Country Insight
HR, Payroll, Taxation & Benefits Guide
A comprehensive overview of key considerations when hiring talent from the Netherlands. This guide outlines mandatory employer contributions, labor law requirements, and available options to ensure compliance and efficiency in workforce management.
Mandatory Employer Payroll Contributions
In the Netherlands, total employer payroll contributions under the ABU CAO typically range between 28% and 34% of an employee’s gross salary. This includes:
- Statutory employer premiums for social security and unemployment,
- Sector-specific contributions required under the ABU CAO, including:
- StiPP pension (8% for Basic Scheme),
- Sustainable Employability Fund (Doorzaam) at 1.02%,
- Holiday and leave reserves (if paid out weekly).
Additional costs may apply based on contract phase, job classification, and client-specific benefits under the inlenersbeloning (equal pay rule).
Employee Income Tax
Employees under the ABU CAO in the Netherlands are subject to standard national income tax brackets for 2025:
- 35.82% on annual income up to €38,441
- 37.48% between €38,441 and €76,817
- 49.50% on income above €76,817
Employees may also benefit from:
- The general tax credit, and
- The labour tax credit (up to €5,599 in 2025),
depending on their total income.
Salaries are paid weekly or monthly, and holiday allowance (8%) and leave reserves are typically calculated and shown separately on the pay slip.
Minimum wage
Under the ABU CAO, employees aged 21 and older are entitled to the Dutch statutory minimum wage, which is currently €14.06 per hour (as of July 2024).
The minimum wage is adjusted twice a year (January and July) based on national economic indicators.
Working Hours
Employees under the ABU CAO may work a maximum of 12 hours per day and 60 hours per week, in line with Dutch working hours regulations.
However, the average over any 4-week period must not exceed 48 hours per week.
Mandatory PTO
Employees covered under the ABU CAO accrue 25 vacation days per year for full-time employment.
These days are paid out or can be taken as time off depending on the contract model.
Employers must also reserve 8.33% holiday allowance and compensate for public holidays.
Sick Leave
Under the ABU CAO, sick leave is compensated as follows:
- Day 1: Unpaid (waiting day, wachtdag)
- Weeks 1–52: 90% of the employee’s time-based wage
- Weeks 53–104: 80% of the time-based wage
If the employee becomes sick during a Phase A contract with uitzendbeding, the contract ends and the employee transitions to ZW (sickness benefit) via the UWV.
Termination
In Phase A with an agency clause (uitzendbeding), the contract ends automatically when:
- The client terminates the assignment,
- The employee is unavailable for work (e.g., due to illness).
No notice period or transition payment is owed in this case.
Standard VAT
The standard rate of VAT in the Netherlands is 21.00%.
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