The complete guide to offering employee benefits in the Netherlands

What employee benefits are mandatory in the Netherlands?

The Dutch government has carefully regulated many aspects of employment law to ensure employees in the Netherlands are well protected and have numerous rights, which is almost certainly a big reason Dutch employees experience a more satisfying work-life balance than many other nations. The most important pieces of employment legislation in the Netherlands are codified in Book 7 of the Dutch Civil Code, but collective bargaining agreements, additional legislation, and even employment contracts all influence employment law in the Netherlands.

Among the many aspects of employment covered, Dutch laws have set mandatory benefits programs that are not only legally required, but also carry penalties should an employer hire an employee and fail to offer one or more of the statutory benefits. There is some good news, however: Not only will this guide provide a straightforward look at the mandatory benefits for employees in the Netherlands, but you are only responsible for providing these benefits packages to employees–independent contractors are not entitled to receive any of these benefits.

It’s crucial to understand that the statutory benefits set the minimums for what an employer is allowed to offer. You can certainly provide more benefits to your employees, and many companies choose to make their benefits package more attractive in today’s competitive job market.

Pensions

The Netherlands has the high distinction of offering a world-class pension system that has three components: The Dutch State Pension System, a Workplace Pension, and a Private Pension. The latter is optional for employees and they are responsible for contributing to the Private Pension system on their own; the Dutch State Pension System, or AOW, is similar to social security in the United States and is covered by the taxes Dutch citizens pay as well as their mandatory social security contributions, which are taken out of their paychecks.

Employers and employees alike are responsible for providing contributions to Workplace Pensions. Though not obligatory, it is common practice for employers to offer a workplace pension plan. It is very rare for employers to not provide a workplace pension. The labor market in the Netherlands is very competitive and there is a high standard and expectation of employer benefits in place. The company that provides the pension plan will calculate how much both parties must contribute to the fund each year, but generally, employees are responsible for contributing 8% of their paychecks each month, while employers must contribute 18% to the fund monthly.

Vacation entitlements

In the Netherlands, Dutch employees are entitled to a minimum of 20 paid statutory vacation days off per year. Interestingly, this doesn’t just apply to full-time employees: part-time employees are also entitled to receive four times the amount of hours they worked in a week as statutory vacation time.

As an incentive, the majority of employers offer more than the 20-day statutory minimum; on average Dutch employees commonly receive between 24 and 32 paid days off each year. Furthermore, it’s common policy to allow workers to roll over unused days into the following year and to offer a program through which employees can purchase additional vacation days if they need them.

One final important note: Public Dutch holidays cannot be included in the total vacation days an employee receives. These are separate.

Sick leave

Unlike in the United States, there is no set number of sick days Dutch employees are limited to. The policies governing sick leave in the Netherlands are straightforward. If an employee is too sick to work, all they need to do is call their employer and let them know (note: They are not required to share their diagnosis with their employer). Employers are required to pay employees who are taking sick leave at least 70% of their wages. If this number would result in the employee receiving less than minimum wage, they’ll get minimum wage instead. Salary amount to be paid during illness is stated in the employment agreement.

Employers are required to provide paid sick leave to ill employees for up to two years.

Health insurance

All Dutch employees are required to be covered by a health insurance policy. Generally, according to Netherlands employment laws, managing healthcare, including paying for the policy, falls on the shoulders of the employees. However, employers are still required to make a contribution to the Health Insurance Act, also called the ZVW. In 2023, the contribution rate of 6.68%, capped at a wage of 66, 956 EUR.

Long-term care

Employees in the Netherlands are protected by the Long-Term Care Act or WLZ. While there are no set contribution rates employers must pay into this fund, they are required to ensure their workers are covered under this benefit. Employees will have their contributions automatically deducted from their paychecks each month.

What employee benefits are optional in the Netherlands?

Thus far, the benefits we’ve covered in this guide have been the statutory minimums the Dutch government requires all employers in the Netherlands to provide. However, many Dutch employers don’t just stop at the required benefits. They frequently include additional supplementary benefits and perks in their benefits packages to ensure they stand out to prospective employees and increase their team member retention rates. Below, we’ll discuss a few of the most common supplementary benefits.

Allowances for employees who work remotely

Dutch companies that hire employees who will spend either the majority or all of their time working from home often choose to defray some of the costs the worker might incur setting up their home office. This is a great perk to offer during a time when remote working is more popular than ever before. How much your company provides is really up to you. Some businesses offer financial help by assisting an employee with their internet bills or purchasing laptops and other home office equipment. Still, others go one step further and agree to finance continuing education for the employee, particularly if it will enhance their ability to perform well at their current job.

Something to keep in mind: Although you, the employer, won’t be taxed on these allowances, there are maximum percentages that are based on the amount the money spends on wages as a whole. With the work-related costs scheme (WKR), you as an employer can determine for yourself what you reimburse, give or make available to your employees untaxed. Think of gift vouchers, sports subscriptions, remote work allowance or Christmas packages.

How does the work-related costs’ scheme work?

The free space you can use tax-free for the employee is re-determined every year. In 2023, the discretionary margin on your fiscal wage up to and including € 400,000 is 3.0%. The free space in 2023 is 1.18% on the amount of the wage bill above € 400,000.

Finally, to defray the additional costs employees incurred working from home, many Dutch employees have provided remote employees with a monthly stipend, which is separate from the money they provide to help defray home office setups.

13th-month bonus

It’s customary for companies to provide a bonus to their employees at the end of the year. While the amount of the bonus and whether it’s performance-based or not is generally up to the employer, the Dutch approach the end-of-year bonus a little differently. Some employers go above and beyond by offering the 13-month bonus, which is essentially a full month’s pay given to employees at the end of the year. There is one caveat for employers, though: You cannot pick and choose who receives the 13th-month bonus. If you give it to one of your employees in the Netherlands, you have to give it to everyone.

Extended paternity leave

While most employers include policies that allow employees to either take or purchase additional days off, the Dutch have put a slightly new twist on additional leave. Recently, the government significantly extended the previous paternity leave policy (which only offered five days off to new fathers) to six (6) weeks.  Better still, the first week of paternity leave taken within four (4) weeks after the birth is paid in full; the remaining five (5) weeks must be taken within five (5) months after the birth and can be expected to receive 70% of the maximum daily wage designated by the government and indexed 2x per year (EUR 264.57 per day or EUR 5754.40 per month) while they’re out.

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Disclaimer: Rippling and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal, or accounting advice. You should consult your own tax, legal, and accounting advisors before engaging in any related activities or transactions.