How to hire employees in the Netherlands

The Netherlands, with its robust economy and prime location in Europe, stands out as an attractive hub for acquiring skilled professionals across sectors such as technology, sustainability, and healthcare. Companies considering expansion or seeking talent in this region must navigate the nuances of the Dutch labor market, characterized by its innovative hiring trends and comprehensive employment laws.

This guide is designed to illuminate the intricacies of recruiting in the Netherlands, providing a pathway from uncovering hiring opportunities to complying with the nation's employment legislation. It aims to arm organizations with the essential insights needed to smoothly enter the Dutch job market, fostering growth and leveraging the capabilities of its highly skilled workforce.

What you need to know before hiring employees in the Netherlands

Job market in Netherlands 

Exploring the Dutch job market unveils a future shaped by the dynamics of flexible work arrangements and the swift acquisition of digital skills. The "Reshaping Work" report by PwC outlines four potential scenarios for 2025, illustrating a job market that could see the share of flexible and self-employed workers rise to 57% or maintain at the current 39%, depending on evolving employment practices and digital competencies within the workforce.

Amidst this backdrop, the Netherlands stands at the forefront of labor market innovation, with economic growth reaching 4.5% in 2022, largely fueled by household consumption and balanced contributions from trade, investment, and public spending. With a net employment rate of 73% among its 17.6 million inhabitants, the nation exhibits a strong workforce participation rate, underscored by a significant portion working part-time. The health and welfare sector emerges as the largest employer, highlighting the diversity of the job market.

As we approach 2025, the Dutch job market is on the brink of significant changes, offering a spectrum of opportunities for those ready to embrace its evolving nature. Engaging with this market means connecting with a labor force that is increasingly leaning towards flexibility, bolstered by a solid foundation in digital fluency. For enterprises poised to adapt and innovate, the Netherlands presents a unique convergence of talent, technological readiness, and growth potential, ready to be harnessed.

Netherlands hiring trends

In 2024, Dutch hiring trends underscore a commitment to innovative, sustainable, and flexible employment practices, affirming the normalization of remote and hybrid models. The search for talent extends globally, with a strong emphasis on environmental and social governance alignment. Skills like adaptability and critical thinking are in high demand, especially within the burgeoning tech sector, targeting AI, data analytics, and cybersecurity specialists. Although a minor contraction to 9.59 million in the workforce is forecasted, the uptick in gig and contract roles signifies a shift towards varied and adaptive hiring practices in the Netherlands, reflecting the evolving preferences for work flexibility.

How to hire employees from the Netherlands

1. Set up an entity in the country

In the Netherlands, businesses can choose from different entity types like Branch Offices, B.V. (a type of private company), Co-operative U.A., and C.V. (a partnership). Branch Offices are for foreign companies wanting a local presence. B.V.s protect owners from personal loss and need to file yearly accounts. Co-operatives U.A. allow members to join or leave without personal risk and also require yearly account filings. C.V.s are partnerships with shared or individual responsibilities, sometimes needing to file yearly accounts too. Each option suits various business goals and tax needs, so choosing the right one depends on what the company plans to do in the Netherlands. Opting for an EOR simplifies starting up by avoiding complex setup processes.

2. Hire independent contractors

In the Netherlands, hiring independent contractors offers an effective and flexible solution for companies pursuing project-based work that requires specialized expertise. This strategy provides a minimal legal and compliance burden, as contractors function as autonomous entities with well-defined contractual periods. Ideal for organizations aiming for rapid adaptation to project needs and shifts in the marketplace, it facilitates access to specific skills without necessitating enduring obligations

3. Partner with an EOR in the country

Partnering with an Employer of Record (EOR) in the Netherlands provides a straightforward connection to the local talent pool, bypassing the need to set up a legal entity. An EOR serves as your legal representative within the Netherlands, taking on the complexities of recruitment, payroll, and legal compliance. This allows you to concentrate on strategic team management. This approach is especially beneficial for companies seeking swift entry or expansion in the Dutch market, guaranteeing adherence to local laws and enhancing operational efficiency right from the start.

Compliance risk while hiring in the Netherlands

In the Netherlands, employers encounter compliance challenges due to strict labor laws, complex tax regulations, and mandatory social security contributions. Managing these intricacies, amid frequent legal modifications and regional differences, requires strict adherence to regulations regarding employment contracts, working hours, minimum wages, termination processes, and employee benefits. Failure to comply can lead to penalties, fines, and legal disputes. Engaging with local experts or utilizing an Employer of Record (EOR) can help mitigate these risks, ensuring businesses comply with Dutch employment laws and avoid potential legal and financial issues.

Key Aspects of Netherlands Labor Law

Employment Contract:

In the Netherlands, it's common practice, though not a legal requirement, for employers to issue written employment contracts delineating employment terms and conditions.

There are primarily two contract types: temporary and permanent. New hires often start with a fixed-term contract, usually spanning six months to a year, before possibly moving to a permanent contract.

Key elements of the contract include:

• Identification of the involved parties
• Contract start date and duration for temporary contracts
• Work location specifics
• Detailed job description
• Salary and benefits information
• Defined working hours
• Holiday entitlements
• Notice period requirements
• Pension details, if applicable
• Non-compete clauses, if present
• References to any collective bargaining agreements

Working Hours:

The Working Hours Act (Arbeidstijdenwet) stipulates that in the Netherlands, the maximum working hours are capped at 9 hours per day and an average of 45 hours weekly, calculated over a 16-week period.

Overtime: 

In the Netherlands, during employment negotiations, employers and employees need to reach an agreement on a reasonable salary, as the law does not mandate overtime compensation. Additionally, it's not allowed for employees to work beyond twelve hours in any given day or exceed 60 hours in a week.

Minimum Wage: 

The Netherlands enforces compliance with the Minimum Wage and Minimum Holiday Allowance Act (Wet minimumloon en minimumvakantiebijslag, WML) to ensure employees receive fair compensation. This legislation sets the legal benchmarks for minimum wage and holiday allowance as the lowest permissible earnings for work performed in the Netherlands, applicable to all employers and employees, irrespective of nationality.

According to the Netherlands Labour Authority, Wage calculations during inspections by the Netherlands Labour Authority are based on the normal working week as defined by any relevant Collective Labour Agreement. Employers who fail to meet these minimums face substantial fines, up to EUR 10,000 for underpaying wages and EUR 2,000 for insufficient holiday allowance per affected employee. 

Additionally, employers must rectify any underpayments within four weeks of the inspector's discovery or incur penalties up to EUR 500 per day per employee, with a maximum penalty of EUR 40,000 per employee, ensuring strict adherence to minimum remuneration standards.

Payroll laws in the Netherlands 

Employers are required to process payroll on a monthly basis, ensuring timely and regular payment to their employees.

Employment benefits in the Netherlands

Leave Policies in Netherlands 

1. Paid Time Off:

Employees in the Netherlands are entitled to a minimum of 20 days of paid vacation each year, not including public holidays.

2. Public Holidays:

Netherlands recognizes 11- 12 public holidays throughout the year, during which employees are entitled to take paid leave.

3. Sick Days:

Employees in the Netherlands who become ill are guaranteed at least 70% of their salary for up to two years, with the possibility of receiving more depending on their contract or Collective Labour Agreements (CAOs). It is mandatory for employees to report their sickness immediately and they may be required to have a medical check-up by a company physician. The focus for both the employer and the employee is on facilitating the employee's return to work. If an employee is still sick after two years, they may be eligible for disability benefits through the UWV.

4. Maternity Leave:

The maternity policy in the Netherlands is notably generous, offering expecting mothers up to 16 weeks of leave. This leave usually starts 4 to 6 weeks prior to the expected delivery date, with the balance utilized after the birth.

5. Paternity Leave:

In the Netherlands, partners are entitled to one week of paid parental leave following their child's birth. Additionally, they can take an extra five weeks of leave, receiving 70% of their regular salary during this period.

Public Health Insurance 

The Dutch health insurance system, mandatory for workers, combines public and private elements to cover essential medical costs. Health insurers must accept all applicants, offering a basic package that includes GP visits, hospital care, and prescriptions. Optional extras cover physiotherapy and dental, the latter averaging a 126 euro reimbursement in 2016. The system, funded through income taxation, features nine major insurers across 39 brands. Adults pay a nominal premium averaging 1,378 euros in 2018 plus a mandatory policy excess of 385 euros to encourage cost awareness. Annually, individuals can switch providers, fostering competition and choice within a socially solidary framework.

Filing tax in the Netherlands

Income Tax:

In the Netherlands, the income tax structure is progressive, with rates starting at 9.28% for incomes up to 37,149 EUR, increasing to 36.93% for incomes between 37,149 EUR and 73,031 EUR, and peaking at 49.50% for incomes above 73,031 EUR. This ensures that taxation is aligned with individuals' financial capacity, maintaining equity within the system. For a comprehensive understanding of the Netherlands' income tax rates and brackets, refer to our detailed guide.

Other Tax and Social Security Contributions:

In the Netherlands, the social security tax framework emphasizes employee welfare, covering invalidity insurance, unemployment, healthcare, sickness benefits, pensions, and more. The system mandates contributions from both employers and employees, ensuring a robust social safety net. Rates for these contributions vary across different schemes, leading to a total employment cost that underscores the commitment to supporting workers' health, financial security, and overall well-being. This approach fosters a secure and transparent work environment, reinforcing the bond between employers and employees. For a concise overview of these contributions, refer to our detailed guide.

Business Culture in the Netherlands

Understanding the landscape of business culture in the Netherlands is critical for international firms considering this dynamic market. The business norms in  the Netherlands encompass:

• Dutch business culture values etiquette in verbal and non-verbal communication, emphasizing general business practices and negotiation habits.
• Introductions are preferably made by a third party, but self-introductions require a firm handshake.
• The Dutch favor a reserved demeanor in public; moderation in voice and body language is recommended.
• Proficient in multiple languages, especially English, the Dutch rarely need interpreters in business, preferring direct communication.
• The "Polder Model" underlines a consensus-driven approach, valuing everyone's input and open discussions.
• Gestures are used minimally; greetings are typically made with a handshake without additional physical contact.
• Personal space is important, with a preference for using first names after initial introductions, except in more formal or hierarchical interactions.

Top sectors to hire from in the Netherlands

Service Sector: Dominating the GDP with a 68.68% contribution, the service sector is vital, with significant employment opportunities, particularly in health and social work, wholesale and retail trade, and business support services. This sector's expansive nature covers a wide range of services, including financial, professional, and personal services, highlighting its pivotal role in the Dutch economy.

Industry: Accounting for 19.51% of the GDP, the industrial sector is crucial, encompassing manufacturing, chemicals, high tech, and energy. The Netherlands' strong manufacturing base and its emphasis on high-quality and innovative products make this sector a key employer and an area ripe for talent acquisition.

Health and Social Work: As the sector with the largest number of employees, nearly 1.5 million jobs, this sector is essential for hiring, given its critical role in providing healthcare and social services to the Dutch population.

Creative Industries: Identified as one of the nine top sectors, the creative industries in the Netherlands encompass design, fashion, media, and more, contributing to the country's innovative and entrepreneurial spirit.

Top cities to hire from the Netherlands

Amsterdam:
As the capital city and a major tech hub, Amsterdam is home to a diverse and highly skilled workforce, especially in IT, creative industries, and finance.

Rotterdam:
Known for its dynamic port and logistics center, Rotterdam also boasts a growing tech scene, making it a prime location for talent in technology, trade, and engineering.

The Hague:
With a focus on international law, politics, and cybersecurity, The Hague offers access to professionals in legal services, international relations, and tech-focused roles.

Utrecht:
A center for education and research, Utrecht is rich in young, innovative talent, particularly in the fields of IT, health, and sustainability.

Leiden:
Renowned for its prestigious university and research institutions, Leiden is an excellent source of talent in life sciences, pharmaceuticals, and academia.

Groningen:
With a youthful population and a strong emphasis on innovation and start-ups, Groningen is a hotspot for creative and tech talents looking for remote opportunities.

Hire in the Netherlands compliantly with Gloroots

Hire in the Netherlands compliantly with Gloroots. Gloroots, serving as an Employer of Record (EOR) in the Netherlands, simplifies the process of candidate onboarding, facilitating swift initiation of operations while adhering to both local and international compliance standards. Designed to suit businesses of varying sizes, Gloroots offers an efficient solution for managing payroll, administering benefits, and overseeing tax obligations without the need for establishing a local entity. This service empowers companies to focus on effectively assembling a remote team within Netherlands. For further information on how Gloroots can support your hiring needs in the Netherlands, please reach out to us.

Frequently Asked Questions 

1. What are the main types of employment contracts in the Netherlands?

In the Netherlands, the primary employment contracts are permanent and temporary contracts. Permanent contracts offer long-term employment without a specified end date, while temporary (fixed-term) contracts are for a specific duration, often used for initial employment periods or project-based work.

2. Is it mandatory to provide a written employment contract?

While not legally mandated, it's common practice and highly recommended to provide written employment contracts in the Netherlands. These contracts clearly outline the terms and conditions of employment, including job roles, salary, working hours, and other important details.

3. How does the Dutch job market accommodate flexible and remote work?

The Dutch job market is increasingly accommodating flexible and remote work arrangements, spurred by technological advancements and shifts in workforce preferences. Employers are adopting more remote and hybrid work models, allowing for greater flexibility in how and where work is performed.

4. What are the regulations around minimum wage and holiday allowance in the Netherlands?

Employers in the Netherlands must comply with the Minimum Wage and Minimum Holiday Allowance Act, ensuring employees receive at least the legal minimum wage and holiday allowance. The Netherlands Labour Authority oversees compliance with these regulations, imposing fines for underpayment.

5. How can companies ensure compliance with Dutch employment laws?

Ensuring compliance involves understanding and adhering to Dutch labor laws, tax regulations, and social security contributions. Companies can mitigate compliance risks by partnering with local experts or employing an Employer of Record (EOR) to manage the legal and administrative aspects of hiring and employment in the Netherlands.