To successfully expand your business in the Netherlands, determining the right compensation and benefits for employees should be a top priority. Companies must determine the proper wages, bonuses, and any supplemental benefits to remain competitive and secure talent, all while following the country’s compensation laws and requirements.
To help simplify the process, here is an overview of key aspects companies should know regarding compensation and benefits in the Netherlands.
The Netherlands compensation laws
As of July 2023, the minimum wage in the Netherlands is EUR 1,995 per month for employees 21 and older. However, the minimum wage rate could vary for employees covered under a Collective Bargaining Agreement (CBA). It is best practice to outline the applicable minimum wage in a written employment contract to avoid any misunderstandings.
Every employee in the Netherlands is entitled to an 8% vacation allowance. Workers accrue this allowance monthly, and employers usually pay it out once a year in May.
Guaranteed benefits in the Netherlands
When designing your Netherlands benefits management strategy, it’s important to include guaranteed benefits first. Paid vacation time often depends on the applicable CBA. The statutory minimum annual holiday entitlement is 20 days for full-time employees. However, certain specialized professionals may receive 23-25 days per year. Some CBAs also grant additional leave days to older employees (55+ years).
Other required provisions in the Netherlands include:
- Social security contributions
- Annual leave
- Holiday allowance
- Parental leave
Holiday allowance is distributed in the form of a single payment for annual leave, and it should be 8% of an employee’s gross yearly wage.
Maternity and paternity leave is another guaranteed benefit in the Netherlands. Pregnant employees are entitled to 16 weeks, starting 4 to 6 weeks before the expected birth date and at least 10 weeks after giving birth. Non-birthing parents are entitled to 5 days of paid leave.
The Netherlands benefits management
The second important aspect of crafting a Netherlands benefits strategy includes offering fringe benefits. Employers in the Netherlands often provide a travel allowance that can go toward a leased car, or fully cover an employee’s train or bus fares for commuting.
Additional to the state pension, almost all employees in the Netherlands participate in a private pension through their employer.
Restrictions for benefits and compensation
Make sure the benefits you provide meet or exceed the country’s compensation laws and CBA requirements (if applicable). If your industry doesn’t have a CBA, you must provide the minimums guaranteed by law to stay compliant.
The Netherlands competitive benefits planning
As your company grows in a new country, benefits management plays an important role in your success. When you create a competitive benefits plan, it’ll help your company stand out in the labor market and improve employee morale.
The Netherlands supplemental benefits
The perks and provisions you provide will show employees how much you value their hard work. A well-developed benefits plan can improve job satisfaction and boost retention rates. Competitive benefits can also encourage workers to apply for your vacancies.
Possible fringe benefits can include:
- Company bicycles
- Tuition reimbursement
- Flexible working hours
- Gym memberships
- Upskilling opportunities
Designing employee benefits plans in the Netherlands
The challenge of employee benefits planning is meeting your workers’ needs without exhausting your company’s resources. The goal is to find a balance between your financial capabilities and employee expectations. You can follow a few basic steps as you start planning.
1. Establish a company budget and goals.
Understanding your income and expenses can help you allocate funds to your benefits plan. Take the time to estimate your earnings and how your benefits spending will fit into them.
2. Research industry standards.
Qualified jobseekers often compare benefits offerings to determine which employers represent their needs. To make your plan competitive, you need to meet or exceed the provisions other companies in your industry offer.
Research businesses similar to yours to find out which benefits can be a valuable investment. You can also learn more about workers’ needs by conducting surveys or interviews with employees in the area.
3. Design your benefits plan.
With a budget and an understanding of employee needs and expectations, you can create your plan. Start by allocating funds to the required benefits, then dedicate your remaining budget to additional provisions that reflect industry standards.
The average cost of benefits
The total amount for benefits varies depending on the industry and type of provisions. As a result, it’s best to set a personal budget based on earnings and expenses so you can allocate funds accordingly.
How to calculate benefits
While calculations will look different for every benefit, you can find some guidance in the labor regulations. For example, social security contributions include a set percentage for employees and employers. Employees must contribute 27.65%, which includes:
- 17.9% for old-age pension
- 1% for spouse and dependent support
- 9.65% for long-term care
Employers pay social security toward employment insurance, which includes:
- 7.94% for unemployment
- 8.55% for occupational disability
- 0.5% for childcare allowance
How are employee benefits taxed in the Netherlands?
All benefits are classified as employment income in the country. As a result, all provisions need a monetary amount attached to them so employees can include them in their annual earnings.
Employee health benefits
The country has a universal healthcare system for residents that combines public and private care. While most healthcare is free to residents, the country requires every working person to hold a basic private insurance scheme to fill any gaps in the public system.
Employers contribute to these health insurance minimums through social security contributions at a rate of 6.7% of employees’ incomes.
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