Workforce compliance in the Netherlands: what international employers need to know

Expanding into the Dutch market provides international companies with access to a skilled workforce, robust infrastructure, and a business-friendly environment. However, hiring employees in the Netherlands comes with a host of legal, tax, and HR compliance responsibilities that must be adequately managed.

Getting workforce compliance wrong can lead to costly audits, fines, and reputational damage, especially for companies unfamiliar with Dutch regulations. Whether you’re hiring local talent or relocating foreign employees, this guide outlines the key information you need to stay compliant. We’ll also explore how a Dutch Employer of Record (EOR) can help you hire without setting up a legal entity in the Netherlands.

Employment law obligations in the Netherlands

Dutch labour law is protective of employees and highly structured. Every employment relationship should be grounded in a written contract that clearly outlines the role, compensation, and working conditions.

The Dutch Civil Code requires employers to provide written contracts that include essential terms, such as salary, working hours, holidays, and notice periods. Contracts may be permanent (open-ended), fixed-term, or based on zero-hours or freelance arrangements.

Note that freelance or contractor agreements must be structured appropriately to avoid the risk of employee misclassification, which could lead to retroactive taxes and penalties.

Collective labour agreements (CAOs)

Many sectors in the Netherlands are governed by collective labour agreements (CAOs), which outline additional rights and entitlements beyond statutory law. These can include minimum wages, bonuses, leave entitlements, or working time limits. International employers must determine whether a CAO applies to their employees and follow its conditions accordingly.

Standard full-time work is 36 to 40 hours per week. Probation periods must be set in writing and cannot exceed two months. Dismissal is regulated and generally requires prior approval from the Dutch Employee Insurance Agency (UWV) or a court of law. Notice periods vary depending on the length of service, but must be respected to avoid legal disputes.

Registering as an employer and tax compliance

Before paying any employees, your business must be registered with the Dutch Tax Authority (Belastingdienst). This includes obtaining a wage tax number and setting up a Dutch payroll.

Employers in the Netherlands are responsible for deducting and remitting:

• Wage tax
• Social insurance contributions (e.g. pension, disability, unemployment)
• Employee insurance premiums

Wage tax must be reported and paid monthly, and employers must submit regular returns, including the loonaangifte (wage tax return), to the Belastingdienst.

Participation in a pension scheme may be mandatory based on your industry’s CAO. If not required, employers can voluntarily offer pensions through a provider; however, transparency and proper registration are still necessary.

Social security and employee benefits

The Dutch social security system is extensive and covers several key areas, including:

• AOW (state pension): a universal pension for those over 66
• WW (unemployment insurance): partially funded by employer contributions
• WIA (disability insurance): covers long-term illness or disability

Employers must register and contribute to the relevant schemes, ensuring that employees receive their statutory entitlements.

Statutory benefits

Some benefits required under Dutch law include:

• Holiday allowance: 8% of annual gross salary, typically paid in May
• Paid annual leave: 20 days minimum for full-time employees
• Sick leave: 70% of salary for up to 2 years of illness
• Parental leave: 9 weeks partially paid and 17 weeks unpaid leave

Failure to provide these benefits may result in legal claims or sanctions.

Immigration and right-to-work checks for non-EU employees

Employing non-EU nationals in the Netherlands involves strict procedures managed by the Immigration and Naturalisation Service (IND). Employers must ensure that every new hire has valid right-to-work documentation and, where required, secure the appropriate residence and work permits before employment begins.

Companies hiring through the Highly Skilled Migrant scheme are also expected to register as recognised sponsors with the IND. Non-compliance with these immigration requirements can result in severe consequences, including financial penalties and restrictions on future employment opportunities.

Common visa types

Here are the most common visa types in Netherland:

• Highly Skilled Migrant permit: for foreign professionals earning a minimum salary
• Intra-company transfer: for relocating staff from abroad
• Orientation year permit: for recent graduates from Dutch universities

It’s crucial to maintain documentation and file timely renewals to avoid legal complications.

Workplace policies and employee protections

Dutch employers are also required to comply with workplace safety and data protection laws. Under the Working Conditions Act (Arbowet), employers must conduct risk assessments, provide a safe working environment, and appoint a company doctor or occupational health service. Employers who fail to uphold these responsibilities may be fined or liable for workplace incidents.

The Netherlands enforces strong anti-discrimination laws that cover gender, race, age, religion, and other protected characteristics. Employers must treat all workers fairly during the recruitment, promotion, and termination processes.

Additionally, all employee data must be processed in accordance with the General Data Protection Regulation (GDPR). Employers must obtain explicit consent for data processing and ensure the secure storage of data.

How a Dutch Employer of Record ensures full compliance for international companies

Understanding Dutch labour, tax, and immigration laws can be time-consuming and risky without local expertise. A Dutch Employer of Record (EOR) can simplify the entire process.

A Dutch EOR is a third-party organisation that becomes the legal employer of record for your Dutch hires. While you manage the day-to-day responsibilities, the EOR:

• Issues compliant contracts
• Runs local payroll
• Pays wage tax and social security contributions
• Ensures all benefits are delivered correctly
• Manages immigration and sponsorship (if applicable)

For instance, a UK-based tech company sought to hire a marketing specialist in Amsterdam but lacked a Dutch legal entity. By working with a Dutch Employer of Record, they were able to issue a locally compliant employment contract, handle all payroll taxes, and meet Dutch labour law obligations. The EOR ensured full compliance while the company focused on scaling its European operations.

Benefits for international employers

Using an EOR allows your company to:

• Hire employees in the Netherlands without setting up a BV or branch
• Ensure compliance with labour, tax, and CAO requirements
• Eliminate administrative burdens
• Reduce legal and financial risk

The EOR model is ideal for startups exploring the Dutch market, global companies managing remote teams, or businesses looking to hire one or two employees without setting up a local legal entity.

Expand your business with ease

Hiring in the Netherlands presents excellent opportunities, but it also comes with significant responsibility. From contracts and payroll to immigration and benefits, compliance with Dutch law is essential for risk-free operations.

Whether you’re hiring your first employee or scaling a team, it’s essential to understand your obligations and have reliable local support. Partnering with a Dutch Employer of Record is a cost-effective and compliant way to build your workforce, without the complexity of setting up a legal entity.

Looking to hire in the Netherlands without legal or compliance risks? Contact us today to learn how our Dutch Employer of Record can help you stay compliant.