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 Agreements

The employer and employee may conclude either an indefinite-term contract, or a definite-term employment contract. A definite-term contract may be renewed, however, it will automatically convert into an indefinite-term contract under the “chain of contracts rule” if:

• The chain of definite-term contracts covers 36 months or more without a rest period (interval) between contracts of at least six months.
• The chain of definite-term contracts consists of more than three definite-term contracts without a rest period (interval) between contracts of at least six months.

Collective agreement 

The vast majority of employees in the Netherlands are covered by collective bargaining, mostly at industry level. However, many large companies negotiate their own deals. Negotiators generally follow the recommendations agreed at national level and recent pay increases have been moderate. Collective agreements cover a wide range of pay and conditions issues, including such things as early retirement, educational leave, the organisation of leave over the whole of an employee’s working life, the position of women, protecting those with disabilities and the environment. Increasingly agreements provide for a range of benefits, from which individual employees can choose. Agreements also deal with procedural issues like the powers and status of members of works councils or union groups at the workplace

#Employment Termination and Severance Pay (Dismissal)

Dismissal with Authorization from the UWV (Uitvoeringsinstituut Werknemersverzekeringen” (or Employee Insurance Agency), an independent administrative authority commissioned by the Ministry of Social Affairs and Employment (SZW), which is responsible for implementing employee insurances, such as unemployment insurance and the Sickness Benefits Act.)

Official authorization, in the form of a “dismissal permit” in cases of termination for:

• Business reasons
• Sickness absence lasting more than two years

Dismissal by the Court 

If the dismissal is for reasons related to the employee, the employer must ask the courts to dissolve the employment contract on the basis of one of the reasonable grounds.

The reasonable grounds are as follows:

• Frequent sickness absence
• Poor performance
• Culpable conduct
• Conscientious objections
• Disturbed working relations
• Other grounds, which must be of such severe nature that continuation of the employment contract cannot reasonably be expected

If the employer has a so-called “urgent”, reason it must terminate the employment contract immediately. The employer must also tell this reason to the employee immediately. If the employer does not terminate immediately after discovering the urgent reason, the opportunity for summary dismissal expires and the employer will need to apply for a dismissal by the court. Reasons for summary dismissal are serious misconduct at work

#It is prohibited to dismiss

Dismissals are null and void if they involve discrimination on one of the statutory grounds, or if the employee is:

• Pregnant or on maternity leave
• A member of the works council or a works council committee
• Absent from work due to sickness (for the first two years of absence)
• Dismissed because of trade union membership
• Dismissed because of exercising the right to parental leave.

The dismissal of some protected categories of employees is, however, possible through dissolution of the contracts by the courts. In court cases over dismissals where employees claim discrimination, they may seek a judgment from the public Netherlands Institute for Human Rights, which has the status of an expert opinion in court proceedings. The employee may also seek a ruling from the court that the dismissal is voidable, on the grounds that:

• An “urgent” reason justifying the summary dismissal does not exist.
• The employer did not obtain authorization from the UWV.
• The employer did not give adequate notice to terminate.
• The employee did not consent to the notice to terminate.
• No valid dismissal notice was given during the probationary period.
• Within 26 weeks of the dismissal, the employer hired another individual to undertake the work previously carried out by the employee.

#Notice period

Termination of an employment agreement is subject to a statutory minimum notice period. In case the employer terminates the employment agreement, the minimum notice is:

• One month for employees with up to five years’ service
• Two months for employees with five to 10 years’ service
• Three months for employees with 10 to 15 years’ service
• Four months for employees with 15 years’ service or more.

The minimum notice period for the employee is statutory one month. It is possible for employers and employees to agree to longer notice periods, of up to six months on the employee’s side, providing that the notice period of the employer is twice the employee’s. If the employer gives notice after having obtained authorization for dismissal with the UWV, the notice period may be shortened, provided that the remaining notice period is not less than one month.

#Severance payments

In accordance with Dutch law the employer may pay in lieu of notice: a payment equal to the amount of the salary the employee would have accrued during the period the employment contract should have continued had notice been given under the contract. If the employee is dismissed, the employer must pay a “transition payment” (“transitievergoeding”), unless the dismissal results from “seriously culpable” conduct (as discussed below). Employees are entitled to transition payment as of the first day of their employment.  Transition payments are linked to length of service and are calculated as follows: 1/3 of the gross monthly salary per year since the first working day.

#Employee Benefits and Contributions

Employees are entitled to:

• Minimum wage
• Holiday pay
• Pension (for Dutch employees)
• Health, Unemployment, Disability Insurance
• Vacation Days
• Maternity Leave
• Severance Pay
• Bonus, 13th and/or 14th month
• Lease car

#Probationary period

Parties to an employment contract may agree on an initial probationary period in writing only. For an indefinite-term employment contract, the statutory maximum probationary period is two months. The maximum probationary period in definite-term contracts is one month if the contract’s duration exceeds six months up to two years, and two months for longer employment contracts. It is not possible to agree on a probationary period in definite-term contracts that do not exceed six months. Deviation to the disadvantage of the employee is possible only pursuant to a collective labor agreement or by an order of an administrative body.

#Overtime

Weekly working time (including overtime) may not exceed 48 hours on average over a 16-week reference period and 55 hours on average over a four-week reference period. Different arrangements are possible by collective agreement (or an agreement with the company works council, if no collective agreement applies), but are subject to absolute limits of 60 hours a week and 12 hours a day. There are also specific restrictions on night shifts. After a working day, employees are entitled to a rest period of no fewer than 11 hours.

#Work hours

Working time limits are described in the Working Hours Act. A full-time working week usually is during five days a week, from Monday to Friday, between 36 to 40 hours. Both Dutch law and collective labor agreements, when applicable, contain standards for rest breaks, overtime, on-call shifts, working hours, night work, and work on Sundays.

#Annual leave

Employees are entitled to statutory annual holiday leave equal to four times their number of weekly working hours (i.e., 20 days’ holiday in case of full-time employment). It is common practice in the Netherlands for employers to grant additional non-statutory holidays. Non-statutory holidays (in excess of the statutory minimum) may be carried over for up to five years. Statutory holidays will remain valid until six months after the calendar year in which they were accrued. Annual leave entitlement accrues during periods such as maternity leave, emergency leave, incapacity for work, and during annual leave itself. Annual leave entitlement also accrues when an employee receives paid parental leave, but it does not accrue during any period of unpaid parental leave.

#Sick leave

Employees who becomes incapacitated for work will remain entitled to continued payment of salary for a maximum period of 104 weeks (i.e., two years) or, if the employment contract is terminated on an earlier date, until the termination date of the employment contract. The following conditions apply to continued payment of wages during incapacity for work:

• During the first 52 weeks of incapacity for work: The statutory minimum obligation for the employer to continue payment of the employee’s salary amounts to at least 70% of latest gross base salary on the understanding that the continued payment may not be less than the applicable minimum wage (even if this amounts to more than 70% of the latest gross base salary). The base salary does not have to be observed to the extent that it exceeds the maximum daily wage.
• As of the 53rd week up to and including the 104th week (second year) of incapacity for work: The employee remains entitled to 70% of latest gross base salary. The base salary does not have to be observed to the extent that it exceeds the maximum daily wage. There is no minimum wage payment applicable to the second year of incapacity.

#Parental leave

Maternity leave

Female employees are entitled to 16 weeks of statutory pregnancy/maternity leave. Pregnant employees are entitled to pregnancy leave from six weeks before the expected date of birth commencing no later than four weeks before the expected date of birth. From the first day after the childbirth, female employees are entitled 10 weeks of maternity leave, plus the number of untaken days of pregnancy leave in case the employee took fewer than six week of pregnancy leave. The pregnancy/maternity leave is paid by the government, up to the statutory maximum daily wage. Employers often supplement the government compensation to equal 100% of the employee’s wages if the maximum daily wage threshold is exceeded.

Paternity leave

If the partner of an employee gives birth, the employee has a right to 1 week of paternity leave following the birth. Paternity leave is the number of working hours in one week. This paid leave can be taken any time in the first 4 weeks after the birth of the child. During this period of leave the employer must continue to pay 100% of the employee’s salary.

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