Run a correct payroll in NETHERLANDS without legal entity

Overview of Netherlands

The Netherlands (also known as Holland) lies in the north-west of Europe. It has a population of 17.28 million and is the most densely populated country in Europe. Even though Dutch is the native language, between 90 and 94% of the population speak English, landing them at first place on the English Proficiency Index in Europe. The Netherlands has the sixth largest economy in Europe and the 18^th largest in the world. The Dutch are known for being direct and very straight forward. They get straight down to business and do not do much small talk. Business and personal life are strictly kept separate and being on time to business appointments is important.

Currency of Netherlands

Euro

Health Insurance and the Social Security system of Netherlands

Employer cost of Netherlands

The cost for an employer to hire someone in the Netherlands is a plus of 23.19% to the gross salary.

Salary and bonuses of Netherlands

Regular employees are paid at the end of the month.

Most companies pay an end-of-year bonus, the so-called 13^th month in December. In the financial sector, bonuses are not allowed to exceed 20% of the fixed remuneration.

Public Holidays in Netherlands

January 1^st – New Years Day
2 days before Easter Sunday – Good Friday
Easter Sunday
Easter Monday
April 27^th – Kings Day
May 5^th – Liberation Day
39 days after Easter (usually in May) – Ascension Day
7 weeks after Easter – Pentecost (2 day holiday – Whitsunday and the subsequent monday)
December 25^th – Christmas
December 26^th – Boxing Day

Working Hours in Netherlands

Average working hours per week are 36 to 40 hours. Regular working hours are between 8:30am and 17:30pm. A 30 min break must be given after 6 hours of consecutive work. Working overtime regularly is not common in the Netherlands.

Vacation in Netherlands

In the Netherlands, the minimum number of vacation days is 20 (four times the amount of days worked per week – 4 x 5 working days = 20 days). However, it is normal that a full-time employee is granted approximately 25 holiday days per year in addition to the public holidays.

Sick Leave in Netherlands

When one falls sick in the Netherlands, one should immediately report this to one’s employer. Most employment contracts contain the guidelines to be followed should one fall sick and also cover the pay. Normal is an agreement that provides “waiting days” – these are the first 2 days an employee is sick. During these days, the employer is not obliged to pay wages.

Under Dutch Labour Law, employers are required to continue paying at least 70% of their employee’s wages for 104 weeks of sickness. The exception is organ donors, pregnant or recently delivered women who are ill in their second year. In this case, the law states that they receive 100% of their wage.

A termination during an illness of an employee is not possible.

Termination/Severance in Netherlands

In the Netherlands, there are various ways one can terminate a work contract.

The first is by means of a settlement agreement – the employee and employer agree on an end date and a settlement. For an employment contract that lasted longer than 2 years, one is required by law to provide a settlement.

In the first 10 years of service, one calculates a transition payment of 1/6^th of the monthly salary per half year of employment. After 10 years of service, one calculates a transition payment of 1/4^th of the monthly salary per half year of employment. If an employee is above 50 and has more than 10 years of service, he is entitled to one month salary per year of employment. Collective Labour Agreements may deviate from the above rules.

If both parties cannot come to an agreement, then the termination goes in front of the court.

An employer can immediately dismiss an employee in an urgent case . For example theft or other serious misconduct. A settlement is not paid in such an instance.