Recruiting Dutch employees

Where can I find resources that can help me identify suitable Dutch employees?

The Netherlands has a large number of recruitment agencies like Egon Zehnder and Michael Page that can help you identify and hire suitable employees. Some recruitment agencies specialise in the recruitment for certain sectors like financial management, IT, marketing and sales etc.

There are also very good regional recruitment agencies. If you have already decided where you would like to locate your office in the Netherlands, the regional development agencies or municipalities, like the Limburg Development Company (LIOF), Investment & Development Company for the Northern Netherlands (NOM) or Amsterdam Foreign Investment Office (AFIO), can refer you to the agency that can help you tab the regional labour pool.

For a selection of recruitment agencies as well as contact information for the regional development agencies, please check the Resources and Links Section.

Are there temporary employment and contract staffing agencies in the Netherlands?

Part-time and temporary employees are readily available in the Netherlands, which gives your company added flexibility. Agencies like Adecco, Manpower and Randstad, which operate internationally and may be familiar to you, have affiliate offices across the Netherlands.

The regional development agencies or municipalities can also help you select a regional temp agency.

For a selection of temp agencies as well as contact information for the regional development agencies, please check the Resources and Links Section.

What kind of employment agreements are there?

An employment agreement may be entered into for an indefinite term or a fixed term. If no term is specified, the agreement will be deemed to be for an indefinite term.

Dutch labour law also provides for so called ‘on-call' employees. These employees are only called upon when the employer is in need of their services and are only paid for hours worked. There are certain safeguards for these employees. For example, for each period that an ‘on-call' employee works less than three hours, he will be entitled to receive a minimum of three hours wages, unless parties agree to an on-call agreement for more than 15 hours per week or clearly agree on the precise working hours per week.

Alternatively, you can hire indirectly via a temporary employment agency. There are no restrictions on an employer as to the period for which employees are hired through such an agency. The average fee of an agency is 25%-30% of the salary paid to an employee. The agency will arrange for the payment of all premiums and any withholding of taxes.

Do employment agreements have to be in writing?

Although an employment agreement may be concluded verbally, it is advisable to have the agreement in writing. The employer is obliged to inform the employee in writing of the conditions applicable to his or her employment (place of work, base salary and other pay components etc). Certain provisions are legally valid only if they are in writing (for example, probationary periods and non-competition clauses). A written contract may take the form of a formal agreement signed by both parties or a letter.

How does hiring and firing work?

There is a widespread belief that it is difficult for an employer to terminate an employment contract in the Netherlands. Although it is true that employee rights are well protected under Dutch law, an employment contract may be terminated for a variety of reasons. However, it is up to the employer to justify dismissal on objective grounds.

Agreements for an indefinite period
An employer must obtain approval from the Dutch Centre for Work and Income (CWI) before terminating an indefinite employment contract (unless the employee is a member of the Management Board of an NV or a BV, in which case no prior approval from the CWI is required).

An application for CWI approval must state the reasons for terminating the agreement, the most common being economic and financial circumstances on the part of the employer or incompetence on the part of the employee.

After obtaining approval from the CWI, the employer may terminate the employment contract, with due observance of the statutory or agreed notice period, unless there is a ban on termination imposed by law (for instance, in the case of illness or pregnancy). Any dismissal by an employer without the approval of the CWI is null and void.

Fixed-term agreements
An employment agreement entered into for a fixed term ends by operation of law upon expiration of the contract term, without notice being required.

An employee can be given no more than three consecutive fixed-term contracts that end by operation of law (and therefore require no notice of termination). If more than three fixed-term contracts are concluded between the same parties or if the total duration of successive contracts is three years or longer, the last employment agreement will be deemed to be for an indefinite period of time.

Urgent cause
An employment agreement can also be terminated with immediate effect for urgent cause, without notice or prior approval being required. The law gives a non-exhaustive list of examples of "urgent causes", such as theft, fraud, divulging trade or professional secrets etc. In the end, it is the court that determines whether the facts of a given case actually constitute urgent cause.

Court termination
Each party may request the court to terminate the employment agreement on the basis of serious cause. A serious cause may be an urgent cause that has not been previously invoked to terminate the employment agreement, or a change in the circumstances of such a nature that the employment agreement should reasonably be terminated on short notice. If the court grants the request, it sets a date for the termination. The court may award the employee compensation (or a severance payment) to be paid by the employer. Although there are no statutory rules regarding severance payments, courts generally use the formula that awards the employee one month's salary for every year of service under the age of 40; one-and-one-half month's salary per year of service between the age of 40 and 49 and two month's salary for every year of service above the age of 49.

What is the average salary that I will have to pay my personnel in the Netherlands?

The salary of an employee in the Netherlands varies from sector to sector, as well as regionally. For instance, the average pay in the Randstad is higher than other regions in the Netherlands. Salary increases are based on the consumer price index as well as individual performance.

The salary includes mandatory benefits that an employer must pay by law or collective agreements like social security. Dutch employers typically also provide several voluntary benefits like compensation for a "13th month" each year, at 100% of normal monthly salary. Most companies make use of a payroll service provider, which for a nominal fee ensures payments and withholdings are in line with legal requirements.

According to a survey by Mercer Human Resource Consulting (April 2005), the average employment costs in the Netherlands are € 34,725 (full-time male employee including pay for vacation and public holidays) covering € 29,354 pay, € 3,023 for social security and € 2,348 for voluntary benefits.

Watson Wyatt Brans & Co, a global consulting firm that provides services in the areas of employee benefits, human capital strategies and related technology solutions, tracks the gross employer labour costs at median level in several Western European countries. According to Watson Wyatt, the median annual labour costs in 2006 for a General Manager, Head of Marketing and Office Administrator in the Netherlands were as follows:

What fringe benefits are considered normal in the Netherlands?

To begin with, a nice long vacation—25 days a year is average.

The General Old Age Pension Act (AOW) provides entitlement to old age pension for people who are aged 65 and over. Although there is no statutory obligation to do so, most employers provide for additional pension benefits relating to old age, surviving relatives, and long-term disablement.

Dutch companies also offer pension/pre-pension schemes. A recently introduced Life Course Plan (‘Levensloopregeling') helps employees end their professional life at an earlier date than their 65th birthday or finance a sabbatical period during working life.

Depending on the job, a company lease car is often offered as part of the overall benefits package.

Is it possible to outsource payroll administration (including social security)?

Yes. There are a large number of service providers in the Netherlands who specialise in handling payroll services for other companies. These services can include salary administration, providing salary slips, salary calculations, calculating wage tax and social security contributions, periodic checks on tax and social security compliance etc. Some of these service providers specifically cater to foreign companies in the Netherlands.