Employment Contracts the Netherlands
An employment contract (arbeidscontract) is an agreement between an employee and an employer, containing working arrangements. In the employment contract, you indicate whether a Collective Labour Agreement (CAO) applies. There are two types of employment contracts:
- A fixed term contract (a temporary contract)
- Contract for an indefinite period (a permanent contract)
Permanent contracts are the most common employment contracts in the Netherlands as the employer likes to give the employee a certain feeling of trust and security. You cannot continually extend temporary contracts. An employee must receive a permanent contract after 3 consecutive temporary contracts, or after temporary contracts over a period of 3 years. This applies unless other arrangements have been made in the CAO. Since 2019, there has been a huge increase in giving employees a permanent contract.
Employment Termination the Netherlands - Notice Period the Netherlands
The Netherlands has no legal concept of “at-will” employment like in the US, and generally has fairly strict legal requirements and procedures that employers must fulfill before successfully terminating employees. If you want to dismiss staff or your employee wants to resign, a period of notice should be given in both situations.
The length of the notice period for an employer depends on the duration of the employment contract:
|Less than 5 years||1 month|
|Between 5 and 10 years||2 months|
|Between 10 and 15 years||3 months|
|15 years or longer||4 month|
Social Security Tax the Netherlands
Workers within the Netherlands are required by law to pay social security contributions on their gross salary and all earnings in the Netherlands. The social security employer tax rate in the Netherlands in 2021 is on average 23.59%.
Employer contributions are capped at an annual salary level of EUR 58,311. The following rates (2021) have to be applied against the gross salary, with the ceilings indicated.
|Type of Insurance||Paid by employer||Capped at||Maximum Employer Contribution|
Occupational disability (WIA)
|€ 58,311||€ 4,099.26|
|€ 58,311||€ 391.56|
Return to work fund (Whk)
2.70% (Indefinite term)
|€ 58,311||€ 4,489.95|
|Health Insurance Act (ZVW)||7.0%||€ 58,311||€ 4,081.77|
|Total||23.59%||€ 58,311||€ 13,755.55|
Average Salary the Netherlands & average employer costs the Netherlands
In 2019, the average annual wage in the Netherlands was $ 56.552,29. This is a lower than the average annual wage in the United States: $65.835,58. As an employer, the actual employer costs are at least 23,59% higher than the gross annual salary. Based on a $65.835,58 annual salary, the employment costs would be $81.371,54.
Apart from the average annual wage and the social security tax for employers, an employer in the Netherlands also has to take into account the employment cost that come with the monthly holiday allowance of 8% and the €0.19 cent per kilometer travel reimbursement.
To learn more about the average salaries in Europe and the actual employment costs in Europe, we invite you to read this article on Costs of hiring European employees.
Working hours the Netherlands
A standard Dutch working week is 38 hours. The majority of fulltime jobs in the Netherlands are between 36-40 hours a week, or seven to eight hours a day, five days a week.
Paid vacation leave the Netherlands
If an employee works full-time (i.e. 5 full days a week), then the legal minimum number of days paid leave that the employee is entitled to, is 20, equivalent to 4 weeks of paid annual leave. However, it is common practice for employers in the Netherlands to offer 25 days of paid leave, on top of 10 public holidays in the Netherlands. To learn more about the average paid vacation days in Europe and how the Netherlands compares to the rest of Europe, we invite you to read our blog on paid vacation days Europe.
Public Holidays the Netherlands
In the Netherlands, there are 10 public holidays:
- New Year's Day
- Good Friday
- Easter Sunday
- Easter Monday
- King's Day
- Ascension Day
- Whit Monday
- Christmas Day
- 2nd Day of Christmas
- Liberty day (once in every 5 years)
Maternity and Paternity Leave the Netherlands
Maternity leave in the Netherlands: Pregnant mothers are entitled to a total of 16 weeks of leave. 6 weeks of pregnancy leave (before the due date) and at least 10 weeks maternity leave (after childbirth). If for instance the baby is born before the pregnancy leave, the total of 16 weeks starts from the day after the birth. Employers can apply for 100% maternity allowance for their employee.
Paternity leave in the Netherlands: If the partner of an employee gives birth, the employee has a right to take 1 week of paternity leave. This paid leave can be taken any time in the first 4 weeks after the birth. During this 1 week of leave the employer must pay 100% of the salary. Partners have the opportunity to extend the partner leave to 5 weeks in the first 6 months after the birth. Employees who take the opportunity to extend the leave can claim benefits for up to 70% of their salary from the Employment Insurance Agency (UWV).
Learn more about PEO and EOR in other European countries:
- PEO in Europe
- PEO and EOR in Germany
- PEO and EOR in France
- PEO and EOR in Italy
- PEO and EOR in Spain
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Monique Ramondt Sanders
Executive Vice President | HR Outsourcing