Hire in Netherlands

There are a variety of employment agreements for employees in the Netherlands, with temporary and permanent contracts being the most common. From January 1, 2020, a temporary contract automatically changes to a permanent contract if an employee has received more than three successive temporary contracts or if an employee has had several temporary contracts with his or her employer for more than three years – unless there are other rules outlined in the collective labor agreement.

An employment contract can be agreed upon for a fixed period of time (fixed-term contract) or for an unspecified period of time (open-ended/permanent contract). A fixed-term employment contract will automatically convert into an open-ended employment contract if either of the following occurs:

• A chain of temporary employment contracts covers 36 months or more
• A chain of three fixed-term employment contracts is continued

A chain is a series of fixed-term employment contracts, which succeed each other with no more than six months in between. This rule is also applicable to employment contracts between an employee and various employers that must reasonably be deemed to be each other’s successors regarding the work performed. It is possible to shorten the interval period of six months to three months in a Collective Labor Agreement, if the nature of the activity so requires. This applies, for example, to seasonal labor.

One month prior to the termination of a fixed-term employment contract of six months or longer, the employer must give notice to the employee whether the employment contract will be extended or not. The employer is also required to inform an employee who has a fixed-term contract about openings with an open-ended employment contract.

A probationary period must be concluded in writing. No probationary period can be applied in an employment contract with a term of six months or less.

The maximum probationary period in open-ended contracts is two months. The maximum probationary period in fixed-term contracts is one month if the contract’s duration is between six months and two years, and two months for longer contracts. Probationary periods are not permitted for fixed-term contracts lasting up to six months.

The established probationary period for both the employer and the employee should be the same. A probationary period is not valid if the employee involved is already employed at the employer, but at a different position and will be carrying out more or less the same work that they have done elsewhere within the company.

During the probationary period, either party may terminate the employment contract with immediate effect, without notice or stating the reasons.

The average working week in the Netherlands has 5 days with between 36 and 40 working hours.
An employee may work a maximum of 12 hours per shift. The maximum working hours per week is set at 60. Note that an employee may not work the maximum number of hours every week.
Looked at over a longer period, the working hours are as follows:

• Per week during a 4-week period: on average 55 hours per week during a period of 4 weeks; deviating agreements on this can be made in a collective arrangement (CAO for example). But an employee may never work more than 60 hours per week;
• Per week during a 16-week period: on average 48 hours per week during a 16-week period. The employee and employer make agreements on what exact hours the employee works per day and per week.

Rest after working hours:

• After a working day, an employee must have 11 consecutive hours of non-work time. This rest period may be shortened to 8 hours once in a 7-day period if the nature of the work or the business circumstances require this;
• In the event of a 5-day work week, an employee must have 36 consecutive hours of non-work time after the end of the work week;
• A longer work week is also possible, provided the employee has at least 72 consecutive hours of non-work time in a period of 14 days. This period may be split into two periods of at least 32 hours each.

Breaks:

• If an employee works for more than 5.5 hours, he is entitled to at least 30 minutes of break time. This may be split into two 15-minute breaks;
• If an employee works for more than 10 hours, he must have at least 45 minutes of break time. This may be split into several breaks, each of which must be at least 15 minutes;
• A collective arrangement (CAO for example) may include agreements on fewer breaks. But if the employee works for more than 5.5 hours, he must at least have 15 minutes of break time.

There is no specific Dutch legislation on compensation for working overtime. Whether overtime will have to be compensated should follow from what was agreed to in the employment contract or established in a collective labor agreement (if applicable). If no stipulations are made, the courts, in a labor dispute, are likely to decide that the employer should compensate an employee for working overtime as this is what may be expected from a “good employer” in such circumstances.

The employer is required to use the services of a working-conditions service, an institution that assists the employer with risk assessments, advises the employer on reintegration of sick employees, assists sick employees and more. Employers are advised to have a proper complaint procedure in place. In addition, employers must inform their employees about their right to address health and safety-related matters with the company’s occupational health and safety service agency.

There are no mandatory requirements relating to bonus or commission payments. Hence, an employer is not required to pay bonuses. This differs if the employer and the employee have agreed to a certain bonus scheme or plan. Whether bonuses are regular will depend on the industry, level and type of position the employee holds.

If an employer chooses to grant bonus payments, all employees must be treated equally for the employer to avoid any discrimination claims. The conditions and criteria under which the employee is entitled to a bonus payment must be objective. A bonus entitlement based on the performance of the employee or the company is permissible.

In the Netherlands, the variable part of remuneration in the financial sector is not allowed to exceed 20% of the fixed remuneration. This is stricter than the 100% cap applied in many other parts of the EU.

There is a mandatory holiday allowance that is paid annually in May.

An open-ended employment contract can be terminated in the following ways:

• the employer submits a termination request to the Dutch Labour Authorities (UWV) and gives notice of termination after receiving permission from the UWV;
• The employee consents after the employer has given notice, without the above-mentioned permission.
• Court proceedings enforce termination.
• Mutual consent to terminate the contract is reached. No notice period needs to be observed in this case, although it is usual to do so. Both parties can agree on a reasonable severance package.
• Dismissal can happen due to an urgent reason, such as if the employee has engaged in such misconduct that the employer cannot reasonably be expected to continue the employment relationship any longer. The urgent reason must be communicated to the other party immediately and the employment contract must be terminated without notice.
• An employee is always permitted to terminate the employment contract with due observance of the applicable notice period.

Employers cannot decide which route to use to make staff redundant. Applications for redundancies on economic grounds (or dismissal on account of long-term incapacity for work) must be made to the Employee Insurance Agency (UWV). The UWV will grant permission only if there is a reasonable ground for dismissal and redeployment within a reasonable period of time is (even after training) not reasonably possible. Permission will not be granted in cases where termination is impossible because of a statutory prohibition against terminating an employment contract by giving notice, for instance, during illness shorter than 104 weeks, pregnancy or if the employee is a member of the works council.

All other dismissals must be referred to the district court. By decision of the court, an employment contract can be terminated after filing a petition for dissolution. This applies to the following:

• frequent and disruptive absence due to illness
• unsuitability for the position/underperformance (other than because of illness)
• culpable acts or omissions of the employee
• dismissal based on cumulative ground

The cumulation ground provision allows an employer to combine different grounds for dismissal, which individually may be insufficient to justify a dismissal. The cumulation ground cannot be applied to dismissals on the grounds of (i) business economics or (ii) due to long-term incapacity for work.

After filing the petition with the competent court, the employee is offered the possibility to file a statement of defense and the court will set a date for a hearing, during which the parties can explain their opinions. The court can then grant the request for termination and dissolve the employment contract – or it could deny the request.

Collective Dismissals:

Only in case of a collective dismissal, or if provided by a Collective Labor Agreement, is the employer obliged to notify and consult the relevant trade unions on its intention to implement the dismissal to the Employee Insurance Agency. A Collective Dismissal applies if an employer intends to dismiss 20 employees or more within a period of three months (within one of the working areas of the UWV).

According to the Dutch Collective Redundancy (Notification) Act (‘Wet Melding Collectief Ontslag’), the employer must notify the UWV of its intention to do so. It is also necessary to take into account all employment contracts that will be terminated by mutual agreement. After the report has been filed, there is a one-month waiting period. No waiting period applies if the report is accompanied by a statement of the trade unions confirming they were consulted and that they agree with the termination of the contracts.

Frequently, a social plan (e.g. termination packages) is negotiated. There is no legal requirement for the employer to negotiate the content of a social plan with the trade unions. Nevertheless, a social plan often forms an important basis of the negotiations with the trade unions, as they will base their support on the content of that plan.

Dutch law provides for the following statutory notice periods for an employer:

• fewer than five years of service: one month
• more than five years, but fewer than 10 years of service: two months
• 10 or more years of service, but fewer than 15 years of service: three months
• 15 or more years of service: four months

The period of notice to be observed by the employee is normally one month. The employer and the employee can agree on a shorter or longer period in writing. This is subject to a maximum of six months. In that case, the notice period the employer observes must be twice the notice period the employee is required to observe.

Employees and employers are each protected by the law when it comes to dismissal. This stipulates, among other provisions, that notice may only be given with effect from the end of a month. A different date can be prescribed by an applicable collective labor agreement or employment contract. Exceptions are possible during the trial period or if there is a substantial reason for doing so (e.g. theft). In that case, contracts can be terminated with immediate effect and without notice.

Dismissed employees are entitled to a transition payment (statutory severance – ‘transitievergoeding’) from the first day of their employment contract. An employee will receive a third of the monthly salary per calendar year. The transition payment is capped at EUR 83,000 gross. If the employee is entitled to a higher annual salary, then it is capped at one annual salary.

The transition payment is not due if the employee terminates the employment contract, unless this termination is a result of seriously culpable actions on behalf of the employer. Employers can apply for compensation for the transition payment if they dismiss an employee on the grounds of long-term occupational disability (following two years of sickness).

If an employment is terminated on the basis of a cumulated dismissal, the court can grant an extra severance equal to a maximum of half of the transition payment. This is in addition to the statutory transition payment that the employee is ordinarily entitled to receive.

Non-compete clauses:

In principle, employing a non-competition clause in a fixed-term employment contract is prohibited, unless the employer has a substantial business interest in including such a clause. This must be substantiated in the employment contract.

Non-competition clauses – those effective for a certain scope of activities, a certain geographical area and for a certain number of years – must be agreed upon in writing. The restriction must be limited to terms that are reasonably necessary to protect the employer’s business interests. Typically, a duration of one year is considered reasonable. Limitations as to territory and the nature of activities will depend on the branch in which the employer operates and the position of the employee.

The employer can enforce the non-competition clause in court and claim damages from the employee. In practice, a penalty clause is typically agreed upon between the parties on the basis of which the employee must pay an agreed amount to the employer (if the employee violates the non-competition clause). If the non-compete clause prevents the employee from being employed elsewhere, the court may order that the employer has to compensate the employee during the period in which the employer holds the employee accountable to the non-compete clause.

Non-solicitation clauses:

Employment contracts can also contain a non-solicitation clause, which stipulates the employee is not allowed to solicit their employer’s customers or employees during or following their employment. The employer can enforce the non-solicitation clause in court and make a claim from the employee to compensate for damages. In practice, a penalty clause is usually agreed upon between the parties on the basis of which the employee must remit an agreed amount (if the employee violates the non-solicitation clause).

In 2019, the European Court of Justice stated companies must implement a system to record the working time of their employees. Thus, employers are required to set up an objective, reliable and accessible system that allows for the recording of the daily workday performed by each employee.

The Social and Economic Council (SER) oversees proposed changes in employment laws and decisions affecting employment. The SER serves as an advisory board and a resource for the Netherlands’ labor agreements, with a council comprising equal proportions of representatives for employees, employers and independent advisors.

Union membership for workers is not mandatory in the Netherlands. Only 16% of the Dutch are unionized, which is a relatively low rate compared to other EU countries. In recent years, membership has declined slightly but not significantly. In the Netherlands, labor unions do not maintain official affiliations with political parties but do engage in politics by lobbying and by participating in the SER.

As a result of transparent and institutionalized relations between management and employees, the Dutch market experiences fewer labor disputes and strikes than EU counterparts.

In principle, employer and employee are free to agree to the wages to which an employee is entitled, taking into consideration minimum wages and minimum holiday allowances (which are normally adjusted each year). A collective labor agreement, if applicable, can also contain salary scales that are binding on individual employees. Salary is generally calculated monthly in arrears and remitted on or around the last working day of the month. The employees’ net pay is almost always transferred directly to their bank account.

The employee will receive a payslip from the employer. Payslips should, at least, contain the following information:

• the gross pay
• the composition of this amount (basic wage, performance bonus, etc.)
• deductions by the employer for taxes and contributions
• the minimum holiday allowance that applies to the employee
• the name of the employer and the employee
• the period to which the payment relates (e.g. month, year)
• the number of hours the employee has to work by agreement

• Employees are entitled to a statutory minimum number of annual leave days equivalent to four times the weekly working hours. For example, an employee with a full-time workweek of 40 hours is statutorily entitled to a minimum of 20 days’ leave per year. Most collective labor agreements provide for an amount of holiday higher than the statutory minimum. The number generally varies from 20 to 30 days for full-time employees.

  Annual leave days will expire if they are not taken within six months after the year in which they were accrued, unless the employee was not reasonably able to take them. The scheme applies only in respect to the statutory minimum of annual leave days. In addition, ill employees will be entitled to accrue the same full number of leave days as employees who are not ill.

  In addition to annual leave days, employees are entitled to a holiday allowance. In general, this equals 8.33% of the annual salary, insofar as the annual salary does not exceed three times the annual equivalent of the minimum wage.

Employers are obliged to continue to pay the salaries of sick employees for the first two years of illness. The employer is obliged to pay 70% of the employee’s salary, but during the first year of sickness payment cannot be less than the minimum wage. For the second year, the minimum wage limit does not apply. Most employees in the Netherlands are bound to a diverging clause laid down in either an individual employment contract or a Collective Labour Agreement with clauses that are often more favourable to the employee.

Per the Collective Labour Agreement applicable to GoGlobal employees in the Netherlands, in the event of inability to work, the employee will be entitled to (for as long as the TEAC continues):

• 90% of the salary based on the time period during the first 52 weeks of the inability to work and at least the statutory minimum wage applicable to him/her;
• 80% of the salary is based on the time period from the 53rd up to and including the 104th week.

Emergency leave is intended for unforeseen personal circumstances for which an employee must take time off immediately (e.g. when making arrangements to care for a sick family member or a death in the family). The employer must always grant a reasonable request for emergency leave. During this period of leave, the employer is required to continue paying the employee’s salary. Emergency leave and short absence leave are considered legal leave schemes in the Netherlands.. If different arrangements have been concluded in the collective labor agreement or regulations of the works council or employee representation, those arrangements apply.

Short-term care leave

Short-term care leave can be taken to provide essential care to parents, ill children who still live at home or partners. However, this leave is only granted if the employee is the only person who can take care of the ill person at that moment in time. During the period of leave, the employer continues to pay 70% of the employee’s salary. If this is less than the minimum wage, the employer pays the minimum wage.

Long-term care leave

If a child, partner or parent of an employee is seriously (e.g. life-threateningly) ill and requires care, the employee can request long-term care leave. During this period of leave, the employer is not required to continue paying the employee’s salary.

Special or extraordinary leave

Special leave and extraordinary leave are not based on any law but are rather provided for in the collective labor agreement (CAO), company scheme or employee contract. There are some differences between the different collective labor agreements but often special leave is granted as follows:

• Giving official notice of an intended marriage: one day
• Marriage: two to four days
• Marriage of a family member: one day
• Funeral of a spouse, partner, parent or child: four days
• Funeral of a grandparent, brother (in-law) or sister (in-law): two days

Holiday entitlement during leave

Holiday entitlement in the Netherlands continues to accumulate while an employee takes leave. The employer may not deduct days taken off for leave from an employee’s holiday entitlement, unless the employee has extra holiday entitlement (more than 4x the number of days worked in a week) and this has been agreed upon in their collective labor agreement.

Maternal Leave

Work for pregnant women and women who have recently given birth must take account of their specific circumstances. A pregnant woman is entitled to extra breaks and, in principle, is not required to work nights or overtime. A pregnant woman is also entitled to work in a steady and regular pattern of working hours and breaks. The employee may not undertake any work from four weeks prior to the probable date of the birth until six weeks after the birth.

Pregnant employees are entitled to four to six weeks’ pregnancy leave (before the due date) and at least 10 weeks maternity leave (following childbirth). If the employee takes less than six weeks pregnancy leave before the birth, she is entitled to add the remaining amount (up to two weeks) to her maternity leave after the birth.

If the baby is born later than the due date, the employee’s maternity leave begins after the actual birth and the total may therefore be longer than 16 weeks. If the employee is expecting multiple births, she is entitled to at least 20 weeks leave. If the baby goes into hospital directly following birth or during the maternity leave, the employee’s entitlement to 10 weeks maternity leave begins once the baby has left the hospital. If the mother passes away during childbirth, her partner is entitled to maternity leave.

During maternity leave, the Employee Insurance Agency will pay 100% of the daily wage (up to the maximum daily wage). The maximum daily wage in the Netherlands is currently EUR 219.28.

For the first nine months following the birth, the woman may interrupt her work to breastfeed or express milk as often and as long as is necessary Iup to a maximum of one quarter of her working hours). The employer must pay her for this time. The employer must also provide a suitable room for this.

Partner/paternity leave

If the partner of an employee gives birth, the employee is entitled to one week of partner/paternity leave after the birth of their child. During this period of leave, the employer must continue to pay 100% of the employee’s salary. This will be based on full-time employment. Partners can choose to take this leave immediately after the birth of their child or to spread the leave over the first four weeks following the birth.

Extended partner leave

Partners are entitled to five weeks’ unpaid leave in the first six months after the birth. Employees who take unpaid leave can claim benefits from the Employment Insurance Agency (UWV) for up to 70% of their salary. The additional birth leave must be taken within six months of the child’s birth.

Parental leave

Employees with children aged up to 8 years old can take unpaid parental leave in the Netherlands. They are eligible as soon as their employment commences. The employee can take at most 26x the number of their weekly contractual hours as parental leave. The right of parental leave ends when the child becomes 8 years old. During parental leave, the employer is not legally required to pay the salary unless this is agreed in the collective labor agreement (CAO) or employment contract. No holiday entitlements will be accrued during the hours of parental leave.

Adoption leave

Employees who have adopted a child or have taken in a foster child are entitled to six weeks adoption or foster leave. The leave applies to both parents. They are entitled to an adoption or foster care allowance. The employee must apply for the adoption or foster leave at least three weeks in advance with their employer. They may take this leave spread out over a period of time. The employer may not refuse this, unless their business will face serious problems as a result.

In the Netherlands, employees are entitled to a number of paid public holidays. There are a total of 10 (11 every five years) public holidays in the Netherlands. Whether employees are free from work on public holidays depends on the agreements made between employers and employees in the CAO (Collaborative Labor Agreement) or those in the individual employment contract. There is no substitution if a holiday falls on a weekend.