Working with Employees

Hiring Employees: What Do You Need to Arrange?

When a company hires employees, there are several matters that need to be arranged and a number of important points to consider. This article will help you get started.

Basic Contract with an Occupational Health and Safety Service

Every employer must have its own agreement with an occupational health and safety service or an occupational physician. This is known as the basic contract.

The basic contract sets out the working arrangements for the tasks for which employers are required under the Dutch Working Conditions Act (Arbowet) to obtain assistance from occupational health and safety experts in carrying out their prevention and protection responsibilities. These experts are the occupational physician, occupational safety specialist, occupational hygienist, and work and organisational psychologist.

Under the Dutch Working Conditions Act, employers are required to obtain professional assistance with the following tasks:

• Sickness absence support: guidance and support for employees who are absent due to illness.

• Risk Assessment and Evaluation (RI&E): reviewing and advising on the risk assessment and evaluation.

• Periodic Occupational Health Examination (PAGO): regular assessments of work-related health risks. Employers must offer employees a PAGO, but employees decide for themselves whether to take part.

• Pre-employment medical examination: an examination to assess whether an applicant is medically fit for a particular role. Employers may only require such an examination in specific, exceptional circumstances. The rules are set out in the Dutch Medical Examinations Act (Wet op de Medische Keuringen).

• Access to an occupational physician: employers must ensure that employees can access an occupational physician, for example through open consultation hours.

The cost of a basic contract varies by occupational health and safety service provider. The most basic option covers only the basic contract, including registration with the service provider and access to the portal for reporting sickness absence. Services such as consultations with an occupational physician are not included and will be charged separately. This option may be attractive for employers with low sickness absence rates.

Employers with high sickness absence rates may opt for a more comprehensive contract that also includes services such as support during the first two years of incapacity for work. The cost will depend on the occupational health and safety service provider selected.

Please note: If the Dutch Labour Inspectorate finds that an employer does not have a basic contract, it may impose an immediate fine. The fine ranges from €750 for an incomplete basic contract to €1,500 if no basic contract is in place at all.

Preparing a Risk Assessment and Evaluation (RI&E)

The Dutch Working Conditions Act requires every employer to implement an occupational health and safety policy aimed at ensuring the best possible working conditions.

The RI&E initially provides a general overview of the hazards and risks within your company. This may show that more detailed assessments are required, for example in relation to noise, hazardous substances, employee well-being, machinery safety, biological agents, and vibration. Carrying out these additional assessments is also part of an employer’s obligations.

Companies with 25 employees or fewer do not have to have their RI&E reviewed by an expert if they can use an approved RI&E instrument. Your occupational health and safety service provider can prepare an RI&E for you. Please note that this service will involve additional costs.

Is your occupational health and safety policy up to date? Use the Healthy and Safe Working Self-Inspection Tool.

Sickness Absence Insurance

When an employee becomes unable to work due to illness, the employer is generally required to continue paying the employee’s salary for up to 104 weeks, or until the end of a fixed-term employment contract if that occurs earlier.

As the costs of long-term sickness absence can be substantial, it is advisable to take out sickness absence insurance.

The cost of this insurance depends on the level of cover (70%–100%), whether employer social security contributions are included, and the selected excess period during which the employer bears the financial risk. For a quotation, we recommend contacting your insurance broker.

Group Personal Accident Insurance and Liability Insurance

Employers can take out group personal accident insurance to provide cover for employees in the event of an accident. This insurance can cover all employees within the company, including employees on permanent or temporary contracts, interns, and seasonal workers.

Group personal accident insurance provides a benefit to employees in the event of permanent disability caused by an accident, or to their surviving relatives in the event of death. Accidents are generally covered both during and outside working hours.

For a quotation for group personal accident insurance, we recommend contacting your insurance broker.

Administrative Requirements

Before an employee starts working for you, several matters need to be arranged.

First, you must establish the employee’s identity. This is known as the verification obligation. The employee must present the original identity document, such as a passport, identity card, or residence document. A driving licence is not a valid identity document for payroll administration because it does not state the holder’s nationality.

When checking an identity document, you should verify the following:

• Photograph: does the photograph match the person standing in front of you?

• Physical characteristics: do the stated physical characteristics, such as height and age, appear to be correct?

• Signature: ask the employee to sign in your presence for verification, or check whether the signature matches the one on the payroll tax form.

• Nationality: is the employee’s nationality stated, and is the employee permitted to work in the Netherlands?

• Validity: has the document’s expiry date passed?

The employer must personally make a clear copy of the identity document. The document number, photograph, and citizen service number (BSN) must be clearly legible. You must retain this copy in your own records in case of an inspection by, for example, the Dutch Tax Administration or the Dutch Labour Inspectorate.

The copy must be retained until at least five years after the calendar year in which the employee leaves the company.

If the Dutch Tax Administration conducts a tax audit and no clearly legible copy of the employee’s identity document is available, the employee may be classified as an anonymous employee. This means that the net amount paid to the employee is grossed up using a payroll tax rate of 52%, without taking into account the maximum contribution base for employee insurance schemes. Any additional tax assessment, plus a possible fine, is payable by the employer.

If the identity document expires at a later date, you do not need to make a new copy. For payroll administration purposes, a copy of an identity document that was valid when the employee started employment must be available.

Hiring Temporary Agency Workers

If you hire a temporary agency worker, you must also personally check the original identity document before the worker starts working for you.

You are not permitted to retain a copy of the identity document in your own records because you are not the worker’s employer; the temporary employment agency is. However, if the agency worker is a national of a country outside the European Economic Area (EEA), you must retain the relevant information for five years. You must also check whether the individual is authorised to work in the Netherlands.

Payroll Tax Credit Form

In addition to providing a copy of their identity document, employees must confirm in writing and date their declaration stating whether the payroll tax credit (loonheffingskorting) should be applied to their salary.

Although the payroll tax declaration has not been subject to a prescribed format for many years, the former standard form is still widely used. It is now called the Model opgaaf gegevens voor de loonheffingen. The employee must complete, sign, and submit the form to the employer.

Employment Contract

Finally, we recommend drawing up a written employment contract. In principle, a verbal employment agreement is also legally binding, but it is much more difficult to prove what was agreed. In addition, certain clauses, such as a probationary period, must be agreed in writing.

For employees with an indefinite-term contract and fixed working hours, the unemployment insurance contribution (WW-premie) is 5% lower than for employees on fixed-term contracts and/or employees whose working hours are not fixed, such as on-call workers.

To apply the lower contribution rate, the employer must have an employment contract for an indefinite period signed by both parties.

We can assist you with preparing employment contracts.

On-Call Workers

If you employ on-call workers, you are required to offer them a contract with fixed working hours each time they have worked for you for 12 months. The offer must be based on the average number of hours per week they worked for you during those 12 months.

The employee can accept the offer and become a part-time employee, or reject it and remain an on-call worker.

The offer must be made in writing, and the on-call worker must indicate whether they accept or reject it. Both parties must sign the document.

If the employer fails to make this offer, there may be significant financial consequences. The employee may submit a claim for unpaid wages. This claim becomes time-barred only after five years and is calculated based on the average number of hours worked per week during the preceding 12 months for which the offer should have been made.

Notification of Contract Expiry (Notification Penalty)

A notification period applies to employees with fixed-term employment contracts lasting at least six months.

You must inform these employees no later than one month before the contract’s end date whether the contract will be renewed and, if so, under what conditions, or whether it will end.

If you forget to provide this notification or do so too late, the employer must pay the employee compensation, known as the notification penalty. The amount depends on how late the notification is and can be up to one month’s salary.

If the employer fails to pay the notification penalty, the employee can claim the compensation up to two months after the contract has ended.

Transition Compensation

In principle, you must pay transition compensation (transitievergoeding) when you dismiss an employee or do not renew a fixed-term employment contract.

Transition compensation may also be payable when an employee resigns because of seriously culpable acts or omissions by the employer. The obligation to pay transition compensation also applies to seasonal workers.

In certain circumstances, the employer is not required to pay transition compensation. Examples include situations in which the employer and employee agree to end the employment relationship by mutual consent through a settlement agreement, or where the employee is under 18 and has worked an average of no more than 12 hours per week.

The amount of transition compensation depends on the employee’s gross monthly salary and the number of years they have worked for you. The employee is entitled to one-third of a gross monthly salary for each year worked, starting from the first day of employment. A maximum amount applies, which is indexed annually.

Employer’s Information Obligations

Under Article 7:655(1) of the Dutch Civil Code (Burgerlijk Wetboek), employers are required to provide new employees with certain information. In most cases, this information will be included in the employment contract.

The information includes:

• Employer’s name and address

• Place or places of work, which may include the employee’s home

• Employee’s job title or the nature of the work

• Working hours per day or per week

• Salary amount and payment intervals

• Employment start date

• Contract duration: fixed-term or indefinite-term

• Probationary period, including its duration where applicable

• Number of annual leave days

• Notice period

• Pension scheme, if applicable

• Non-compete or non-solicitation clause, where permitted

• Any applicable collective labour agreement (CAO)

With the introduction of the EU Directive on Transparent and Predictable Working Conditions on 1 August 2022, employers’ information obligations were expanded to include the following:

• Duration and conditions of the probationary period

• Working schedules:

  • For predictable working hours: the working days and times, and, where applicable, how changes to shifts are arranged.

  • For unpredictable working hours: an explicit statement that working times may vary, as well as the guaranteed paid hours, days, and times during which the employee may be required to work.

• Pay: the initial salary amount, the separate components of remuneration, and how these are calculated and paid.

• Paid leave arrangements within the company.

• Place of work where the employee does not work at a fixed location, for example when working from home.

• Any entitlement to training, including consideration of whether a training cost repayment clause is valid.

• Procedures for terminating the employment contract, not just the notice period.

The company’s paid leave arrangements can be included in an employee handbook, unless they are already set out in an applicable collective labour agreement (CAO). Please note that this covers all forms of leave, including paid parental leave, care leave, and other types of leave.

Make the Most of Your Payroll Portal

We use Nmbrs payroll software. This application offers a wide range of options for digitising personnel administration, including employee personnel files.

Please contact us if you would like an explanation of the available features or a demonstration.