A General Guide To Employment Contracts Of The Netherlands

25 March 2020

By Orson Oduber

A General Guide To Employment Contracts Of The Netherlands

It is quite challenging finding a new job in a country where you're completely in the unknown. As a new expatriate of The Netherlands, it is always good to know the rules that govern the labor laws and the regulations before signing an employment contract. There's certainly a lot of questions on your mind like: What happens if I should get dismissed? How many days of holiday am I lawfully entitled? We are addressing as many of your queries as we can in this blog. 

 

The Fundamentals

It's important to know who you're working for and what kind of contracts you're signing. Are you being recruited directly by a company? Are you recruited through an outsourcing company/recruitment agency, or are you directly hired by a company? Is your contract permanent, temporary/fixed-term, part-time, or ZZP (freelance)?

 

Collective Labour Agreement (CAO)

The Collective Labour Agreement is your contract with the company that directly hired you. This agreement entails the wage you'll collect at the end of each period, the amount of paid vacation days you're entitled to, the collective paid vacation days allowance, and transportation allowance. This agreement - depending on the employer - could cover additional benefits and allowances. This agreement is your only agreement to refer to in case of any queries.  

 

Type of Agreements

When describing the type of agreement, it is essential to pay attention to the period requirement. Let's focus the attention on Fixed agreements, Permanent Agreements, and Temporary Agreements. 

Fixed Agreements: are usually anywhere between three months to three years contract, which means that there's a beginning date end end date. One of the main points to look at when it comes to such an arrangement is the probation period and the mandatory compliance of the contract after the probation period. It's important to note that from January 2020, if the same company has employed you for more than three years, you are entitled to a permanent contract. You are also entitled to a permanent contract if you have received more than three fixed agreements from the same employer. 

 

Permanent Agreement: is when you have a start date but no end date. This agreement offers more flexibility after the probation period. You will also find such deals to contain more benefits as opposed to fixed agreements usually. 

 

Temporary Agreement is when you're working for an outsourcing company that schedules short period contracts and allows you to work on multiple contracts at the same time. The kind of work is usually related to administration jobs, event projects, F&B events, and other types of projects. 

 

When you are working for an outsourcing company (uitzendbureau), it's essential to know that your contract is under the outsourcing agency and not their client. The outsourcing company will be responsible for all payroll related matters. 

 

ZZP Contracts

When it comes to ZZP(Zelfstandige Zonder Personeel) contracts, you're engaging yourself in a freelance transaction, which means you are considered a service provider, and thus the contract is a business agreement. The terms and conditions are, therefore, required honoring. You are also responsible for registering at Kamer Van Koophandel (Chamber of Commerce), and you are also responsible for your taxable income with the Nederlandse Belasting Dienst (Dutch Tax Authority). 

 

Working Hours

Within the laws of The Netherlands, you have full-time employment when your weekly working hours are between 36 and 40 hours. Any number below 36 hours a week is a part-time job. Some exceptional employers give a 32 working hour week as a full-time agreement with full-time benefits. 

 

Salary

In The Netherlands, the minimum wage as of January 1st, 2020 is €1.653,60 for a working person of the age of 21 and above. The salary of every person depends on their profession and level of education. The average wage in the country is at a gross €2,816 (excl. vacation 8% allowance).

 

Vacation Allowance

When talking about vacation wages, we're referring to the 8% of your monthly salary your employer has to save up for you and pay you out for when you're taking your annual leave. Employers usually pay this out around May. Other employers prefer to pay it out monthly. This vacation allowance is mandatory for employers by law, including outsourcing agencies.  

If you earn a salary that is three times more than the minimum wage, your employer is allowed to offer you a contract without a vacation allowance. Also, bear in mind that if you take extra unpaid off days or call in sick often, this reduces the allowance.

 

Annual Leave Entitlement

By law, your employer is to give you 20 days of annual leave minimum working a full-time contract (36-40 hours). Most employers provide around 25 days or higher to attract top talents. Take note that if you do not take your full annual leave during the calendar year, you can only carry over five days maximum to the next year. Keep track of your annual leave not to lose any of these precious days. 

 

Public Holidays

Public Holidays are off days determined by the government of The Kingdom of The Netherlands. These days are for most of the general population except for the hospitality, tourism, and retail industries. People who work these days get paid a higher percentage set by the government.  

Netherlands Public Holidays 2020

New Year's Day

1st of January

Good Friday

10th of April

Easter Sunday

12th of April

Easter Monday

13th of April

King's Day

27th of April

Liberation Day (Every 5 years)

5th of May

Ascension Day

21st of May

Pentecost Sunday

31st of May

Pentecost Monday

1st of June

Christmas Day

25th of December

Boxing Day (2nd day Christmas)

26th of December

 

Commute Expenses Coverage

Many companies in The Netherlands participate in covering the travel expenses for their employees. What exactly they cover varies from employer to employer. The majority of employers cover your commute expenses only if you live more than 10 kilometers away from the workplace, and the amount they cover is €0.19 per kilometer.

 

There are a few exceptional employers that cover the full expenses for public transportation or fuel cost plus a maintenance fee per kilometer if you're traveling utilizing your vehicle. Some other companies lease cars or bicycles as your means of transport and cover the expenses. 

 

Additional Benefits

Employers who desire to attract the top talents tend to give other benefits as their selling point. Many of these benefits vary between flexible hours, food & beverage, gym membership, 13th-month salary, monthly or annual bonuses, stock options, extended maternal, paternal leave, adoption assistance, and many more options. 

 

Illnesses and Pregnancy

Illness: If you obtained a sickness, your employer is by law not allowed to terminate your employment within the first two years, and your payment reduced to 70% of your agreed-upon salary. Your employer may ask you to report on your health condition from time to time. It is advisable to maintain a good relationship with your employer by at least cooperating with your employer's request for your health updates. Also, trying to work reduced working hours or commit to a work-from-home arrangement may show good intent from your side. 

 

After two years of sick leave, you are allowed to ask for reduced working hours at your employer if you're not already on such an arrangement. If the employer cannot facilitate this, you're entitled to apply for disability benefits through the official channels.

 

Pregnancy: In the event of pregnancy, you have an entitlement to sixteen weeks of paid maternity leave at 100% of your wage. 

 

Both parents, by law, are allowed to take unpaid paternal leave per child under the age of eight years old. In some cases, the employers pay a portion of the leave. Your leave calculated is as 26 times the weekly working hours. 

 

Notice period

The notice period varies depending on the contract with your employer. In most cases, the notice period is one calendar month. If you have agreed on a different notice period with your employer, then that notice period will need to be served. If you are still in your probation period, you can terminate your
contract on the spot before your notice period expires.

 

If you have worked for the employer for more than five years, your notice period is two calendar months, and with every additional five years, it will increase by another calendar month.

 

Dismissal

Wondering what to do in case of termination from work?

If your employer does not extend your contract or dismissed you, you could petition for unemployment benefits. To be considered for unemployment benefits, you must legally be residing in The Netherlands and have worked for at least 26 weeks in 36 weeks period before becoming unemployed of a reason not being your fault. 

 

There's a limit to the length of unemployment benefits as it depends highly on your employment history. For every annum, there's an entitlement for one month of unemployment benefits. The minimum when you apply for unemployment benefits is three months, with a maximum being 24 months. 

 

Apart from the unemployment benefits, you could also benefit from the transition compensation, and it is also known as the end-of-service benefit. It's a one-time payment that depends on your monthly income and for how long you have worked for the employer. From January 1st, 2020, the requirement to qualify for this benefit is that you meet the minimum employment of six months.  

 

Non-compete (concurrentiebeding)

Finding a non-competition clause in a contract is not uncommon to find in labor agreements. It means that you are not allowed to enter into a labor agreement with a competitor company after your resignation from your current company for a determined period. In The Netherlands, it's usually no more than a 12 months period and only for permanent contracts. Breaching such an agreement can have unpleasant consequences. It is, therefore, crucial to keep a sharp eye on your labor contracts.

 

Pension in The Netherlands

If you legally reside in The Netherlands, and you reach the legal age of 67, you're entitled to retirement benefits. This benefit is for everyone regardless of gender; it covers a guaranteed basic pension income by the General Old Age Pension Act (Algemene Ouderdomswet or AOW). 

 

The amount you are entitled depends on your age and living conditions. The guaranteed amounts covered are €1.255,87 gross per month for an individual living on his/her own and €859,55 gross for a couple per person, combined it's an income of €1.719,10 gross income. For every year you spent outside The Netherlands, there's a 2% deduction from the pension income. 

 

Some employers in The Netherlands offer within the legal working age a pension scheme as an additional pension income. However, this is not mandatory by the employer to provide the pension scheme. You can also arrange your private pension plan as an extra income for when you retire. You can set this up with many pension planning companies in The Netherlands.  

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