As many companies shift gears towards a remote-first work environment, employers are increasingly hiring international employees. Often, this is because countries like the Netherlands offer a young workforce with a diverse and exceptional skill set.
Salaries are essential when budgeting for hires in the Netherlands, but there are numerous other costs to consider. From overtime and severance to social security contributions, hiring overseas employees requires more than calculating your new employee’s wage.
Employers should also consider supplementary benefits like coworking passes or gym memberships. This can help with employee retention and satisfaction.
Overall, it can be challenging to determine total costs on your own. This article will guide you through the costs of hiring employees in the Netherlands.
Mandatory Costs
When hiring employees in the Netherlands, you’ll need to consider numerous mandatory costs. These include wages, taxes, benefits, overtime pay, and severance pay. Adherence to these costs will ensure you are compliant with local labor laws and regulations.
Salary
While the minimum wage in the Netherlands is €1934.45 (USD 2073.57) per month, employers should consider offering higher salaries to gain a competitive edge.
For instance, the average salary in the Netherlands is €3300 (USD 3537). However, those who work in tech, like a software engineer, usually make around €5000 per month. If you’re looking to hire a software engineer or IT manager, you can expect to pay above €5400 — approximately USD 5788 — per month.
Taxes and Benefits
When hiring employees from the Netherlands, it’s essential to be aware of the mandatory taxes and contributions. Employers are required to pay 22% of an employee’s salary, which goes towards disability insurance, health insurance contributions, and childcare allowance, among other things.
Paid Leave
Employees in the Netherlands are entitled to take numerous types of paid leave, many of which are paid by the employer.
Annual Time Off and Holidays
When it comes to annual paid time off, employees are entitled to 20 days, fully paid by the employer.
The Netherlands also has eight public holidays which are non-working days. However, unlike most other countries, there is no weekday substitution if the holiday falls on a weekend.
Maternity and Paternity Leave
New mothers are entitled to 16 weeks of fully paid maternity leave. New fathers are also entitled to five days of fully paid paternity leave. It’s important to note that this cost is not paid by employers but rather by social security. Either the employer is reimbursed by social security, or social security pays for it directly.
Sick Leave
Regarding sick leave, employers also need to be aware of additional costs they may face. Employees are entitled to 70% of their wages for up to two years of sick leave, which is covered by the employer. While not mandatory, it is common for the employer to cover 100% of the employee’s salary in the first year of sick leave.
Other Types of Paid Leave
There are many other types of paid leave available. For employees who have adopted a child, they are entitled to six weeks of paid leave.
There’s also short-term and long-term care leave available. Employers are required to pay 70% of an employee's salary. However, if this is below the minimum wage, employers must pay the minimum wage.
Employees are entitled to emergency leave, in which employers are not allowed to refuse. This type of leave is fully paid.
It’s important to know that these types of leave do not affect vacation entitlement. Vacation days will continue to accrue while an employee takes leave, whether it be emergency, short-term, or adoption leave.
Overtime Pay
The standard work week in the Netherlands consists of eight-hour days over five days. However, overtime pay is not required by the government. Overtime pay is mutually agreed upon by both parties in the employment contract.
Severance Pay
Severance pay in the Netherlands is entirely dependent on the employee’s length of service with the company.
- 0-2 years of service: One month’s salary
- 2-4 years of service: Two month’s salary
- 4+ years of service: Dependent on other factors and parameters
Supplemental Costs of Hiring Employees in the Netherlands
In addition to statutory benefits, employers may also provide supplemental benefits. Offering additional benefits can help attract top talent, motivate staff, and increase retention.
Benefits
Making sure your new employees are happy and healthy is paramount. You can support their health by offering a robust benefits package. While many employers choose to offer private health insurance for their employees, doing so comes at an extra cost.
The price will significantly vary depending on the type of private health insurance and coverage. Common health insurance providers in the Netherlands include LoonZorg and Bupa Global.
An EOR like Borderless will typically offer benefits packages. This will usually include medical, dental, vision, and life insurance along with a retirement savings plan.
Bonuses and Extras
The Netherlands doesn’t have any mandatory bonuses, such as the 13th-month bonus that’s common in many other countries. However, performance-based bonuses and signing bonuses are typically offered. Additionally, employers may want to consider offering employees a lunch or coffee stipend.
Employers also need to take workspace costs into account when hiring employees in the Netherlands. Since new hires will typically be working remotely, they’ll need to set up a home office or access a coworking space.
Providing a home office stipend can be hugely beneficial. It can go towards a company laptop, ergonomic office chairs, or keeping your system secure, like with antivirus software.
Coworking offices have become the go-to for many employers. Not only do coworking spaces provide employees with a designated space to work, but they also encourage collaboration and networking.
The costs of coworking spaces in the Netherlands vary by region. In Amsterdam, monthly passes can range anywhere from €150 (USD 160) to €350 (USD 375). For instance, StartDock in Amsterdam offers monthly coworking memberships for €170, whereas Hackers and Founders monthly passes start at €350.
Utrecht and Rotterdam have similar prices. Mindspace in Utrecht offers monthly passes for €300 (USD 321), and Rotterdam’s SpacesWorks monthly membership starts at €225 (USD 241). However, Groningen, a small university town in the north of the Netherlands, has De Pijp, a popular coworking hub with a lower monthly price of €159 (USD 170).
Work With Borderless
Hiring employees in the Netherlands may feel overwhelming, especially with so many different costs to be aware of. Working with an Employer of Record (EOR) can help take the stress out of global hiring and budgeting.
An EOR like Borderless will do the heavy lifting, guaranteeing that you compliantly hire and pay employees in the Netherlands. To get started, book a demo today.
Disclaimer
Borderless does not provide legal services or legal advice to anyone. This includes customers, contractors, employees, partners, and the general public. We are not lawyers or paralegals. Please read our full disclaimer here.
