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 (15.9% ER + 7.5% EE contribution),
- Sector Fund (SFU) at 0.2% of SV-loon,
- Holiday allowance and holiday/vacation accruals, depending on pay frequency and employment setup.
Additional costs may apply due to inlenersbeloning (equal pay / hirer’s pay & benefits) and client-specific allowances.
Employee Income Tax
Employees under the ABU CAO in the Netherlands are subject to standard national income tax brackets for 2026:
- 35.75% on annual income up to €38,883
- 37.56% between €38,883 and €78,426
- 49.50% on income above €78,426
Employees may also benefit from:
- The general tax credit, and
- The labour tax credit (up to €5,685 in 2026),
depending on their total income.
Salaries are paid weekly or monthly, and holiday allowance (8.33%) 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 €14.71 per hour (as of 1 January 2026).
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 55 hours per week.
Mandatory PTO
Employees covered under the ABU CAO accrue 4× the number of hours worked per week 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
If an employee becomes sick, sick pay and reintegration follow Dutch rules and the applicable client arrangements. Where the contracted hours are variable, the wage basis may be determined using the average paid hours over the previous 13 weeks.
f an employee is sick and their Phase A contract ends on its agreed end date, and they qualify for ZW (sickness benefit), the ABU CAO provides for a supplement to the ZW benefit up to 90% during weeks 1–52 and 80% during weeks 53–104.
Termination
InTermination (Phase A – agency clause / uitzendbeding)
In Phase A with an agency clause (uitzendbeding), the contract ends automatically (by operation of law) when:
- The client ends the assignment (the worker is no longer requested), or
- The employee stops being able or willing to perform the agreed work for reasons other than sickness.
Standard VAT
The standard rate of VAT in the Netherlands is 21.00%.
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