Hire employees in the Netherlands
Everything a foreign company needs to know before employing people in the Netherlands: whether you need an entity, what an employee really costs once the 8% holiday allowance is added, how payroll and wage tax work, what leave is mandatory, and why two-year sick pay and preventive dismissal catch people out. Written for CHROs, CFOs, General Counsel and founders.
Quick answers
The questions leadership teams ask first, answered directly. Detail follows further down the page.
Do I need a local Dutch entity to hire?
No. Foreign companies can engage talent in the Netherlands through three routes:
- Employer of Record. Dryft Global employs the person through its compliant Dutch entity, runs payroll and wage tax withholding (loonheffing), holds the mandatory occupational health contract (Arbodienst) and files the statutory returns. You direct the day to day work.
- Direct local entity (B.V. or branch). You incorporate a private limited company (Besloten Vennootschap, B.V.) before a Dutch notary, register with the Chamber of Commerce (KVK) and the Tax Administration (Belastingdienst), contract an Arbodienst and run Dutch payroll yourself.
- Independent contractor (ZZP, B2B agreement). Lawful only for genuinely self-employed specialists with a registered business, multiple clients, their own hours and rates and no supervision. See the contractor section below for why this is the riskiest route.
When should I use an EOR instead of setting up a B.V.?
An EOR makes commercial sense when you are:
- Onboarding people in days rather than the 4 to 8+ weeks a B.V. takes for notary, KVK and bank.
- Testing the European market or building a remote team without Dutch corporate tax filings and annual accounts.
- Keeping the two-year sick pay obligation and works council (Ondernemingsraad) administration off the parent company's books.
- Reducing permanent establishment risk for technical and non-commercial roles.
A B.V. becomes the right answer past roughly 15 to 25 permanent local employees, or when the Dutch company needs to hold IP, sign long-term leases or carry a regulated financial licence.
What does an employee actually cost beyond salary?
Plan for roughly 22% to 32% on top of gross salary. The statutory 8% holiday allowance (vakantiegeld) comes first. Employer social security adds about 11.5% to 14.5%, the employer health care levy about 6.6%, and pension 6% to 15% or more where a sector fund applies. Contributions are capped at an annual maximum wage base (maximum premieloon), so the effective percentage falls for higher earners. Full breakdown below.
How difficult is termination in the Netherlands?
Difficult, because the system is preventive. You cannot dismiss an employee on an indefinite contract without prior permission: from the Employee Insurance Agency (UWV) for redundancy or long-term illness, or from the Cantonal Court (Kantonrechter) for performance, conduct or a broken relationship. Only a closed list of statutory grounds qualifies. A transition payment of one third of a month's salary per year of service is due from day one. In practice, over 85% of exits are negotiated in a mutual separation agreement (vaststellingsovereenkomst, VSO).
Can Dryft Global legally employ my team in the Netherlands?
Yes. Dryft employs your people through a compliant Dutch entity. We issue the contract, run monthly wage tax and the digital wage return (loonaangifte), remit employer contributions, hold the Arbodienst contract, administer holiday allowance and sick leave, and act as an IND recognised sponsor for highly skilled migrants. You direct the work.
Hiring routes compared
Foreign companies have to weigh presence requirements, compliance burden, speed and permanent establishment risk. Here is how the three routes stack up.
| Factor | Direct entity (B.V.) | Dryft Global EOR | Independent contractor (ZZP) |
|---|---|---|---|
| Speed to onboard | 4 to 8+ weeks (notary, KVK, bank) | 2 to 5 business days | 1 to 3 business days |
| Local entity required | Yes, B.V. or Dutch branch | No, employed through Dryft | No, direct B2B contract |
| Permanent establishment risk | High, creates direct Dutch tax presence | Shielded for non-sales roles | High if the contractor has sales authority |
| Compliance burden | You carry tax, social security and 2-year sick pay | Fully managed by Dryft | None until an audit reclassifies |
| Works council (WOR) | Mandatory at 50+ local staff | Managed through Dryft's infrastructure | Not applicable, excluded from headcount |
| Misclassification exposure | None, standard employment | None, compliant employment | Critical under Wet DBA enforcement |
| IP assignment | High, assigned in the contract | High, global IP transfer built into the contract | Moderate, needs robust Dutch IP clauses |
| Best fit | 15 to 25+ permanent staff, long-term | 1 to 20+ specialised hires, immediate | Discrete, short-term autonomous projects |
What an employee costs in the Netherlands
Dutch employer costs stack in four layers: the 8% holiday allowance, employee insurance premiums, the employer levy under the Health Care Insurance Act (Zorgverzekeringswet, Zvw) and pension. State pension and long-term care are paid by the employee through wage tax, not by you. Premiums and the Zvw levy are capped at the annual maximum wage base.
| Component | Employer share | Notes |
|---|---|---|
| Holiday allowance (vakantiegeld) | 8.00% | Statutory minimum, accrued monthly, paid in May |
| Unemployment fund (AWf) | Differentiated | Low rate for indefinite contracts, high for fixed-term and flexible |
| Work and care fund (Aof) | Differentiated | Lower rate for small employers |
| Return to work fund (Whk) | Sector and risk rated | Disability and sickness benefit, by sector and claims history |
| Employer social security combined (AWf, Aof, Whk) | ~11.5% to 14.5% | Capped at the maximum wage base |
| Health care levy (Zvw) | ~6.57% to 6.68% | Employer contribution, capped at the maximum wage base |
| Statutory subtotal | ~26% to 29% | Of gross base pay, before pension and Arbo cover |
| Pension (sector fund BPF or company scheme) | ~6% to 15%+ | Mandatory where a sector fund is binding |
| Arbodienst and sick pay risk cover | ~1% to 2% | Occupational health and 104-week sick pay insurance |
| Total employer on-cost | ~22% to 32%+ | Above base salary |
For an employee on €70,000 gross, budget roughly €85,000 to €92,000 all-in, depending on whether a sector pension fund applies. Ask us for a cost model with current rates applied.
Payroll and tax
Dutch payroll runs monthly, with salaries usually paid between the 23rd and 28th. Every pay run needs an itemised electronic payslip (loonstrook) showing gross pay, holiday allowance accrual, wage tax, social security and pension deductions and net pay. The employer files a digital wage return (loonaangifte) with the Belastingdienst every month and remits tax and contributions by month end.
Wage tax (loonheffing)
The employer withholds wage tax (loonbelasting) and national insurance contributions together as loonheffing. Box 1 income tax has two brackets: a combined rate of about 36.97% on income up to roughly €75,518, which includes state pension and long-term care contributions, and 49.50% above that. The general and labour tax credits are applied through payroll and phase out as income rises. Eligible recruits from abroad can receive up to 30% of gross pay tax-free under the 30% ruling (30%-regeling), subject to a minimum salary threshold and scale-down rules.
Statutory minimum wage
The Netherlands sets a single national minimum hourly wage under the Minimum Wage and Minimum Holiday Allowance Act (WML), so the floor is the same whether the standard week is 36, 38 or 40 hours. It is adjusted on 1 January and 1 July each year in line with collectively agreed wage growth. Workers aged 15 to 20 receive graduated percentages of the adult rate. Employees earning over three times the minimum may agree in writing to roll the 8% holiday allowance into an all-in salary.
Leave and mandatory benefits
- Paid vacation. Statutory minimum of four times the weekly hours, so 20 days on a 40-hour week. Market standard is 25 to 30. Statutory days expire six months after the year they were earned.
- Holiday allowance. A mandatory 8% of gross annual pay, accrued from June to May and paid as a lump sum in May or June. It sits on top of salary, not inside it.
- Public holidays. Not statutory; the contract or CAO grants them. Standard practice recognises 11, including King's Day on 27 April.
- Sick pay. The employer pays at least 70% of salary for up to 104 weeks. Market practice is 100% in year one and 70% in year two. The Gatekeeper Improvement Act (Wet verbetering poortwachter) sets a reintegration timetable: problem analysis by week 6, action plan by week 8, first-year evaluation at month 12. Miss it and the UWV can add a year to your pay duty.
- Maternity. 16 weeks (6 before, 10 after birth), paid at 100% by the UWV up to the maximum daily wage.
- Birth and parental leave. Partners get one week at full pay from the employer plus up to five weeks at 70% from the UWV. Each parent gets 9 weeks of paid parental leave at 70% in the child's first year, plus unpaid leave until the child turns 8.
- Occupational health. Every employer must contract a certified occupational health service (Arbodienst) or company doctor (bedrijfsarts) before hiring and keep a written risk assessment (RI&E).
- Working time. Under the Working Hours Act (Arbeidstijdenwet) a shift is capped at 12 hours, a week at 60, averaging 48 over 16 weeks, with 11 hours of daily rest. There is no statutory overtime premium. High earners above three times the minimum wage are largely exempt. Hours must be recorded.
Termination and notice periods
Probation is capped at 2 months on an indefinite contract, 1 month on a fixed-term contract under two years, and prohibited on contracts of six months or less; get it wrong and the clause is void. After probation, dismissal needs one of the closed statutory grounds in Article 7:669 of the Civil Code and prior approval. Redundancy and illness past 104 weeks go to the UWV for a permit. Underperformance, culpable conduct, a broken relationship and the combination ground go to the Cantonal Court. The chain rule (ketenregeling) converts a fourth consecutive fixed-term contract, or any chain past 36 months, into an indefinite one.
| Completed service | Statutory employer notice (Art. 7:672 BW) |
|---|---|
| Under 5 years | 1 month |
| 5 to under 10 years | 2 months |
| 10 to under 15 years | 3 months |
| 15 years and above | 4 months |
- Transition payment from day one. One third of a month's gross salary per year of service, prorated, on every involuntary termination, capped at an annual statutory ceiling or one year's salary if higher. The court can add up to 50% on the combination ground.
- The VSO is the real exit route. Over 85% of separations are mutual agreements. Draft it so the initiative is the employer's and there is no culpable conduct, or the employee loses unemployment benefit (WW) and will not sign. The employee has 14 days to revoke.
- Sick employees cannot be dismissed. An absolute bar during the first 104 weeks of illness.
- Non-competes. Invalid in fixed-term contracts unless a substantial business interest is written in; rules on geography and duration are being tightened.
- Works council. Mandatory at 50 employees, with approval rights over pensions, hours, sick leave rules and monitoring, and advisory rights over restructurings.
Can I use independent contractors?
Only for genuinely independent specialists. The enforcement moratorium under the Assessment of Employment Relationships Act (Wet DBA) has been lifted and the Belastingdienst is auditing. The test is holistic, following the Deliveroo ruling: does the client direct hours, methods and reviews (gezagsverhouding); is the work embedded in core operations alongside staff (inbedding); does the worker invest in tools, serve multiple clients and bear financial risk (ondernemerschap); and can they send a substitute without your approval? If the answers point to employment, it is false self-employment (schijnzelfstandigheid). The consequences are retroactive wage tax, national insurance and Zvw levies, penalties of up to 100% of the unpaid tax for gross negligence, interest, and a civil claim for the 8% allowance, two years of sick pay and a transition payment. An EOR is the compliant alternative for anyone who works like an employee.
The legal framework in brief
Dutch employment law sits in Book 7 of the Civil Code, layered with protective statutes, EU directives and sector collective agreements (CAOs) that can be declared universally binding. The statutes you will hear most:
- Civil Code Book 7, Title 10 (Burgerlijk Wetboek). Contracts, probation (7:652), written terms (7:655), the chain rule (7:668a), dismissal grounds (7:669), notice (7:672), transition payment (7:673).
- Balanced Labour Market Act (WAB). Differentiated AWf premiums, fixed-term limits, on-call rules.
- Work and Security Act (WWZ). The closed dismissal grounds and the UWV or court dual track.
- Working Hours Act (Arbeidstijdenwet). Maximum hours, rest periods, time recording.
- Working Conditions Act (Arbowet). Safety, psychosocial workload, home office ergonomics, the mandatory Arbodienst.
- Gatekeeper Improvement Act (Wet verbetering poortwachter). The 104-week sick pay and reintegration regime.
- Works Councils Act (WOR). Employee participation from 10 staff, a full works council from 50.
- Minimum Wage and Minimum Holiday Allowance Act (WML). The hourly minimum wage and the 8% allowance.
- Assessment of Employment Relationships Act (Wet DBA). Contractor classification, now enforced.
- Equal Treatment Act (AWGB) and Whistleblower Protection Act. Anti-discrimination; an internal reporting channel from 50 staff.
- GDPR and the Dutch Implementation Act (UAVG). Consent is generally invalid in employment; covert monitoring is unlawful absent exceptional grounds and a DPIA; monitoring systems need works council approval.
Where the talent is
The Netherlands is the sixth-largest economy in the EU and the continent's commercial gateway, with Europe's largest seaport at Rotterdam, its best-connected airport at Schiphol and the highest English proficiency of any non-native country, above 90%. Over half the working-age population holds a tertiary degree and remote work is mature. English-language employment contracts are valid and standard.
| Region | Talent and industry concentration |
|---|---|
| Amsterdam | European headquarters, fintech, B2B SaaS, global media, adtech, e-commerce, venture capital, legal services |
| Eindhoven / Brainport | Semiconductors and the ASML ecosystem, advanced robotics, deep tech, photonics, nanotechnology, R&D |
| Rotterdam | Global logistics, supply chain, cleantech, energy transition, maritime engineering, commodity trade |
| Utrecht | Life sciences, healthtech, digital gaming, enterprise software, academic research |
| The Hague | International law, govtech, cybersecurity, telecoms, regulatory operations |
Netherlands Implementation Kit
This page tells you the rules. The kit tells you what to do, in what order, and what goes wrong when you skip a step. Built from Dryft's own onboarding checklist for the Netherlands.
- Step-by-step implementation checklist, from hiring route selection to first payroll
- Wet DBA false self-employment audit for every contractor
- Contract structuring inside the 3-contract / 36-month chain rule, with probation limits by contract type
- Setting up the 8% holiday allowance accrual and May payout
- Monthly loonaangifte filing and the differentiated WAB unemployment rates
- Checking your activities against mandatory sector pension funds (BPF)
- Arbodienst contract and the poortwachter milestones at week 6, week 8 and year 1
- 30% ruling application deadlines, time tracking and home office ergonomics
This guide is general information, not legal, tax or immigration advice. Dutch employment, social insurance and wage tax rules change regularly through biannual indexation, legislation and court interpretation. Confirm current figures with a qualified adviser or with Dryft before acting. Last reviewed September 2026.
Ready to hire in the Netherlands?
Tell us who you want to hire and where they sit. You will get a cost model and a compliant route within a day, from a person who has done this before.