Can you hire employees in the Netherlands without a legal entity?

Yes. Foreign companies can hire employees in the Netherlands without establishing a Dutch legal entity by using an Employer of Record (EOR). The EOR becomes the legal employer in the Netherlands, while your company manages the employee’s daily work and responsibilities.

How long does it take to hire employees in the Netherlands?

Hiring through an Employer of Record is substantially faster than setting up a Dutch entity. In many cases, employees can be onboarded within several weeks depending on documentation, immigration requirements, and contract complexity.

What employment contracts are required in the Netherlands?

Dutch employment contracts are commonly structured as either indefinite or fixed-term agreements. Contracts should clearly define salary, working hours, notice periods, probation terms, holiday entitlement, and any applicable collective labor agreement (CAO) conditions.

Can a PEO help hire contractors in the Netherlands?

Yes, but the Netherlands has strict worker classification rules. If contractors operate under conditions similar to employees, companies may face misclassification risk. Many international businesses choose an EOR employment structure to reduce compliance exposure.

How does payroll work in the Netherlands?

Payroll in the Netherlands is usually processed monthly and includes wage tax withholding, employee insurance contributions, holiday allowance calculations, pension obligations where applicable, and statutory employer reporting.

How often are employees paid in the Netherlands?

Employees in the Netherlands are generally paid monthly. Some sectors or employment agreements may also include additional compensation structures such as 13th-month payments or annual bonuses.

Does a PEO manage taxes and social contributions in the Netherlands?

Yes. A PEO or Employer of Record manages payroll tax calculations, wage tax withholding, employee insurance contributions, employer social charges, filings, and payments to Dutch authorities.

Can payroll be run in local currency?

Yes. Payroll in the Netherlands is processed in euros (EUR). Employees are paid locally in EUR, while invoicing arrangements with the client company may vary.

Is using an Employer of Record legal in the Netherlands?

Yes. Employer of Record services are legal in the Netherlands when structured in accordance with Dutch labor law, payroll tax regulations, and employment compliance obligations.

What labor laws apply to foreign companies hiring in the Netherlands?

Dutch labor law applies to all employees working in the Netherlands regardless of whether the employer is foreign or locally incorporated. This includes regulations covering working hours, dismissal procedures, leave entitlements, payroll obligations, and employment protections.

What are the risks of employee misclassification in the Netherlands?

Misclassification can lead to back taxes, retroactive social contributions, penalties, and employment claims. Dutch authorities closely monitor contractor arrangements, particularly where there is a relationship of supervision or long-term exclusivity.

How does a PEO or EOR ensure compliance in the Netherlands?

A PEO or EOR supports compliance by: Preparing compliant Dutch employment contracts Managing payroll and statutory filings Administering holiday allowance and leave entitlements Monitoring labor law and CAO requirements Supporting compliant termination procedures Managing payroll documentation and reporting obligations

Are employees entitled to holiday allowance in the Netherlands?

Yes. Employees in the Netherlands are legally entitled to holiday allowance equal to at least 8% of gross annual salary. This payment is commonly made annually in May, although some employers distribute it monthly.

What are collective labor agreements (CAOs) in the Netherlands?

Collective labor agreements (CAOs) are sector or company-level agreements negotiated between employer organizations and trade unions. CAOs may establish mandatory rules regarding salary scales, overtime, leave, pensions, notice periods, and other employment conditions.

Hire Employees in the Netherlands with an Employer of Record

Hiring employees in the Netherlands does not require setting up a local legal entity or subsidiary.

With EuroDev’s Employer of Record (EOR) and PEO services in the Netherlands, you can legally employ staff, manage payroll, and meet all Dutch employment law requirements, while EuroDev acts as the legal employer.

We manage:

Dutch-compliant employment contracts
Payroll processing and wage tax filings
Social security registrations and contributions
Ongoing HR and labor law compliance

Talk to our EOR experts today

Hiring Employees in the Netherlands with an Employer of Record

An Employer of Record (EOR) gives your company the ability to employ in the Netherlands without setting up a Dutch subsidiary or branch. EuroDev becomes the legal employer on record, while your company is in charge of the employee's daily work and responsibilities.

This structure allows companies to hire in the Netherlands while avoiding local incorporation, statutory registrations, and employer compliance exposure.

How hiring in the Netherlands through EuroDev works

1. Employee selection

You select the right employee for your company to hire in the Netherlands.

2. Employment contract setup

EuroDev drafts and issues a locally compliant Dutch employment contract that complies with labor law in the Netherlands and applicable collective labor agreements (CAOs).

3. Payroll & tax administration

We run all monthly payroll, calculate income tax and social security contributions, and guarantee accurate reporting to Dutch authorities.

4. Ongoing compliance & HR support

EuroDev manages employment administration, statutory benefits, paid leave, and compliance throughout the employment lifecycle.

Employer of Record vs Setting Up a Legal Entity in the Netherlands

When an EOR is the right choice:

You want to hire in the Netherlands quickly
You are testing the Dutch market
You plan to hire a small or distributed team
You want to reduce employment compliance risk

When a local entity makes sense:

You are building a large, long-term workforce
You require a permanent commercial presence
You want payroll and HR fully managed in-house

Key differences at a glance

	Employer of Record	Local Entity
Setup time	Days to 1-2 Weeks	Several months
Legal responsibility	EuroDev	Your Company
Payroll & Compliances	Managed by EuroDev	In-house
Upfront costs	Low	High
Risk exposure	Reduced	Full exposure

Employment Contracts Through a Dutch EOR

Permanent (Indefinite) Employment Contracts

Indefinite (permanent) employment contracts are the default and preferred form of employment in the Netherlands. If no end date is agreed, the contract is automatically considered indefinite under Dutch law.

Key characteristics of permanent contracts:

No predefined end date
Full statutory employment rights from day one
Strong dismissal protection; termination typically requires approval from the UWV or court
Statutory notice periods apply to both employer and employee
Employees may be entitled to transition compensation upon dismissal
Can be full‑time or part‑time
Probation periods are permitted within strict legal limits
Terms may be further regulated by a relevant CAO (collective labour agreement)

Because Dutch law assumes employment to be permanent in the absence of clear agreements, incorrectly drafted contracts can unintentionally create indefinite employment.

Fixed‑Term Contract Rules (Temporary Contracts)

Fixed‑term contracts are permitted but are strictly regulated under the Dutch “chain rule” (ketenregeling). They may only be used within specific limits.

Key limitations include:

Maximum of three consecutive fixed‑term contracts
Maximum total duration of 36 months
Exceeding either limit results in automatic conversion to an indefinite contract
A fourth contract, or continued employment after 36 months, becomes permanent by law
CAOs may adjust these limits, but only within legally permitted boundaries

Additionally, employers must inform employees at least one month before the end of a fixed‑term contract whether it will be extended. Failure to do so can result in financial penalties.

Termination, Notice Periods & Severance in the Netherlands

Dutch employment law is known to provide strong employee protections. Employment at-will doesn't exist.

Probation Periods

Probation periods in the Netherlands must be agreed in writing and are strictly limited by contract type: no probation for contracts of six months or less, up to one month for fixed‑term contracts under two years, and up to two months for indefinite or long fixed‑term contracts; during probation, either party may terminate employment immediately, provided the dismissal is not discriminatory.

Notice periods

Less than 5 years' service: 1 month
5-10 years' service: 2 months
10-15 years' of service: 3 months
15+ years' service: 4 months
Payment in lieu of notice is permitted
Dismissal requires UWV or court approval, except during probation

Severance pay

Accrued from day one of employment
1/3 of monthly salary per year of service
No statutory maximum cap

EuroDev guides you through termination procedures to ensure compliance and risk mitigation.

Payroll, Employer Costs & Working Hours in the Netherlands

Payroll costs when hiring through an EOR in the Netherlands

When hiring employees in the Netherlands through EuroDev’s Employer of Record service, total employer costs are typically around 30% of the gross salary, depending on the employment contract, sector, and applicable collective labour agreement (CAO). This covers all mandatory employer contributions and statutory payroll charges, including social security, healthcare contributions, and the required 8% holiday allowance.

Example:

Average annual gross salary: €40,000
Estimated total employment cost: ~€52,000

EuroDev fully manages all payroll calculations, statutory filings, employer contributions, and salary payments, ensuring full compliance with Dutch labour and tax regulations.

Social Security & Employer Contributions in the Netherlands

When hiring employees in the Netherlands through an Employer of Record, EuroDev manages all social security registrations, payroll filings, and statutory payments with the Dutch Tax and Customs Administration (Belastingdienst) as part of the payroll process.

Employer responsibilities handled by EuroDev

Registering the employer and employee with the Belastingdienst
Monthly payroll and social security reporting
Withholding employee wage tax and social insurance contributions
Paying all employer social security and healthcare contributions

Typical employer contribution structure

Employer contributions in the Netherlands depend on contract type, salary level, and sector risk classification, but commonly include:

Unemployment insurance (AWf): 2.74%–7.74%
Disability / incapacity insurance (Aof / WIA): 6.28%–7.64%
Return‑to‑Work Fund (Whk): approximately 0.38%–6.08% (employer‑specific)
Healthcare Insurance Act (Zvw): approximately 6.10% (capped)
Childcare levy (Wko surcharge): 0.50%

Total estimated employer contribution: ~20%–30% of gross salary, capped at the annual social insurance ceiling, depending on employee profile and applicable collective labour agreement (CAO).

Working Hours & Overtime in the Netherlands

Standard full‑time working schedule: typically 36–40 hours per week, depending on the employment contract and applicable collective labour agreement (CAO)
Maximum legal working limits: up to 12 hours per day and 60 hours per week, with an average of 48 hours per week over a 16‑week period (including overtime)
No statutory overtime pay rate: overtime rules and compensation are determined by the employment contract or applicable CAO
Overtime compensation: may be paid financially or compensated with equivalent time off, depending on contract or CAO provisions
Exemptions: senior management or employees earning three times or more than the statutory minimum wage may be exempt from Working Hours Act limits

EuroDev ensures all working‑time and overtime rules are correctly applied in line with Dutch law, the employment contract, and any applicable collective labour agreements.

Paid Vacation Leave & Public Holidays

Employees hired through an EOR in the Netherlands are entitled to statutory paid leave and holiday benefits.

Annual leave

Dutch employees are entitled to a statutory minimum of four times their weekly working hours per year.

For a full-time employee working five days per week, this typically equals:

20 statutory paid vacation days annually

Many employers provide additional contractual vacation days above the statutory minimum.

Public holidays

The Netherlands recognizes national public holidays including:

New Year’s Day
King’s Day
Easter Monday
Ascension Day
Whit Monday
Christmas Day
Boxing Day
Good Friday

Recognition of certain holidays may vary by employer or collective agreement.

Maternity & Paternity Leave in the Netherlands

The Netherlands provides well‑established parental leave entitlements, largely funded through the social security system (UWV) when administered correctly. Employers are responsible for registration and reporting, while wage replacement is primarily state‑funded.

Maternity leave

16 weeks total statutory maternity leave
4–6 weeks before the expected due date (employee’s choice, within limits)
At least 10 weeks after birth, including 6 mandatory weeks immediately following childbirth
Leave is paid at 100% of the employee’s daily wage, up to the statutory maximum
Paid by the Dutch Employee Insurance Agency (UWV)
No mandatory employer top‑up, unless required by a collective labour agreement (CAO)

Paternity leave

1 week of partner leave (geboorteverlof), taken within 4 weeks after birth
100% salary paid by the employer during this first week
Up to 5 additional weeks of partner leave (aanvullend geboorteverlof)
Additional leave is paid at 70% of the employee’s daily wage
Paid by UWV, taken within 6 months after birth
Employer top‑up is not mandatory, unless agreed in a CAO or contract

EuroDev ensures all parental leave is registered, reported, and administered correctly with UWV, ensuring full compliance with current Dutch employment and social security regulations.

Why Companies Choose EuroDev for EOR in the Netherlands

No need to establish a Dutch legal entity
Fast and compliant hiring support
Expertise in Dutch labor law and payroll administration
Local HR, payroll, and compliance guidance
Scalable hiring support for growing international teams
Reduced administrative and legal burden

Hire Employees in the Netherlands with Confidence

EuroDev helps international companies hire employees in the Netherlands quickly, compliantly, and without the complexity of establishing a local entity.

Whether you are employing your first Dutch team member or scaling an existing workforce, our Employer of Record and PEO services provide the infrastructure and local expertise needed to support compliant growth.

Contact our team today to discuss hiring employees in the Netherlands.