The relationship between the Dutch employer and the employee is governed by the Employment Law in Netherlands and it is based on an employment contract which usually contains in the rules and regulations that must be followed by both parties, the obligation of the employer to pay the employee and the employee’s agreement to perform the activities required by the employee. These contracts can be for a definite period of time or an indefinite period of time and can be written or oral.
Before signing an employment contract, both parties can agree on a trial period after which can decide if the collaboration will continue or not.
In this article, our Dutch lawyers highlight the main issues that need to be taken into account by employers and employees. Do not hesitate to reach out to us if you have questions about other matters concerning the Labor Law in Netherlands or if you are in need of legal representation in case of employment disputes.
Our team can also answer questions about other topics, such as Dutch company formation, bank account creation, and more.
Table of Contents
Employer and employee obligations in the Netherlands
The Employment Law in Netherlands is one that offers a significant degree of protection for employees. These apply both to Dutch citizens, and to foreign nationals working in the country. The Dutch labor law has received a series of important amendments that started to come into force starting on January 1, 2022, or at a later date.
In the Netherlands, the employment contract is the agreement between the employer and the employee (agreed upon in written form or verbally) which governs their relationship and the terms of employment. It is essential and its conclusion is not mandatory as part of the Dutch Labor Law. Both parties follow the provisions of this document (in its decided form, fixed-term or permanent), as well as the mandatory provisions of the Employment Law.
Some of the important issues that need to be taken into account when hiring employees under the Employment Law in Netherlands include the following:
- The employment agreement: fixed-term or permanent; includes clear information about the employment conditions;
- Working hours: maximum 12 hours/shift, maximum of 60 hours/week; the Working Hours Act also sets different hours for minors and pregnant women;
- Holiday: minimum 4 times their work hours per week of annual leave; official public holidays in the Netherlands also need to be observed;
- Minimum wage: adjusted periodically; as of July 1, 2023, the gross hourly wage for a full-time employee 21 and older was EUR 11,51 when working 40 hours per week;
- Dismissal: subject to clear rules for the employer; there must be a valid reason for letting an employee go;
- Others: our Dutch lawyers can also give you details about other matters, such as collective labor agreements, trial period, leave schemes, or the use of the non-compete clause.
According to the new employment regulations in the Netherlands, companies are expected to have a balanced ratio of both men and women in top positions within the company (top management and/or supervisory boards).
In addition to the aforementioned employer obligations under the Netherlands labor laws, companies also need to take into account their social security contributions, and the payroll requirements. Our tax lawyers can provide company owners with complete information on the calculation of the social security contribution and can provide details on the payroll threshold for small to medium employers.
According to the Employment Law in Netherlands, Dutch employees may cease their activities in one of three methods: at will during the trial period, by notice, by mutual consent, by summary dismissal, or in more extreme situations by judicial decision.
The termination can be requested by the employee or the employer and the situations in which the parties may do so differ:
- When requested by the employee, a notice period is required, with a maximum duration of 6 months; this does not apply in case of fixed-term agreements when in most cases the employee cannot issue the notice before the contract termination period (unless permitted through a special clause);
- When requested by the employer, the company needs to obtain prior approval for termination from the employee; the employee issued a settlement agreement for termination, however, he has the right to withdraw this within 2 or three weeks, without the need to provide a reason for his decision.
The approval of the Employment Insurance Agency (UWV) or the approval of the court is needed before delivering the notice to terminate the activity when no settlement is reached between the two parties. This permit is granted only if after checking the employer’s and employee’s interests, he finds the proposed termination acceptable.
In special situations (such as theft, divulging confidential information, or embezzlement) the employer can choose to give up the services of an employee through summary dismissal which does not require a notice. However, in these special cases without the notice of termination, the employee will be offered the opportunity to explain his actions, and these will be taken into account.
In serious cases where the circumstances allow it, the Court may decide to rescind an employment contract. In this case, the concerned parties can be represented in Court by legal representatives.
In case the parties decide to end the employment through mutual consent, no notice is required and both parties agree on the condition of termination.
Our lawyers in the Netherlands can also give you important information about the unemployment benefits you can be entitled to after the termination of your employment agreement. Below you can find a summary of these benefits, as part of the Labor Law in Netherlands:
- the initial benefits cover 75% of the salary one has been paid for the last 12 months;
- this value is reduced to 70% of the aforementioned wage after 2 months (depending on individual circumstances);
- this benefit has a minimum duration of 3 months and a maximum duration of 38 months; during this period, the former employee will need to provide proof of having applied for a job in the Netherlands;
- one can be eligible for unemployment benefits if he was employed for at least 26 weeks out of 36 weeks, before the first day of unemployment;
- the applicant needs to be under 65 years and must be able to work.
Investors who open a company in the Netherlands and who are interested in more than just employment-related matters can reach out to us for other types of services, including those for VAT registration in the Netherlands. This is a mandatory step, one that takes place for all companies that offer goods or services that are subject to this tax. Our team will assist as needed during the registration process.
Contact us if you are an employer in the Netherlands in need of legal assistance, or if you are an employee who has questions about his rights under the Employment Law in Netherlands when employed by a Dutch company.
Our team answers questions about Dutch Labor Law, as well as about taxation and company formation matters. Do not hesitate to reach out to us if you are in need of other legal services.