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If your company starts up operational activities within the Netherlands, your employees are on a Dutch payroll. This means you are subject to the various regulations and obligations of the Dutch taxation system. Residence and work permits are often required for non-Dutch employees. Furthermore, you will always have to consider the extensive social system in the Netherlands. Employer obligations often reach beyond the obligations of their counterparts in other countries.
In order to be able to account for all amounts paid out, you are subject to a legal obligation of having and updating payroll records. You will have to pay wage tax and social security premiums each period (generally on a monthly or four-weekly basis). The government uses these premiums to pay for the unemployment and disability benefits.
In certain cases, you will have to provide insurers, pension funds, various government bodies and sector funds with periodical, specific information. Furthermore, the Dutch government has imposed employer obligations regarding the correct documents, such as employment contracts, regulations and personnel manuals.
Your employee is entitled to at least four weeks of holiday per year. This equates to 20 days for a full-time employee. Most employers in the Netherlands allocate some non-statutory holidays. In many sectors, the standard is 25 holidays per year.
In most cases, continued pay to employees that are absent due to illness is mandatory for two years to employers in the Netherlands. This amounts to at least 70% of gross wages. During the first year of absence due to illness, the amount paid out may not be below minimum wage. After two years of absence due to illness, you do not need to pay the employee anything anymore. The employee will then claim a disability benefit from the government.
If your employee is absent due to illness and the risk of long-term absence is apparent, you also have the obligation to take action together with your employee in promoting his/her return to work. This is designed to contribute to reducing the number of disability benefits. UWV is the government organisation supervising whether employers and employees make adequate efforts in this respect. This is why it is important to properly document all agreements and actions.
Employees are entitled to minimum wage. This is determined annually as of 1 January and as of 1 July. It is not permitted to pay any less, except during continued pay in the second year of absence due to illness.
You will have to pay your employees an annual holiday allowance of at least 8% on their wage. This allowance is calculated on the fixed gross wage that your employee earns. The holiday allowance is usually paid out in May or June. Alternatively, you may decide in consultation on a monthly payment instead.
Furthermore, the Netherlands has a system for untaxed allowances and benefits. A certain percentage of the gross wage may be spent exempt of tax. This system is referred to as the Expense Allowance Scheme (WKR - Werkkostenregeling). This concerns items such as travelling costs and meals for business purposes, work clothing, mobile telephone and laptop, etc.
Fully or partially outsourcing your payroll administration of your Dutch personnel to a local player will relieve you of a huge burden and extensive 'red tape'. Bol International has various professionals available focusing on payrolling and HRM. They can offer support regarding:
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As soon as you hire staff, you are a ‘withholding agent’ as an employer and you therefore have the obligation to have and update payroll records. Being a withholding agent means that you have to withhold amounts of tax and social security premiums from the employees’ wages. The payroll is the instrument the Tax Department uses to check your records. Bol International can support you professionally in this respect.
In principle, yes, provided you pay above the minimum wage and include an 8% holiday allowance. However, if a CLA is applicable, the wages and other conditions may have been negotiated in the CLA. This always concerns the minimum remuneration. You are free to exceed these amounts.
The general rule is ‘no work, no pay’. Therefore, if someone is not working, you do not need to pay a wage. However, some exceptions apply.
For example, every employee is entitled to at least four weeks of holiday per year. During this scheduled holiday, in which the employee is not working, his/her wage must be paid out as normal. Furthermore, employees are entitled to continued wage during absence due to illness. During a maximum period of 2 years, at least 70% of the wage must be paid on absence during contractual working hours. Furthermore, several other leave types apply, entitling the employee to continued full or partial wage.
The UWV (Uitvoeringsinstituut Werknemersverzekeringen - Employee Insurance Agency) is the government body responsible for the implementation of social insurance and providing labour market and data services.
The UWV's tasks cover four areas: