Civil law. Member of the European Union, so required to implement relevant EU directives. The official currency is the Euro (EUR). The official language is Dutch.

Last modified 21 Jun 2024

Foreign entities may directly engage employees in the Netherlands, subject to doing-business and tax considerations. Registration with the Dutch tax authorities as an employer – to make mandatory payroll deductions – is required.

Last modified 21 Jun 2024

Required

Immigration compliance. For certain professions (eg, judges, lawyers and advocates), an applicant must provide a recent copy of a so-called certificate of conduct (verklaring omtrent gedrag), proving that they have no criminal record that should prevent them from performing their duties. All workers must undergo an identity verification on the basis of an original identity document. A copy of these documents must be maintained by the company.

Permissible

Reference checks are common and permissible with the applicant's consent. Other checks are only permissible in limited situations.

Last modified 21 Jun 2024

Most nationals of the European Economic Area (EEA) and Switzerland are allowed to work in the Netherlands, although they should be registered. Other nationals should have a visa that allows them to work in the Netherlands.

Last modified 21 Jun 2024

Employee

Employment agreements can be entered into for either a fixed or an indefinite term. Fixed-term employees may gain an indefinite employment status after a certain time (maximum of 3 years and 3 fixed term contracts) and cannot be discriminated against due to their fixed term status. In terms of scope, employment agreements can be full-time, part-time, zero-hours or on-call. With regard to on-call employees and employees with zero-hour contracts, it is mandatory to offer a contract with a fixed number of hours after such employees have been employed for at least 12 months. This is a recurring obligation.

Independent contractor

With regard to independent contractors, there are no limitations imposed by law and thus no maximum term for hiring an independent contractor. However, there is a risk of bogus self-employment / legal reclassification of an independent contractor relationship as an employment relationship. The terms and conditions agreed in the contract as well as the actual circumstances under which the contract is conducted are decisive in regard to the question of whether the work relationship should be considered an employment relation.

• The work must be performed in person
• Salary is paid and
• There is a relationship of authority between the individual and the company.

It is important to assess up front if the contract is in fact an employment contract "in disguise." If, based on the facts, this appears to be the case, the independent contractor should be regarded as an employee – so all employee and dismissal protections will apply – and Dutch wage tax and social premiums will be due.

To limit the tax and social security risk, parties may use model agreements, published on the website of the Dutch tax authorities, or submit the contract to the Dutch tax authorities to receive confirmation on the qualification of the contract in a ruling. If Dutch tax authorities confirm the absence of an employment relationship in a ruling, they can, in principle, not recover wage tax and social premiums from the company with respect to that contract.

The Dutch government introduced an online tool with regard to the legal classification of independent contractors: the Web Module for Assessment of Employment Relationships. The Web Module is an online questionnaire which companies can use to obtain clarity about whether an assignment can be carried out by a contractor instead of an employee. The Web Module will provide 1 of the 3 possible outcomes: ‘contractor’, ‘employee’ or ‘no judgement possible’. The Web Module does not yet have legal status, but the outcome of its assessment may be used by companies to review – and reconsider – their working relationship with contractors.

Agency worker

Agency workers are common and cannot be discriminated against due to their status.

Employees who are placed in the organization through a payroll-provider/employer of record (PEO) are entitled to terms of employment that are equal to the terms of employment of “regular” employees of the organization – or terms of employment that are in line with industry / common practice, if there are no regular employees within the organization.

Last modified 21 Jun 2024

Employment contracts

Common best practice, but in any case, the following must form part of the employment contract:

Parties' names

Work location

Job/position

Start date

In case of fixed term: the end date

Holiday entitlement and entitlement to other forms of paid leave

Notice periods and dismissal and termination procedures which must be followed (by employee as well as employer) in case of termination

Salary (including the individual components and the method/frequency of payment)

Working hours, if predictable: the normal amount of daily or weekly working hours and if not predictable: additional information requirements on the working hours and working pattern are required

Pension entitlement

If the employee has to work abroad for a period exceeding 4 weeks: the details of such arrangement

Applicability of a collective labor agreement (or not)

If the employment agreement is a temporary agency contract or payroll contract

If the employment agreement has been concluded for an indefinite term

If the employment agreement is an on-call agreement

In case of an agency contract: The identity of the hiring company

If applicable: the duration and/or conditions of a probationary period

If applicable: the right to education/training offered by the employer

The identity of the social security agency receiving the social security contributions and the level of protection of social security offered by the employer.

Further required content will depend on the requirements of any applicable collective labor agreement (CLA).

Probationary periods

Probationary periods are permissible. The maximum statutory probationary period for (i) indefinite-term contracts and (ii) fixed-term contracts with a term of 2 years or more is: 2 months.

A probationary period in a fixed-term employment contract of 6 months or less is invalid. It is not possible to deviate from this via a CLA.

In case of a fixed-term contract of more than 6 months and less than 2 years, a maximum probationary period of 1 month is allowed. If agreed in a CLA, it is possible to extend the probationary period to a maximum of 2 months.

Policies

Whistleblowing policy (if a company employs 50 or more employees)

Risk assessment on health and safety risks in the workplace (RI&E)

Health and safety policy (which includes policies aimed at preventing, or, if not possible, limiting, pressure at work due to a high workload, discrimination, harassment and bullying)

Third-party approval

No requirement to lodge employment contract or policies with or get approval from any third party.

Last modified 21 Jun 2024

No statutory requirements to issue employment documents in Dutch, although the employer must make sure that the employee understands the relevant provisions.

Last modified 21 Jun 2024

Characteristics protected from unlawful discrimination and harassment include age, disability, gender reassignment, marriage or civil partnership, pregnancy or maternity, race, religion or belief, sex or sexual orientation.

Last modified 21 Jun 2024

On February 18, 2023, the Whistleblowers Protection Act entered into force. The act aims to better protect the legal position of whistleblowers. Every employer with 50 or more employees is obliged to establish an internal reporting channel for employees to report suspected breaches. An internal reporting scheme must meet certain requirements (eg, a reasonable timeframe and the manner in which a report must be made). 

Last modified 21 Jun 2024

In many industries, mandatory industry wide pension funds apply. Employers who fall under the scope of such mandatory industry wide pension fund are required by law to pay pension premiums to the pension fund and register their employees with the pension fund. Such mandatory industry wide pension funds often offer defined benefit schemes. In industries without a mandatory industry wide pension fund, employers usually take out a pension scheme for their employees with an external pension provider. Such pension schemes can either be defined benefit or defined contribution schemes.

Last modified 21 Jun 2024

Employees generally must be notified of personal data processing – and, in certain cases, give consent. Registrations with the Information Commissioner are required. Special rules apply to data transfer outside the EEA. Significant restrictions on monitoring email and internet use.

Being an EU member state, the Netherlands are subject to the General Data Protection Regulation (GDPR), which includes significant obligations and onerous sanctions for employers regarding privacy and personal data of employees. In general, the GDPR aims at empowering individuals (including temporary employees, job applicants, contractors, trainees and other workers) with regard to controlling the use of their personal data and at harmonizing the data protection legislation across the EU.

Last modified 21 Jun 2024

Automatic transfer under the EU Acquired Rights Directive/Dutch civil code in a business sale or service provision change. Significant restrictions on changing terms and conditions following a transfer. Duty to inform and consult with employee representatives. Any dismissal connected to the transfer would be unfair unless for an economic, technical or organizational reason. Works council has the right to advise.

Last modified 21 Jun 2024

Trade unions are prevalent in a number of industries. Industry-wide CLAs are common in those industries.

Works councils are common and have significant rights (the right to render an advice on certain strategic decisions, the right of approval for certain policies and a general right of information). If the company has 50 or more employees, the company is obliged to establish a works council. If there are more than 10 employees, but fewer than 50 employees, employees can request that the company forms an employee representative body, which has less rights than a works council. In the absence of an employee representative body, the company must meet with the employees twice a year in an all-hands meeting (personnel meeting) to discuss the general affairs of the company. 

Last modified 21 Jun 2024

Grounds

Termination is permissible on misconduct, performance, redundancy or other substantial grounds. Dismissal is only possible on the basis of one of the reasons specified in the Dutch Civil Code.

Employees subject to termination laws

All.

Restricted or prohibited terminations

Members of a European Works Council, employees on their first 2 years of sick leave, pregnant employees and employees on military service.

These prohibitions on termination do not apply in the event that:

• An employee consents to the termination in writing
• The termination takes place during the probationary period
• The termination is, by operation of law, due to the expiry of a fixed-term contract
• The termination is a dismissal with immediate effect
• There is a company closure (though the termination of employees who are pregnant or on maternity leave in that event still prohibited/restricted) or
• The termination takes place because the pensionable age has been reached.

Third-party approval for termination/termination documents

Employers do not need any third-party approval for:

• Immediate termination due to an urgent reason
• Termination during a probationary period
• Termination by operation of law due to expiry of a fixed-term contract or
• Mutual consent termination.

In all other situations, employers must either seek approval of the Dutch Employee Insurance Agency (UWV) or request a court to dissolve the employment agreement. Mutual consent terminations are common.

Mass layoff rules

Strict information and consultation rules apply in situations where 20 or more employees in a certain area are to be made redundant within a period of 3 months or less.

Notice

The notice period that must be given by the employee is 1 month. For the employer, notice requirements depend on the duration of the employment:

• Less than 5 years requires 1 months' notice
• Between 5 and 10 years requires 2 months' notice
• Between 10 and 15 years requires 3 months' notice and
• 15 years or more requires 4 months' notice.

Parties can agree on a longer notice period than 1 month for the employee, provided that the notice period for the employer is at least twice as long as the notice period for the employee (ie, 2 months for the employee and 4 months for the employer). The maximum notice period that can be agreed  for an employee is 6 months. With the consent of the employee, employers can make a payment in lieu of notice.

Statutory right to pay in lieu of notice or garden leave

Employers do not have a statutory right to pay in lieu of notice. However, if the employer (validly) terminates the employment agreement without observing a notice period, damages in the amount of a payment in lieu of notice are due (such payment has to compensate for all remuneration elements the employee would be entitled to during the notice period). Employers have no statutory right to impose garden leave on an employee. Garden leave needs to be agreed in writing in order to be valid.

Severance

• 1/3 of 1 month's salary (including holiday allowance and, if any, fixed end-of-year bonus and/or average bonus of the last 3 years and/or commission of the last 12 months) for each calendar year that the employment agreement has lasted, and a pro rata amount for a period where the employment agreement has lasted less or longer than a calendar year.

The maximum transition payment for 2024 amounts to EUR94,000 gross or, where an employee earns over EUR94,000 per annum, a maximum of 1 year's salary.

The statutory transition payment is not due if (i) the employee has engaged in seriously culpable behavior; (ii) the employee terminates the employment agreement, provided that the termination is not a result of seriously culpable behavior by the employer and (iii) in case of a termination due to the employee reaching the statutory retirement age (AOW-leeftijd).

Waivers

Enforceable, but employees must be given time to consider and to seek legal help.

Last modified 21 Jun 2024

Non-competes

Post-employment restraints to protect against competition are common in the Netherlands. Typically, such restraints remain in effect for up to 1 year after termination of employment. Non-competition clauses in fixed-term employment contracts are not allowed unless they are necessary to protect a legitimate business interest and the business interests are clearly described in the employment agreement. Published rulings have shown that this is a high threshold; therefore, it is common not to include a non-competition clause in fixed-term employment agreements.

Ancillary activities clauses are common and an employer can require an employee to inform the employer about any side-activities, but ancillary activities cannot be forbidden, unless the employer has an objective justification (eg, health and safety, the protection of confidentiality of business information, the integrity of public services, the avoidance of conflicts of interest).

Customer non-solicits

Permissible under the same conditions as described above under non-competes (ie, the restrictions to include such non-solicit clause in a fixed term contract are the same).

Employee non-solicits

Permissible and common (usually also for a term of 12 months after the employment has ended). There are no restrictions to include a non-poaching of employees clause in a fixed term contract.

Last modified 21 Jun 2024

Claims may be waived provided that the employee understands they signed a waiver of claims. Accordingly, it is advisable that employees be given time to consider and to seek legal help with regard to a waiver.

Last modified 21 Jun 2024

Discrimination

Compensation depends on damages. It is uncommon that (high) damages are awarded in discrimination cases.

Unfair dismissal

An employee may obtain a court order to be reinstated or can demand an additional ''fair compensation'' on top of the statutory transition payment.

Failure to inform & consult

Works councils may litigate certain decisions of the company – that is, they may file an appeal with the Enterprise Chamber and request revocation of the company's decision.

Last modified 21 Jun 2024

Criminal sanctions are not generally a concern.

Last modified 21 Jun 2024