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If you hire staff in the Netherlands, you will have to comply with Dutch labour law.
It is important for you to be aware that Dutch employees enjoy extensive protection. For example, you are not allowed to simply dismiss someone. This implies that you will have to be fully aware of the legal options and implications when making choices in this respect.
Dutch labour law imposes a number of minimum requirements in some areas. In the first place, a legal minimum wage applies in the Netherlands. Currently, the legal minimum monthly wage for employees age 23 and over amounts to € 1,446.60. In addition to the minimum wage, Dutch legislation also imposes a minimum annual number of holidays (20 days per year). Furthermore, the employer must continue the employee’s wage during the first two years of absence due to illness.
Aside from these legal minimum requirements, Dutch labour legislation also includes collective labour agreements (CLAs). These are contracts detailing agreements between employer associations and unions regarding employment conditions for an entire sector or an individual company. It is therefore important to check if your activities fall within the scope of a collective labour agreement. In that case, you will need to review the implications to your employment conditions. Bol’s consultants can find out all the details for you.
You will probably want to agree on a number of secondary employment conditions with your employee. All agreements and plans negotiated with your employee are recorded in an employment contract. Bol’s consultants generally provide bilingual employment contracts for foreign employers, allowing both parties to fully understand the contract.
When recruiting staff, you can choose to offer a permanent (indefinite contract period) or temporary (defined contract period) contract. According to the law, you are allowed to offer a maximum of 3 temporary contracts during 3 years. This is also referred to as the 3x3 rule or chain rule. Subsequently, a person is automatically on a permanent contract.
Upon recruitment, you can agree a trial period with the employee. This should be done in writing and is normally included in the employment contract. This allows both the employer and the employee to check whether the performance and position are mutually satisfactory. During the trial period, both the employer and the employee may cancel the employment contract without being subject to a notice period.
Other issues requiring your attention include protection of your business interests when your employee leaves the company. You may negotiate various limitation clauses with your employees in order to protect your business interests.
For example, you may want to prevent commercial or management staff from working for a competitor after leaving the company (non-competition clause), from disclosing sensitive information (confidentiality clause), or taking your customers to their new employer (non-solicitation clause).
The Netherlands has a special system for dismissal and redundancy: employers are not allowed to simply dismiss people at will. In order to protect the employee, third-party verification of dismissal grounds is required. In the Netherlands, this third party is either a court of law or UWV (Social Tax Implementation Institute).
You can choose one of the following two options for dismissal / redundancy. The court of law may dissolve the employment contract, possibly subject to payment of compensation to the employee (in accordance with the so-called district court formula). Alternatively, you can request a permit for dismissal or redundancy directly from UWV. After obtaining UWV’s permission, you may terminate the employment contract, subject to the applicable notice period.
Other than the dismissal procedure through the court of law or UWV, the employer and employee may decide on terminating the employment contract in mutual consultation. Such agreements are then recorded in a mutual consent agreement signed by both parties, allowing the employee to not be considered at fault for becoming unemployed and therefore to remain entitled to an unemployment benefit in accordance with Dutch regulations.
Bol International’s consultants are happy to provide comprehensive assistance regarding such issues, ensuring that you make the most favourable decisions and preventing any cumbersome legal proceedings.
A trial period must be convened in writing, preferably in an employment contract. Temporary contracts up to 2 years are subject to a maximum trial period of one month. Temporary contracts with a contract period of 2 or more years and permanent contracts are subject to a maximum trial period of two months.
Please request proper advice and have the right contract drawn up with the appropriate trial period. Applying incorrect trial periods will result in having the trial period clause declared void.
During the first two years of absence due to illness, you are required to continue paying the wages of the absent employee. The employee will remain entitled to 70% of the agreed wage during the first 104 weeks of his/her absence and during the first 52 weeks, he/she is entitled at least to the minimum wage.
During the period of absence, both the employer and employee must cooperate in return to work and recovery. If an employee is not cooperating in the reintegration process, wage payments may be discontinued.
The district court formula is a calculation method developed by the district courts applied throughout the Netherlands when determining the severance pay for termination of an employment contract.
The amount of severance pay is determined on the basis of the duration of the employment, the employee’s age, the employee’s wage and any factor of attributability to either employee or employer.
If the employee is considered more at fault, the court may decide that the severance pay amount is lower or even zero for termination of the employment contract.