherlands can leverage collective labor agreements and temp agencies for more flexible workforce requirements, depending on the nature of their employment.

Contractors vs. Full-Time Employees

Employees in The Netherlands fall into two essential categories:

Employers often prefer working with contractors in the Netherlands, as the policies and contracts are much more flexible. Doing so means taking extra care to avoid common misclassification errors, which can result in severe legal penalties, fines, and reputational damage.

Book a demo to learn more about how Skuad’s customized solutions work for your business needs!

IP Protection

The Netherlands has various types of protection for intellectual property rights, such as the following,

Other similar IP rights provided by the Netherlands laws include design rights, database rights, plant breeders’ rights, tradename law, and semiconductor topography rights.

Types of Visa

Payroll

Once you’ve registered with the Dutch Tax Authorities and received a payroll tax number, some of the primary concerns for payroll outsourcing in the Netherlands are 

• Income tax withholding
• National insurance withholding (included in payroll tax)
• Business tax
• Permanent establishment concerns

Types of Payroll

Benefits and Compensation

The social insurance scheme in the Netherlands can be divided into two categories:

• Employee insurance schemes that are mandatory for every employee
• National insurance schemes cover everyone working or living permanently in the Netherlands.

Employee Insurance Schemes

The primary goal of employee insurance schemes in the Netherlands is to provide aid to individuals during unemployment, illness, or incapacity for work. 

It also allows individuals to access temporary income if they cannot work.

Employee insurance schemes are regulated by four main acts: the Sickness Benefits Act, the Work and Income (Capacity for Work) Act, the Unemployment Insurance Act, and the Invalidity Insurance Act.

National Insurance Schemes

The National insurance schemes in the Netherlands comprise the following benefits:

• The National Survivor Benefits Act
• General Child Benefit Act (requires no contribution)
• General Old Age Pensions Act
• Long-Term Care Act

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You’ll always have someone in your corner to handle the heavy lifting of managing employee benefits & compensation when you work with an EOR like Skuad.

Speak with our team

Worker Rights

Working as an employer of record in The Netherlands involves managing various statutory employee entitlements. The sections below highlight a few of the essentials: 

Statutory Working Hours

The statutory working hours in the Netherlands are 60 hours per week and 12 hours per day.

Overtime

Overtime is allowed in the Netherlands and regulated by employment or collective agreements. The compensation amount for overtime usually varies from 50% to 100% of pay or time off.

Minimum Wage

The minimum wage for individuals over 21 years is €13.27 per hour.

Probation Period

In the Netherlands, the probationary period must be specified in writing, with a standard probationary period of two months for open-ended employment contracts or fixed contracts of two or more years. 

Otherwise, the longest possible probation period is one month. A probation period will only be valid in an employment contract that extends longer than six months.

Anti-Discrimination Laws/Acts

The Dutch Equal Treatment Act is the primary legislation that prohibits any form of discrimination against employees based on religion, race, sex, personal beliefs, and nationality, among other grounds. 

Additionally, the Working Conditions Act lays down a series of obligations for employers to prevent harassment in the workplace.

Health and Safety

The Working Conditions Act, Working Conditions Decree, and Working Conditions Regulations outline employers' and employees' rights and obligations regarding health and safe working conditions.

Under these laws, employers are primarily responsible for providing an environment where employees can work under health and safety conditions. 

On the other hand, employees are responsible for following all the relevant safety conditions applicable to the workplace. 

Bonuses

Employees are awarded a vacation allowance equal to a minimum of 8% of their annual gross wages. If a bonus scheme exists, a work council may help employers institute, change, or end it. 

The employer must mention the criteria or guidelines for earning a bonus in the criteria list. They should also be able to justify the bonuses since Dutch employees have the right to challenge the amount.

Remote & Hybrid Work in the Netherlands

An employer of record in The Netherlands must evaluate their organization's hybrid and remote readiness - the degree to which the company can engage in remote and hybrid work setups. 

There are three main elements of remote readiness, including:

Salary

The salary of employees in the Netherlands can vary a lot depending on several factors, including:

• Industry: The average salary of an IT engineer in the Netherlands is currently set at €64,150 per annum. Meanwhile, an individual with expertise in the healthcare sector earns up to  €35.256.‍
• Experience level: Individuals who have previously worked in other organizations or have enough experience in a particular sector will earn more than someone who has just graduated or is considered a fresher.
• ‍Location: The location of work can also directly influence the salary earned by individuals working in the Netherlands.

When hiring individuals from the Netherlands, please ensure you adhere to all the government's minimum wage requirements and comply with various payroll rules and regulations. For example, employees can only be paid in the Netherlands' official currency, the Euro (EUR, €).

Take a look at Skuad’s salary insight tool. It grants you access to the latest salary trends and robust compensation data so that you can offer the fairest and most competitive packages to your potential hires.

Leave Policy

Let’s look at the country's leave policies, which include national holidays in the Netherlands, annual paid leave, and sick leave, among others. 

National Public Holidays

In addition to the types of leaves discussed above, employees in the Netherlands enjoy the national holidays mentioned below.

Dates of these holidays and observances may change based on religious calendars.

Employees in the Netherlands are also granted the following types of leave:

Background Checks

Background checks in the Netherlands are crucial to guarantee a safe workplace, prevent theft, and ensure that you hire the most qualified candidates. Various types of background checks are permissible under the Netherlands labor laws, including:

Criminal Record Check

A criminal record check helps uncover details related to an individual's state and federal criminal records. This screening type is especially important when hiring candidates to fill roles that involve access to sensitive business information or security responsibilities.

Employees in the Netherlands can apply directly for a criminal record document, also known as a certificate of conduct (VOG), either online or through the Integrity and Screening Agency.

Education Verification Check

Employers hiring for roles requiring specific academic qualifications must conduct an education verification check, which evaluates and confirms an employee’s educational background and relevant certifications.

You can contact educational institutions directly to verify the accuracy of an employee’s high school diploma, undergraduate or graduate degrees, and any other certifications.

Employment History Check

An employment history check confirms a job candidate’s work experience with previous employers/organizations, including their start and end dates, reasons for leaving, and sometimes even salary.

The primary purpose of checking employment history is to determine whether the individual has the necessary skills and expertise to perform the role for which they are hired.

Credit History Check

Employers perform a credit history check when they gather a job applicant’s financial records to get an overview of their financial history. Such screenings are particularly useful for roles at the leadership level or those directly related to finance positions.

In addition to these background checks, you can conduct social media verification and medical screening prior to hiring employees in the Netherlands.

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Avoid the headache that often comes with background checks in the Netherlands. It’s as simple as choosing the right EOR solution.

Talk to our experts today

Termination and Offboarding

In the Netherlands, there are generally five ways to terminate an employment contract:

Statutory Notice Period

The notice period during the probationary period is seven days.

If an employee is terminated after the probationary period, the duration of the notice period will differ depending on their tenure of employment.

The maximum notice period in the Netherlands is currently set at six months. 

However, if the termination occurs due to the employee's decision, please note that the notice period will only be one month.

Severance

The severance payable in the event of termination amounts to 1/3rd of the employee's gross monthly salary for every year of their service at the company. 

The total amount of severance payable is currently capped at 89,000 Euros, or the employee’s full yearly salary, whichever is greater.

Cultural Considerations

The Netherlands is an attractive destination for international hiring, thanks to its highly skilled workforce, business-friendly environment, and strong economic stability.

An employer of record in The Netherlands, however, does need to consider a few elements of Dutch culture to ensure smooth operations. We’ve added an overview of some primary factors below:

Leaving Work On Time

The Dutch are famous for maintaining a perfect work-life balance. They like to keep their personal and professional lives separate, and spending time at home with loved ones is considered sacred. 

This means that when hiring employees from the Netherlands, do not be surprised when they do not answer any work-related calls or emails outside of office hours.

Honesty and Transparency

The Dutch are generally considered to be very direct communicators. The same principle applies to the working environment. 

They rarely beat around the bush in telling a colleague – or even their boss – that they are not doing their work properly. 

This level of directness is perceived as honest and efficient and, therefore, highly valued in the workplace. 

Informal Workplace

Compared to most other countries, the Dutch organizational structure is usually flat. 

Higher officials work closely with lower-level staff daily, and everyone refers to one another by their first names.

Conclusion

As the page above demonstrates, acting as an employer of record in The Netherlands can be incredibly complex, requiring deep knowledge of Dutch law and culture to manage effectively. For this reason, even companies with the resources to manage this process on their own usually choose to work with an EOR solution to handle the copious amount of administrative tasks.

Skuad’s expertise and robust global employment platform will help you achieve all your goals for international expansion. To learn more about Skuad's EOR services, click here.

FAQs

What is an employer of record in the Netherlands?

An Employer of Record (EOR) in the Netherlands is a third-party service provider that legally manages another company’s workforce. The EOR manages payroll processing, tax compliance, and benefits administration and ensures adherence to Dutch labor laws.

What is the WHK tax in the Netherlands?

It's a tax levied on the WHK (Werkhervattingskas), the return-to-work fund in the Netherlands. Businesses are taxed between 0.21% and 3.48%, depending on their unemployment risk level. The rate is determined by the business's risk profile, with higher-risk businesses paying more.

What is an employer statement in the Netherlands?

An employer statement (werkgeversverklaring) in the Netherlands is a document that includes details such as the employee's job title, start date, type of employment contract, and gross monthly salary. Banks and financial institutions ask for this when an employee applies for a mortgage or other forms of credit.

What is the WHT tax in the Netherlands?

The WHT (Withholding Tax) is imposed at a rate matching the highest Dutch corporate income tax (CIT) rate for the current tax year, which is 25.8% for 2023. However, this WHT rate can be lowered if a tax treaty applies.

What are the employer obligations in the Netherlands?

Dutch labor laws and regulations govern employer obligations in the Netherlands. These obligations include a written employment contract, statutory minimum wage, adherence to working hours and overtime regulations, safe and healthy working conditions, paid annual leave, sick leave, and maternity leave, and compliance with social security contributions, including WHK and other taxes.

How much does an EOR cost?

The cost of an EOR in the Netherlands varies based on local labor laws and the number of employees. EOR providers generally charge a monthly fee per employee, ranging from USD $100 to $1,000 or more. Pricing structures depend on local regulations and workforce requirements, providing transparency for businesses.

What is the difference between EOR and PEO?

A PEO co-employs another company’s staff and shares certain HR responsibilities. An EOR, however, is a third-party service provider that legally employs the distributed workforce of client companies without local entities and manages them on the company's behalf.

How does an EOR work?

An EOR primarily assumes the legal responsibility of employing staff on behalf of another company. It includes several key tasks, such as managing employee payroll and benefits, handling tax requirements, and, most importantly, ensuring compliance with all country-specific labor regulations.

What is the difference between payroll and employer of record?

One of the many differences between payroll companies and employers of record services in the Netherlands is the level of liability and responsibility each assumes. While payroll companies give you all the tools/equipment to facilitate international payment, an EOR takes on the majority of HR-related legal duties.