Hiring compliance in the Netherlands: a guide for international employers

23 mei 2025

How to stay compliant when hiring employees in the Netherlands: a guide for international companies

Written by: Sophie

Strategic Business Consultant

Hiring in the Netherlands offers international companies access to a highly skilled, multilingual workforce in one of Europe’s most stable and business-friendly environments. But alongside the advantages come strict legal, tax, and employment regulations.

For companies unfamiliar with Dutch labour law, failing to meet these requirements, whether due to misclassification, missing registrations, or non-compliant contracts, can lead to serious financial and legal risks. Compliance is non-negotiable whether you’re hiring a Dutch national or a foreign employee working in the Netherlands.

This guide outlines the key areas of employment compliance that international businesses need to understand and follow. We’ll also explain how working with a Dutch Employer of Record (EOR) can help you hire staff locally without opening a legal entity, while ensuring you meet all Dutch employment obligations.

Legal frameworks for employment in the Netherlands

Dutch employment law is built on the Dutch Civil Code (Burgerlijk Wetboek), which governs employer-employee relationships, contracts, working conditions, and termination protections. Dutch and foreign companies hiring workers locally, remote or on-site, must comply with these laws.

The Dutch Labour Inspectorate (Inspectie SZW) is the enforcement body that ensures employers comply with minimum wage laws, working hours, safe working conditions, and fair treatment. Even companies without a registered office in the Netherlands are subject to local law if they employ Dutch residents.

Employment contracts and job classification

All employment relationships in the Netherlands must be documented with a written contract. The contract must include specific details such as job title, salary, working hours, start date, duration of employment (if fixed-term), notice periods, and reference to applicable collective labour agreements (CAOs), if relevant.

Employers can offer:

Permanent contracts (open-ended),
Fixed-term contracts, and
Freelance or self-employed agreements.

However, the Dutch authorities closely monitor the misclassification of freelancers (ZZP’ers). If a worker is legally operating as an employee (e.g. working under your direction, receiving fixed payments, or lacking client independence) but is hired as a contractor, your company could face fines, back taxes, and retroactive employment obligations.

Additionally, if a CAO covers your industry, its terms may dictate minimum contract standards, wages, and benefits that must be respected.

Registering and paying taxes

When hiring an employee in the Netherlands, your company must register with the Dutch Tax Authority (Belastingdienst) and set up payroll administration. As an employer, you’re responsible for withholding:

Income tax (Loonbelasting), and
National insurance contributions.

This system is known as Loonheffing and includes payments to both the tax office and social security schemes. Monthly filings must be submitted, and employers must issue payslips and annual wage summaries to employees.

Foreign employers must either register locally with the Belastingdienst or work with a recognised third party, such as an EOR, to fulfil these obligations.

Social security contributions

Employers in the Netherlands are required to make contributions on behalf of their employees to various social insurance schemes, including:

AOW: the Dutch state pension,
WW: unemployment insurance,
WIA: disability insurance.

These contributions are calculated as a percentage of the employee’s gross salary. While employees also contribute, the employer is largely responsible for accurate registration and timely payment.

It’s also important to note that employees must hold valid Dutch health insurance, which is their own responsibility. However, employers are often expected to support new hires with guidance or help during the initial registration.

Employee rights and statutory entitlements

Under Dutch law, employees are entitled to a comprehensive set of rights, regardless of whether they are locals or foreign nationals. These include:

Minimum wage, which is updated twice annually based on age and full-time hours.
A statutory minimum of four weeks of paid annual leave, based on full-time employment.
Full entitlement to holiday allowance (vakantiegeld), calculated as 8% of annual salary and usually paid in May.
Sick leave, where employers are obliged to pay at least 70% of the salary for up to two years.
Parental and maternity leave, including paid and unpaid options depending on the situation.

Anti-discrimination laws also bind employers and must ensure fair treatment in all employment processes. Terminations are highly regulated and often require approval from the Dutch Employee Insurance Agency (UWV) or the court, especially in the case of permanent contracts.

IND requirements when hiring non-Dutch or non-EU nationals

If you’re hiring an employee not an EU/EEA or Swiss national, you’ll need to work with the Dutch Immigration and Naturalisation Service (IND) to secure the appropriate residence and work permits.

The most common route is the Highly Skilled Migrant (kennismigrant) scheme, which allows fast-track processing for professionals earning above a specified salary threshold and working in a qualified role. Your company must be a recognised sponsor with the IND to sponsor under this scheme.

Responsibilities include:

Submitting documentation,
Monitoring employee status, and
Reporting changes in employment or residence.

Hiring foreign nationals without the proper permits can lead to steep fines and even criminal charges. Companies without Dutch registration cannot act as a sponsor unless working through a third party like a recognised Employer of Record.

Role of CAOs (collective labour agreements)

Collective labour agreements (CAOs) are sector-specific contracts negotiated between unions and employer associations. Many industries in the Netherlands are covered by mandatory CAOs, including construction, healthcare, retail, and transport.

If your business operates in one of these sectors, or hires for a role governed by a CAO, you must apply the CAO’s terms regarding:

Minimum salary levels,
Working hours and overtime pay,
Leave entitlements, and
Termination conditions.

Failing to apply CAO terms where applicable can result in penalties, back pay claims, or legal disputes. Even foreign employers are expected to comply if they hire in covered sectors.

How a Dutch Employer of Record helps you stay compliant without an entity

Meeting all these legal requirements can be overwhelming for international companies without a Dutch subsidiary. A Dutch Employer of Record (EOR) provides a fully compliant solution by acting as the legal employer on your behalf.

The EOR manages:

Employment contracts, ensuring they align with Dutch law and CAO provisions,
Payroll administration, including tax and social security contributions,
Employee onboarding, including registration with the tax authority and social security bodies,
Compliance with IND sponsorship rules, if you’re hiring non-EU nationals.

For example, a Canadian fintech company wanted to hire a product designer based in Amsterdam but didn’t have a legal entity in the Netherlands. They were unsure how to handle Dutch employment contracts, tax registration, or social security contributions.

By partnering with a Dutch Employer of Record, the company was able to legally employ the designer without setting up a local subsidiary. The EOR drafted a compliant contract, registered the employee with the Dutch tax authority and social security system, and ensured that all payroll, holiday allowance, and benefits met Dutch legal standards. This allowed the Canadian company to stay fully compliant, avoid misclassification risks, and onboard their new hire quickly and confidently.

This arrangement enables you to hire staff in the Netherlands quickly, compliantly, and without setting up a legal entity. It’s ideal for:

Startups or SMEs testing the Dutch market,
Companies expanding regionally but not ready for full incorporation,
Businesses needing to avoid misclassification and administrative risk.

By partnering with a local EOR, you reduce exposure to compliance failures while maintaining full operational control of your team’s day-to-day work.

Stay compliant

Hiring in the Netherlands requires more than just offering a competitive salary: it demands full compliance with labour law, tax obligations, social security, and immigration rules. Foreign companies without a local presence must follow Dutch regulations when employing residents or foreign nationals working locally.

The legal landscape can be complex, from drafting compliant contracts to managing payroll tax and IND sponsorship. That’s why many international businesses turn to a Dutch Employer of Record as a trusted partner to help them stay compliant, minimise risk, and hire quickly without administrative delays.

Interested in hiring in the Netherlands without setting up a local entity? Contact us to learn how our Dutch Employer of Record solution can help you hire and stay fully compliant.

Written by:

Sophie | Strategic Business Consultant

As a strategic business consultant based in the Netherlands, she supports international businesses in successfully expanding their operations across the Dutch market. With her expertise in market entry strategies and business development, she helps companies navigate the unique challenges of establishing a foothold in the Netherlands. Her keen insight into local business practices and regulations makes her a trusted partner for HR managers and business development teams. Outside of work, she enjoys spending time with her family, exploring the Dutch countryside, or relaxing with a good book by the canals in Utrecht.

Questions? Questions?

Get in contact

Check what applies
I am an employeeI am an employer

30 mei 2025

How to get a self-employed visa in the Netherlands: requirements and business plan tips

30 mei 2025

Octopus Marine: Simplifying payroll and sponsorship with Dutch Employer of Record

9 mei 2025

How to stay compliant when hiring employees in the Netherlands: a guide for international companies

How to stay compliant when hiring employees in the Netherlands: a guide for international companies

Legal frameworks for employment in the Netherlands

Employment contracts and job classification

Registering and paying taxes

Social security contributions

Employee rights and statutory entitlements

IND requirements when hiring non-Dutch or non-EU nationals

Role of CAOs (collective labour agreements)

How a Dutch Employer of Record helps you stay compliant without an entity

Stay compliant

Get in contact

Read more

How to get a self-employed visa in the Netherlands: requirements and business plan tips

Octopus Marine: Simplifying payroll and sponsorship with Dutch Employer of Record

How long does it take to set up a business in the Netherlands?

Navigation

Legal

Contact