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Employment in the Netherlands

The Netherlands have excellent social legislation. Everyone is entitled to a minimum wage to live on. If you have no job or you are disabled, you are granted a benefit in the Netherlands. If you have a job, you pay a premium for this system. This way, everyone contributes. Of course, a benefit is subject to certain obligations and conditions.

Extensive legislation exists regarding labour. You could see it as a standardisation of the basic employment conditions, that all employees in the Netherlands benefit from.

The main rules include:

  • A minimum wage applies, imposed by law (Minimum Wage Act). This bottom wage is age-dependent, increasing as the employee ages.
  • Generally, companies must pay out a holiday allowance in either May or June, amounting to at least 8% of the annual salary.
  • Depending on the sector, a Collective Labour Agreement (CLA) may be applicable. This concerns mandatory agreements made within each sector regarding employment conditions, pension, training and development. Furthermore, your company must contribute to the sector fund, which is used for sector-wide development, care for the elderly or training programmes, for example.
  • The employment conditions must comply with the so-called Arbo (working conditions) Act in order to ensure the health, safety and wellbeing of the employees. In the event of an employee being absent due to illness, the employer must continue the employee’s pay up to a maximum of 2 years. The employer must also ensure reintegration in the employee’s previous position, transfer or outplacement.
  • Companies with 50 or more employees are subject to a legal obligation of appointing a Works Council. This is a participation body, allowing employees to exercise the right of approval and advice regarding company policy.

Please note that both the employer and the employee have obligations. In principle, the rule is: no work, no pay. During absence due to illness, the employee must cooperate in quick reintegration. Naturally, an employee must comply with the agreements set out in the employment contract concluded with the employer.

An employee has rights too, of course. For example the right of leave (including parental leave, dependant care leave, emergency leave, and special leave). This is set out in the law. The details are defined in consultation with the employer.

In addition to individual agreements with the employees, collective agreements may be made. Employees are generally represented by the Works Council. Furthermore, the union can monitor the employees’ rights, for example in the event of collective redundancy or large-scale reorganisations.

Unless you are fully-versed in local Dutch regulations, involving an advisor is sensible. Bol International provides various specialists ensuring that international companies provide proper Dutch employership.

FAQ

Is a CLA mandatory?

A CLA (Collective Labour Agreement) is mandatory only to companies in a sector within which participation is mandatory, or if the employer is a member of an employer organisation that is a signatory to the CLA.

Deviation from CLA provisions may be possible depending on the type of CLA. You may deviate from a minimum CLA if this is to the employee’s benefit. You may not deviate from a standard CLA. CLA’s may be mixed, with provisions that you may or may not deviate from. In some cases, companies are allowed to offer their own employment conditions, provided that these are on the same level as the sector conditions.

Is offering a pension mandatory?

No, this is not mandatory, unless the sector has decided otherwise. In some cases, you are allowed to offer an equivalent pension scheme.

However, in the Netherlands, offering employees a pension scheme is customary. The state pensions have decreased in the Netherlands during the past few years and therefore employees are increasingly interested in company schemes. 

Should an employer pay if an employee is not working?

In principle, the rule is: no work, no pay. Therefore, theoretically, no, then you do not pay.

However, in the event of absence due to illness or leave, you must continue the employee’s pay as set out in the provisions listed above. Even if you do not have enough work to fill the employee’s contractual working hours, you still have to pay the salary. You may not just ask an employee to use up holiday hours in such a case. Not being able to provide enough work is an employer risk in the Netherlands.