Employ Candidates Compliantly in Netherlands

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  1. Overview: Netherlands
  2. Global HR Compliance
  3. Global PEO and payroll
  4. Work permit for hiring expats via PEO
  5. Expand without a company set up
  6. Contractor vs. employee: which is better?
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Global HR Compliance in the Netherlands

If you hire an international workforce, or plan to hire, then Hiring and Firing Workforce in Netherlands Guide below will help you understand the nuances of labor legislation in the country.

When the company is planning to enter a new foreign market of Netherlands and has a need to employ a local national there, the first question to answer is how it is going to make local hires.

We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.

This solution helps you employ your global sales force in Netherlands as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.

Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.

So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Netherlands instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.

Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.

Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Netherlands .

We are experts in global workforce employment in Netherlands, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.

Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.

With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Netherlands.

Hiring and Firing Workforce in Netherlands Guide

This article is written to provide you with a generic overview of doing business in Netherlands.

The Netherlands is a good place to consider when thinking of diversifying geographically: it is among the 10 largest economy in the world, is strategically located and provides a large-sized competitive market with highly intelligent workforce, has a well-developed technological infrastructure and a high standard of living. Netherlands has different programs and policies that are particularly geared to attract and of course retain foreign businesses.

Some of the fundamental things to know about Netherlands business environment are as follows:
Weather permanent employment contract, temporary employment contract, freelancer contract, zero-hour contract or contract with an employment agency, all employment relationship in the Netherlands is regulated by an employment contract, collective agreement and/or an employee internal regulations, if any.

Employment Contracts

Once an employment offer is made and accepted, the next thing before the job commencement is to sign an employment contact. Employment contracts are mostly in written form and must include the basics of the employment such as job description, probationary period, hours of work, compensation and expenses, conditions for contract termination etc. A fixed term-contract can have the duration of six months and above and can be extended up to 3 times in a row, and that within the space of 2 years. In total, the duration of a temporary contract cannot exceed 2 years. At the completion of the third tenure of a temporary job extension, the contract can either be terminated or extended indefinitely. In other words, the employer is required to change the temporary contract to a permanent one if the employee must continue to work for him/her after the 3rd tenure has expired. A temporary contract has a long-term duration and in fact does not have specified end date.

Minimum statutory employment rights

# Hours of work
By rights, employees who work on a full-time basis should work between 36 and 38 hours a week. However, depending on the company, some employers do allow 8 hours working time per day and 40 hours per week. These hours do not include time offs for lunch (usually 30 mins), as employers do not recognize lunch breaks as part of working hours, hence do not pay for them. For shiftwork, employees cannot work more than 12 hours per day and 60 hours per week.
Based on the Employment Act, the average weekly work-time must not exceed 55 hours over a 4-week period and 48 hours, over a 16-week period.

# Probation period
The duration and terms of trial period must be provided for in writing (usually part of the contents of a contract) if the employer must place the employee on probation. Probation period is only allowed for contracts of more than 6 months’ duration. For such contracts, the maximum duration that is permissible is one month for contracts of 6 months to 2 years’ duration and 2 months for more than 2 years’ contracts.

# Annual leave
There are 8 different holidays (New Year’s Day, Easter, Queen’s Day, Liberation Day, Ascension Day, Pentecost, Christmas Day and Boxing Day) that are nationally recognized, but the decision on whether an employee will have some time off during these holidays is usually determined in the employment contract or by the collective agreement. All employees are entitled to a paid annual leave, of which the duration depends on the number of their regular workdays per week (4 multiplied by the number of their weekly workdays). This means that an employee who regularly works 5 times a week will be entitled to 20 days and vice versa if the employee works more or less than that. It is however, important to note that in most cases, the collect agreement alters this rule of annual leave calculation by setting a minimum annual paid leave that an employee can be entitled to. Another exception is made for student employees who work the minimum of 2 days a week. Employees that fall under this category are eligible for nothing less than 12 days paid vacation per annum.

Although it is common practice for full-time employees to be granted 25 holiday days per year, on top of Dutch national holidays. In the Netherlands’ employment law, there is an expiration date of six months for taking the legal minimum number of holidays. Employees therefore must take all their holidays within six months after the year in which the holidays were accrued. Should the employee not take the holidays on time, the holidays will lapse without any compensation or payment. The expiration date of six months is not applicable to holidays that the employee is entitled to on top of the legal minimum number of holidays. These extra holidays will not lapse until after a period of five years.

# Parental leave
All female employers are entitled to at least 16 weeks’ maternity leave and all its benefits. During pregnancy, an employee has the right to start her leave 6 weeks (or at least 4 weeks) prior to the expected date of delivery and the rest after the baby is born. The duration of the pregnancy leave and in fact the entire maternity may vary depending on the variation between the expected date of childbirth and the actual date of delivery. Employees have no right to reject a maternity leave, but can decide to end it earlier than it should be, though not earlier than 24 days after her child is born.

An employee who is on a maternity leave is entitled to receive a benefit equivalent to 100% of their normal earnings, which is paid from the General Unemployment Fund (Awf).. This benefit can be extended over 1 year if the pregnancy led to other health complications.

Male employees with a pregnant partner has the right to an emergency leave during pregnancy and a paid paternity leave after childbirth. A paternity leave usually lasts for 2 days and must be taken within the first 4 weeks the new mother is discharged from the hospital. Also, employees who have worked for at least one year for the current employer have the right to request for a parental leave if they have up to under 8 child/children to care for.

Both mothers and fathers who have worked for their current employer for at least a year are entitled to take a specified amount of non-paid parental leave (ouderschapsverlof) to care for each of their own children or adopted or foster children, within a six month period at any time during the first eight years of the child’s life. The amount of leave that can be taken depends on the number of hours usually worked and the duration of employment, and can usually be taken as up to 50% of normal working hours until the leave allowance is used up. Employers must agree to a request for parental leave which is made at least two months in advance, but the specific arrangements and amount of weekly leave to be taken must be agreed between the employee and employer. Some employers pay up to 75% of normal income for parental leave, but this is discretionary.

Adoption leave is given to employees who wish to adopt a child. Adoption leave can last until 16 weeks and can be started any time from 2 weeks before the child is adopted.

# Sick leave
Sick employees or those whose child, parent(s) or partner are sick are entitled to a sick leave, which can last until 2 years. These set of employees are eligible to receive a minimum of 70% of their wages. The amount paid is linked to a maximum daily wage. If the amount of 70% is lower than the statutory minimum wage, employer is obliged to supplement it to the minimum wage in the first year of illness. This statutory minimum wage guarantee does not apply to the second year of illness. Employees on a sick leave are protected against dismissal; they can only be dismissed with the consent of the Public Employment Service or by collective agreement as the case may be.

# Overtime
There are no standard laws for or against overtime in Netherlands. All the issues regarding overtime are set in the collective agreement or employment contract, thus overtime can vary in length and in compensation.

# State minimum salary
The standard minimum salary an employee is entitled to receive depends on his/her age.
Since 1 January 2018 it is €1,578.00 per month, €364.15 per week, €72.83 per day, and €9.11 per hour for persons 22 and older (in a 40-hours work week, a work week with less hours has a higher minimum wage per hour); between 30–85% of this amount for persons aged 15–22.

# Employment termination
There are many approved reasons why an employment contract can be terminated. Some of such reasons are but not limited to incompetence or inability to fill the conditions of the contract, employee’s misconduct, different economic reasons, mutual consent, etc. Except for the reason of misconduct (summary termination), an employer is required to obtain permission from the Public Employment Service before he/she can terminate the employment contract. Employees cannot dismiss an employee who is on sick leave unless, of course, he/she is able to prove that the employee can no longer perform or is no longer needed for the job he/she was contracted for. To terminate a contract, the employer or the employee is required to give a notice, the duration of which depends on what is stated in the collective agreement or the employment agreement. Ordinarily, the actual length of a notice of termination from the employer depends on the length of the employee’s service in the company. If there are no provision for notice of termination in the contract, the employer and the employee will be required to use the normal procedure, which is as follows:

  • one month notice period from the employee to the employer,
  • between 2 and 6 months from the employer to the employee.

These procedures do not apply to the temporary contract that ends on its agreed date.

Just like any other foreign market, there are different bridges you must cross before you can successfully start to do business in the Netherlands. For instance, you will need to go through the challenges of setting your subsidiary or contracting a trustworthy independent sales rep and so forth; challenges of finding, hiring and sustaining a highly motivated workforce, payrolling them, calculating their taxes and making payments when due, and most importantly, complying to the local authorities.

Here’s the good news for you – there is a way out! As a PEO and payroll provider, Acumen International has set up an Employer of Record solution that will help you overcome all these challenges and succeed in expanding internationally.

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