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Payroll Services for Your Employees in the Netherlands
We handle payroll processing for employees in the Netherlands and support international companies in ensuring accurate compliance with Dutch requirements.
Want to hire an employee in the Netherlands without a permanent establishment, but still need Dutch-compliant payroll?
IPS can help you hire and pay employees in the Netherlands in full legal compliance, even without a Dutch branch or permanent establishment.
There are two options:
1. Employer of Record (Netherlands)
With this option, your employee is formally hired by us and works for you full-time on a leased basis. In Germany, this arrangement is also known as employee leasing or an umbrella company model.
✓ Fast market entry in the Netherlands
✓ No need for your own local entity
✓ Payroll and administration fully outsourced
2. Direct Employment
Your employee is hired directly by your company, but payroll is processed under
Dutch law by registering your company
as a foreign employer.
✓ Suitable for long-term employment
✓ Employee is hired directly by your own company
✓ Payroll processed by IPS
IPS is your global payroll solution for fast, successful
cross-border payroll — without setting up your own local entity.
Payroll in the Netherlands: What Employers Need to Know
Companies employing staff in the Netherlands need to navigate a number of specifics around payroll, social security, and local employer obligations. IPS helps international companies manage payroll in the Netherlands accurately and in full legal compliance.
Below you’ll find the key facts on Dutch payroll processing and the employer obligations that come with it.
Employer Costs in the Netherlands
When you hire and pay an employee in the Netherlands, employer on-costs come to roughly 30% on top of gross salary. This is made up as follows:
Occupational disability insurance:
6.38%, with a maximum contribution base of €4,396.91
Unemployment insurance:
2.07% plus an average sector-fund contribution of 2.27%
Health insurance:
6.75% plus a base rate of roughly €1,200/year
Employer contribution to state disability benefits:
Varies by company, as it’s set individually and communicated by the Dutch tax authority.
Social Security System in the Netherlands
Basic health insurance is mandatory in the Netherlands. Employees also have the option of taking out additional private health insurance if they wish.
With IPS’s international payroll services in the Netherlands, you can be confident your employee is paid in full compliance with Dutch law.
Labor Law in the Netherlands
→ Work week: Typically 38 to 40 hours per week.
→ Paid public holidays: Determined by collective bargaining or employment agreements.
→ Vacation: At least four times the weekly working hours; often extended through collective bargaining agreements.
→ Illness: Up to two years of continued pay (at least 70% of gross salary); paid waiting days can be agreed freely.
→ Fixed-term contracts: No legal restrictions on the first contract; up to three renewals allowed, with a maximum total duration of 36 months.
→ Collective bargaining agreements: Govern many additional employment terms.
Termination in the Netherlands
Terminating an employee in the Netherlands requires either the employee’s consent or approval from the relevant Dutch employment authority. If no mutual agreement can be reached, prior approval from the authority is mandatory.
The authority reviews whether valid grounds for termination exist. This process can take between 6 and 12 weeks and may be credited against the notice period.
- General rule: The notice period is one month, effective at month-end, and is extended for employees with longer tenure.
- Alternatively: Contract dissolution through the Dutch labor court (requires approval from the employment authority; includes a court-determined severance payment).
- Settlement agreement: The standard notice period applies; typically includes a severance payment; no disadvantage to the employee provided the employer initiated the termination.
Employ and Pay Your Team in the Netherlands with Full Legal Certainty
Employing staff of your own in the Netherlands comes with a range of legal and administrative requirements. Our international payroll solutions ensure a legally sound, efficient process from start to finish.
Your benefits:
✓ Payroll fully compliant with Dutch law
✓ Compliance assurance and risk reduction
✓ We handle all social security matters
✓ Employ staff without a permanent establishment of your own
✓ Flexible expansion into new markets
Get in touch today for a no-obligation consultation and employ your team in the Netherlands with full legal confidence.
Where We Can Support You
Have Questions?
We’re happy to help — quickly and without any hassle!
Just give us a call: +49 2173 2039568
or send us an email!
