The most important long-term asset of almost any business is its qualified personnel. As mentioned before, the Netherlands is internationally renowned for its high-quality labour market. In addition, Dutch employees are flexible and have an excellent work ethic.
Trade unions in the Netherlands have a moderate character and tend to operate on the premise of consensus. Union membership is generally low and where industrial disputes do occur, they are resolved quickly and pragmatically. Employers and employees cooperate in various ways. The works council, if in place, is one of the most important employee participation organs within a company. This cooperation also contributes to stable labour relations. As a result, growth in wage costs has been kept to moderate levels, while productivity levels remain high.
It is common practice in the Netherlands to include a bonus scheme in the employment agreement of highly qualified personnel. In certain sectors bonus/reward schemes are subject to specific statutory requirements. The wording of these schemes is of utmost importance, as the right design can have tax advantages and may save the employer unexpected costs when the employment is terminated. In addition, providing benefits (rather than paying a higher salary) can have tax advantages for both the employer and the employee.
On 1 January 2024, the statutory minimum hourly wage was introduced, which means that there are no longer statutory daily, weekly and monthly wages. Depending on the sector, the amount of full-time employment varies (e.g. 36, 38 or 40 hours per week). The minimum monthly wage is determined by the actual number of hours worked by an employee. The statutory minimum hourly wage may require adjustments to payrolls and employment agreements.
While wage costs are moderate, it is important to notice that premiums for benefits such as social security and pensions are compulsory. They are paid by both the employer and the employee.
Dutch employers can also hire ‘self-employed persons’. A self-employed person is not an employee. In practice it is sometimes hard to make a distinction between an employee and a self-employed person. The employer should make sure that the Dutch Tax Authorities cannot consider the relationship with the self-employed person as an employment relationship. At the time of writing, the government is still working on further clarification and guidance with regard to when an individual qualifies as self-employed. In recent years there was a suspension of enforcement of labour relationships with self-employed persons. This will resume on 1 January 2025. The Dutch Tax Authorities will fully enforce regulations on false self-employment and can impose a fine and back taxes.
Dutch law grants employees a range of protections that create obligations and potential risks for employers. These include among others:
It is recommended that employers have a comprehensive employment contract in place for every employee, which includes all the terms and conditions of employment and in addition protects the employer’s business interests by imposing obligations on the employee (e.g. about confidentiality of business secrets or restrictions of certain competitive activities after the employment ends).
All foreign nationals who intend to work and stay in the Netherlands are required to comply with the immigration regulations of the Netherlands. The Netherlands has a less restrictive admittance policy for highly skilled workers of multinational companies who meet specific (salary) criteria.
No immigration requirements are applicable to EEA (or Swiss) nationals. In case the stay of an EEA national exceeds four months he/she needs to register with the local municipality in the city of residence (see ‘Registration municipality’ under ‘Non-EEA national’).
Which immigration procedure has to be initiated, depends on the specific facts and circumstances. The work permit procedure and the highly skilled migrant procedure are the most commonly used procedures.
UK nationals arriving in the Netherlands after 1 January 2021 are subject to Dutch immigration legislation. This means they are allowed to enter and stay in the Schengen area (which includes the Netherlands) for up to 90 days in 180 days on the basis of their passport. Their passport must be valid for at least six months. However they will require a work permit in order to work in the Netherlands from day 1. They will also require a residence permit in case their stay exceeds 90 days in 180 days.
A residence permit for a highly skilled migrant allows a non-EEA national to reside and work legally in the Netherlands (without a separate work permit). The following requirements have to be met:
Please note that a 30 per cent tax allowance for this category of employees might be applicable (see ‘Personal income tax’ on page X40X).
In case the stay in the Netherlands is less than four months, registration as a non-resident in the Municipal Population Database at one of the 18 designated offices is voluntary but required in order to obtain a Dutch citizen service number (BSN) needed for tax and payroll purposes.
For a stay of at least four months within a period of six months, registration with the Municipal Population Database is required.
A company is required to maintain accounting records that are sufficiently adequate to determine the financial position of the company at any time. There are various regulations, including civil and tax regulations, stipulating the period for which the records should be retained. As a general rule, the records must be kept for a period of seven years.