Do you want to hire an employee in the Netherlands without a legal entity but need Dutch payroll? IPS can help you hire and pay employees in the Netherlands in compliance with the law, even without a Dutch branch or permanent establishment.
There are 2 ways you can hire someone in the Netherlands without a permanent establishment:
- Employer of Record (Netherlands) – here your employee will be employed directly by us and deployed to you full time. This is also known as employee leasing in the Netherlands.
- Direct employment in your company but with payroll according to Dutch law by registering your company as a foreign employer.
Both employment options offer its advantages and disadvantages. Contact us to find out which one suits your project better. We will be happy to advise you and find the best solution for your company.
IPS is your global payroll solution for a successful and fast international expansion without a permanent establishment.
Remote Work Full Time from the Netherlands – Information for hiring employees in the Netherlands.
To make sure that you succeed in the first go abroad, IPS as your international payroll partner is here to assist you in hiring your employees correctly in the Netherlands and preparing Dutch payroll in accordance with the country’s laws. Below is some data to help you understand the Dutch payroll system.
The social security system in the Netherlands
If you are an employee living in the Netherlands, you must be insured according to local law (even if your employer is not in the Netherlands). There is a compulsory basic health insurance in the Netherlands. If one wishes, the employee can take out additional, private health insurance.
If you do not have a branch in the Netherlands, you need a service like IPS to calculate and pay these social benefits correctly according to Dutch law. With IPS’s international payroll services in the Netherlands, you ensure that your employee is payrolled compliantly according to Dutch law.
Costs for the employer
If you want to hire and pay an employee in the Netherlands, the additional costs to a gross salary for an employer amount to approximately 30%. This amount is made up of the following:
- Disability insurance:
6.38% maximum assessment base is € 4396.91
- Unemployment insurance:
2,07% + on average 2,27% share in sector funds
- Health insurance:
6,75% + basic tariff of approx. 1200€/year
Employer contribution for state disability benefits:
Varies, as determined individually. Will be communicated by the tax office.
Salary and bonuses
The annual salary is usually paid in 12 installments. Once a year, the so-called “holiday bonus” is paid – this amounts to 8% of the salary. Only if it is stated in the employment contract that the holiday bonus is part of the gross salary, it does not have to be paid extra.
Through our international payroll service we make sure that you do not pay more than you have budgeted for!
- A working week is 38 to 40 hours per week.
- Paid holidays are determined according to collective bargaining agreements or employment contracts.
- Paid vacations are at least four times the agreed weekly working hours. However, collective bargaining agreements often apply here as well.
- Paid sick leave is at least 70% of gross salary for two years. Days with paid absence from work can be freely arranged between the parties.
- Fixed-term employment contracts are often concluded when the employee is hired for the first time. However, such contracts may be renewed a maximum of three times. Moreover, the maximum duration of all such contracts combined is 36 months. Nevertheless, fixed-term employment contracts can be concluded without any legal restrictions.
- Many other labor regulations are governed by collective bargaining agreements.
As your international payroll provider in the Netherlands, we ensure that you are equipped with the necessary information to take your first steps.
A dismissal in the Netherlands requires either the approval of the employee or the approval of the Dutch Employment Agency. If no mutual agreement with the employee can be reached, it will require prior approval from the Dutch Employment Agency. This checks whether there are grounds for termination. This process can take between 6 and 12 weeks and can be counted towards the notice period.
The general period of notice is one month to the end of the month, but this is extended for longer periods of employment.
An alternative to termination is the dissolution of the employment contract before the labor court. This requires the consent of the Dutch employment agency. In such cases, the court will set a severance payment.
The third alternative is a termination agreement. In this case, the notice period also applies. This has no disadvantages for the employee as long as it is not initiated by him. A severance payment is usually agreed in this case.