The Netherlands is often regarded as both employer and employee-friendly, with clear labor laws and strong worker protections. Employers do not face the same complexities as in some other EU countries, but they must account for mandatory contributions and benefits that significantly increase the total cost of employment.
How Much Does It Really Cost to Hire in the Netherlands?
While employer social contributions (payroll taxes) are lower compared to some European countries, employers must also cover:
- An additional 8% holiday allowance
- Pension contributions (compulsory, percentage varies)
- Sick pay obligations that are among the highest in Europe
This guide breaks down the true cost of employment in the Netherlands, including contributions, pensions, and benefits.
Employer Social Contributions in the Netherlands
The employer social contributions are the costs, which are the social security premiums that have to do with employment, the loss of employment, and sickness or some disability to the employee.
Contribution Breakdown
|
Component Employer
Social Contribution
|
% applied salary
|
Notes
|
|
Health Insurance (rate depending on type of contract; permanent/flexible)
|
2.64% / 7.64%
|
Applied up to €71.600 annual gross
|
|
Disability & accident insurance
|
Approx. 1.4% on average
|
Can vary
|
|
Health Insurance
|
6.6%
|
Applied up to €71.600 EUR annual gross
|
|
Other contributions
|
1%
|
|
|
Total
|
Approx. 15-20% of gross base
|
|
Additional employer costs in the Netherlands
Holiday Allowance
- 8% of annual gross salary (vakantiegeld)
- Paid annually in May/June or spread monthly
Pension Contributions
- Typically 10–20% of gross salary
- Amount depends on the employer, applicable CBAs, and contract terms
Sick Pay
- Employers must pay at least 70% of the salary for up to 2 years during illness
- Many CBAs require 100% in the first year, making Dutch sick pay obligations higher than those in most EU countries
Cost Example in Practice
Consider a sales manager in a small to medium enterprise in the Netherlands. The manager is paid a gross salary of € 5,000 a month. The average employer contributions that the employer has to pay on top of the gross wage are roughly 35% which makes the total employment cost for the Sales Manager € 6,750.
Calculation Example
|
Gross Annual Salary
|
€ 60.000
|
€ 90.000
|
|
Gross Monthly Salary
|
€ 5.000
|
€ 7.500
|
|
Employer Social Contribution (in %)
|
Approx 35%
|
Approx 35%
|
|
Employer Social Contribution (in £)
|
€ 1.750
|
€2.413
|
|
(Sub)Total Monthly Employer’s Cost
|
€ 6.750
|
€ 9.913
|
|
(Sub)Total Annual Employer’s Cost
|
€ 81.000
|
€ 118.956
|
Key Benefits in the Netherlands
Holiday Allowance
An additional 8% holiday allowance is mandatory. In other EU countries, this is often replaced by a “13th month” bonus.
Generous Sick Leave Protection
Employees can receive up to 2 years of paid sick leave, partially covered by the employer. This level of protection is significantly higher than in most EU countries.
Paid Time Off (PTO)
- 20 statutory days minimum
- Many employers offer 25 days
- Some CBAs increase PTO to 30+ days
Final Thoughts
Hiring in the Netherlands comes with moderate payroll taxes but also unique obligations such as the 8% holiday allowance and extensive sick pay requirements. On average, the total cost of employment is 30–40% higher than the gross salary.
At EuroDev, we help international employers navigate Dutch and European HR complexities. From payroll and benefits to compliance and cultural adaptation, our tailored HR solutions allow you to focus on growth while we handle the local details.
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