When you take on personnel or post them to the Netherlands, you need to comply with Dutch labour law. Employees in the Netherlands enjoy a relatively high level of protection and occupy a strong position under labour law. As an employer you therefore need to be familiar with the applicable rules and obligations. This article examines a number of the key aspects of Dutch labour law.
Which labour law is applicable?
Labour law varies from country to country. The main rule is that the employer and employee decide which labour law applies together, for example by laying this down in the employment contract. In some cases, for instance in certain cross-border cases, you can agree on applying the labour law of a different country. However, this decision may not result in the employee losing the protection they would have had under the law that would have applied to the employment contract in the absence of a decision.
When you take on personnel in the Netherlands (or post them here from abroad), it is therefore important to take Dutch labour law into account. In principle, this forms the minimum threshold for your obligations in all cases.
Dutch labour law
Dutch labour law differs considerably from other legal systems. Dutch employees enjoy a relatively high level of protection and employers have a significant duty of care. Below we discuss several important basic principles of Dutch labour law.
The employment contract
The employment contract is the foundation for the employment relationship. The law prescribes that the employment contract must contain certain agreements, including the duration of the contract, any applicable collective labour agreement (CLA) and a pension scheme. Provisions such as a trial period and non-competition clause are only valid if they have been agreed in writing.
An employment contract may be entered into for a fixed or indefinite period, but the law does set limits for the number of fixed-term contracts. This means that an employee automatically receives a contract for an indefinite period in certain cases, for example if they have had more than three temporary contracts at the same employer. Make sure you obtain advice before entering into or extending a contract. Our advisors will be happy to discuss this with you.
Collective labour agreement (CLA)
As the provisions in the CLA take priority over the provisions in the employment contract, it is important to know whether a CLA applies. Among other things this depends on the sector, the type of work/activities and the revenue of the company. The CLA determines whether it is possible to deviate from the terms and conditions contained in the CLA.
Remuneration
In principle, an employer is free to decide the amount of salary together with the employee. However, you do need to comply with statutory minimum wage requirements. A set minimum hourly wage applies to all employees aged 21 and over (2024: €13.27). Separate minimum youth wages apply to employees under the age of 21. Please note: if a CLA applies, the salary scales in the CLA form the basis for the amount of salary.
Holiday allowance/leave
In principle, it is mandatory for an employer to pay a holiday allowance at a set rate (currently 8%) of the employee’s gross salary. Employees are entitled to a minimum of 108% of the minimum wage for all the hours worked, including overtime. On top of this, they are entitled to paid leave. The annual leave entitlement must be at least equal to four times the number of working hours per week as agreed in the employment contract.
Health, safety and illness
As an employer you must implement measures to guarantee the health and safety of your employees. In addition, you are obliged to conduct a risk assessment and evaluation. You must also conclude a contract with an occupational health and safety service (‘Arbodienst’), even if not a single employee has reported sick.
If an employee is off sick, you must continue to pay their salary for the first 104 weeks of their absence due to illness. The law prescribes the amount the employee is entitled to during this time (at least 70% of the salary, and during the first 52 weeks at least the minimum wage), but the employment contract or CLA may add a supplement. It is mandatory to bring in a company doctor for monitoring absences due to illness and assistance on rehabilitation.
Pension
A sectoral pension fund may be mandatory in certain sectors. If so, as an employer you are obligated to join this sectoral pension fund and pay contributions on behalf of your employees.
Standby (on-call) employees
Different rules apply to standby employees in the Netherlands, the idea being to strengthen their employment position. If you work with standby employees, make sure you are familiar with the rules. You need to consider the on-call period, entitlement to remuneration on cancellation of on-call work and the obligation to offer a permanent contract after twelve months.
Termination of the employment contract
There are only limited options for terminating employment contracts. Dutch labour law also clearly sets out the procedure for terminating employment contracts. With the exception of termination by operation of law, dismissal during a trial period and an instant dismissal, termination nearly always requires prior consent from the Employee Insurance Agency (UWV), a courts permission for dismissal or the consent of the employee. Any termination of an employment contract at the initiative of the employer will in principle lead to the obligation to pay the departing employee a transition compensation. This also applies to termination as a result of not extending a fixed-term contract or on termination during the trial period. This payment is one-third of the gross monthly salary (including holiday allowance plus other structural employee benefits) for each year of service.
Prepare properly for becoming an employer
Make sure you know your obligations as an employer so you can prevent making any potentially costly mistakes and suffering the consequences. Our Employment Advisory specialists would be happy to explain how to do this. Whether it involves taking on your first employee, posting someone to the Netherlands from abroad, monitoring and optimising your payroll and HR or (preventing) acute labour law problems: our experts are here to help you.
The legislation and regulations in this area may be subject to change. We recommend that you discuss the potential impact of this with your Baker Tilly advisor.
