Each labour market has some peculiarities. It may be tricky for foreigners to understand fully the payment methods, the taxes and other benefits related. In TalentUp we are starting a series of different blog articles, one for each country. This article analyses the labour market in the Netherlands.

General data about the Dutch labour market

Payroll taxes in the Netherlands

Social security contributions are made by the employer and the employee and are used for funding unemployment, pension, maternity/paternity leave, and sickness or injury.

Once contributions are paid, employees need to pay an income tax that varies depending on their gross salaries. 

Contingencies from self-employees

Just like other entrepreneurs, freelancers/self-employed professionals must register with the Dutch Tax and Customs Administration (Belastingdienst), which determines whether you are an entrepreneur for the purposes of turnover tax and income tax.

Example of net salary in the Netherlands

As a reference, we use the average salary of a software engineer. In the Netherlands, on average, software engineers earn annually 53,500€.

The employer contributes 12,567.15 to 17,810.15€ to social security.

After paying the income tax, the employee has a net salary of 24,388.94 to 29,315.26€ coming from a gross salary of 53,500€. 

Unemployment regulation in the Netherlands

The statutory minimum notice period for termination in the Netherlands is one month, however, it is dependent on the employee’s length of service as below:

The statutory transition payment is calculated based on years of service upon termination of the employment agreement. It consists of 1/3 of 1 month’s salary for each calendar year of employment, including various bonuses and allowances. For periods shorter or longer than a year, a proportional amount is calculated. In 2023, the maximum transition payment is EUR 89,000 gross, or one year’s salary for employees earning over EUR 89,000 annually.

Probation periods last for a maximum of:

Different kinds of leaves in the Netherlands

The minimum paid annual leave is 20 working days. However, employers usually offer from 25 to 32 days. Any leave accrued from the previous year must be used by July.

They have 7 public holidays. If they fall on a weekend, they are lost.

Employers pay 70% of the employee’s salary for the first 2 years of sick leave. If 70% of the pay rate is lower than the minimum wage, the minimum wage must be paid for the first year. It is common practice to pay 100 % of the full salary during the first year of illness and 70 % of the full salary during the second year.

Workers are entitled to leave to take care of a sick relative:

Paid parental leave

Paid maternity leave lasts for 16 weeks: 4 to 6 being before the expected due date and 10 to 12 after birth. It is paid at a 100% pay rate, capped at 256.54 Euros per day.

Paid paternity leave is 1 week within the first 4 weeks following the birth. Extended partner leave for 4 more weeks is paid at 70%.

There are an extra 17 weeks of unpaid parental leave.

Adoption leave lasts for 6 weeks.

Other common Dutch benefits

How to employ a Dutch worker

Before hiring employees, you need to establish a legal entity in the Netherlands. You can choose between several business structures, such as a Dutch subsidiary, branch office, or representative office. Consult with legal and financial experts to determine the best option for your company.Some platforms (Papaya Global among them) offer the Employer of Record (EoR) service helping companies hire countries where they do not have any office.

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