Hiring in the Netherlands: A Comprehensive Guide for 2026

Introduction

Hiring remote employees in the Netherlands means working within Dutch employment law, which requires registration with the Kamer van Koophandel (KVK) and Belastingdienst, sets working hours and statutory benefits, and governs termination through a formal approval process rather than employer discretion.

Foreign companies without a local entity typically hire through an employer of record (EOR) that holds the legal employment relationship and completes this registration on their behalf.

Termination in the Netherlands isn't a unilateral decision. Employers generally need permission from either the UWV (Employee Insurance Agency) or the sub-district court before a dismissal is valid, and choosing the wrong route can leave the termination legally void.

A statutory transition payment also applies regardless of route, calculated by tenure and capped annually, and companies used to notice-based termination elsewhere often underestimate how procedural this process is until they're already mid-dismissal.

In this guide, we cover how to hire in the Netherlands with or without a local entity, what it costs, the country's core labor laws, the main compliance challenges, and how an EOR supports compliant hiring from day one.

How to hire remote employees in the Netherlands?

Hiring remote employees in the Netherlands means working within Dutch employment law, which sets out working hours, employment contracts and conditions, minimum wages, and statutory benefits for every employment relationship in the country. Foreign companies cannot run local payroll directly. They need either a registered local entity or an employer of record (EOR) that holds the legal employment relationship and registers the hire with the Kamer van Koophandel (KVK) and the Belastingdienst.

Registering a local entity in the Netherlands means incorporating with the KVK and registering separately with the Belastingdienst before a single employee can be added to payroll, a process that typically takes many weeks, even months, to organize and operate as usual. Choosing this option keeps a company carrying the constant risks of high start-up costs, legal fees, and the liabilities of a long-term commitment, all resting on the parent company.

Hiring contractors looks lighter on paper, but recent Dutch reform has tightened that path. Under the new VBAR Act, a contractor earning below roughly €36 per hour and working under a company's direction can be presumed to be an employee from July 2026 onward, which exposes the company to back-dated registration, unpaid statutory contributions, and misclassification fines.

There are three main ways to hire remote employees in the Netherlands:

• Setting up a local entity
• Hiring employees via EOR
• Hiring contractors via AOR

Here's what each option involves.

Setting up a local entity

Directly hiring international workers in the Netherlands by setting up a local entity means incorporating with the KVK, registering with the Belastingdienst, and building out the office foundation, legal, and administrative infrastructure to run Dutch payroll in-house. This route is usually time-consuming and capital-intensive, and it tends to make sense for companies planning a large, long-term headcount in the country rather than a first hire.

How to hire employees through EOR in the Netherlands?

Setting up a local entity in the Netherlands means navigating KVK incorporation, Belastingdienst tax registration, and social security enrollment, a process that can take many weeks, even months, before your first hire is on payroll.

Skuad helps remove that dependency. Skuad acts as the legal employer in the Netherlands, so your company can hire, onboard, and pay employees without entity setup, local legal counsel, or in-house Netherlands payroll infrastructure.

Here is what Skuad helps with:

• Employment contract generation across 160+ countries, aligned with local labor laws and statutory requirements
• Statutory contribution workflows across supported markets, covering applicable social insurance and pension obligations
• Payroll processing in 70+ currencies with accurate tax withholding and statutory deductions
• Statutory benefit administration, including paid leave, the mandatory holiday allowance, and parental entitlements in line with local requirements
• Termination and offboarding support aligned with local labor requirements across supported markets
• Background verification covering identity, employment history, and criminal records before onboarding

How to hire contractors through AOR in the Netherlands?

Hiring contractors via AOR gives a company less control over day-to-day operations and opens doors for possible compliance risks and misclassification fines. Under the VBAR Act, a contractor working under company direction for below roughly €36 per hour can be presumed to be an employee from July 2026 onward, regardless of how the contract is titled.

An Agent of Record helps reduce that exposure. Through Skuad's AOR and contractor management solution, you can engage contractors in the Netherlands on compliant terms, or move them into employment when the relationship requires it, without carrying the classification risk yourself.

Here is what Skuad helps with:

• Locally compliant contractor agreements that reduce misclassification exposure across supported markets
• Worker classification checks that flag risk before a contract is signed
• Invoice generation, approval workflows, and payment processing in local currency
• Multi-currency contractor payouts across 70+ currencies with no manual reconciliation
• Contractor records, contracts, and payment history in a single dashboard alongside full-time employees
• Support for converting a contractor to full-time employment through Skuad's EOR when the relationship changes

See AOR pricing plans and what's included

What is the cost of hiring remote employees in the Netherlands?

The cost of hiring remote employees in the Netherlands is rarely just the salary you agree on. Statutory contributions, the hiring method, and administrative setup can all increase the total cost. Here is how those costs break down:

Beyond setup, hiring in the Netherlands carries both direct and indirect ongoing costs. Direct costs include base salary, statutory benefits like paid time off and healthcare allowance, and talent discovery and acquisition expenses tied to sourcing and background verification. Indirect costs include administrative costs for HR and payroll operations, and legal and compliance costs tied to labor law adherence and potential misclassification exposure.

• Employer social contributions: Dutch employers pay into a layered social insurance system, with base contributions typically running 18% to 22% of gross salary. Pension contributions sit on top of this and vary by sector, since most pension schemes in the Netherlands are set through each industry's collective labor agreement (CAO) rather than a single national rate, so the actual pension load depends on which CAO applies to the role being hired.
• Minimum wage: Employers must also budget against the Dutch statutory minimum wage, currently €14.99 per hour for employees aged 21 and older as of July 2026, adjusted twice a year every January and July. Since 2024, this is set hourly rather than as a fixed monthly rate, so cost estimates need to be built from the applicable hourly figure directly.
• Mandatory holiday allowance (vakantiegeld): On top of base salary, Dutch employers must pay a statutory holiday allowance equal to 8% of an employee's gross annual salary, typically paid as a lump sum in May or June. This brings the effective minimum compensation to roughly €16.19 per hour once the allowance is factored in, and it's easy to underbudget if a company is costing roles off base salary alone.

Skuad's employee cost calculator helps estimate the total cost of employing someone in the Netherlands, including salary, employer contributions, benefits, and taxes.

Calculate the full cost of hiring an employee, including salary, taxes, and contributions

What are the employment laws in the Netherlands?

Dutch employment law sets clear rules across a few core areas, most of which differ meaningfully from what employers may be used to elsewhere.

The court approval requirement is the one most foreign employers underestimate, since it means termination in the Netherlands is a formal process with its own timeline, not a unilateral decision.

What are the challenges of hiring in the Netherlands?

Hiring in the Netherlands can involve more than meeting standard payroll and employment requirements. Employers may need to navigate formal termination procedures, statutory severance, contractor classification rules, collective labour agreements, and additional immigration requirements for non-EU talent. These factors can affect hiring timelines, employment costs, and ongoing workforce administration. The following challenges give a clearer picture of what companies may need to plan for when hiring in the Netherlands, starting with the country’s formal dismissal process.

1. Termination requires third-party approval, not just notice

Dutch employers generally can't dismiss an employee unilaterally. Termination requires permission from either the UWV or the sub-district court, depending on the ground for dismissal, unless both parties agree by mutual consent. Get the ground or the process wrong, and the dismissal simply isn't legally valid. Skuad's Netherlands employment laws guide covers termination procedures and notice requirements in more detail.

2. A statutory severance payment applies regardless of route

Dismissed employees are entitled to a transition payment (transitievergoeding), roughly one-third of gross monthly salary per year of service, capped at a government-set maximum adjusted annually. This applies whether termination goes through mutual agreement, UWV, or the court.

3. Contractor misclassification risk has tightened recently

Under the new VBAR Act (Clarification of Assessment of Employment Relationships and Legal Presumption Act), a contractor earning below roughly €36 per hour and working under a company's direction can be presumed to be an employee from July 2026 onward, regardless of contract title. This raises real exposure for companies that lean on Dutch contractors instead of employees.

4. Sector-specific collective agreements layer on top of statutory minimums

Many Dutch industries operate under a CAO (collective labour agreement) that sets pay scales, working hours, and leave terms above the statutory floor. The applicable rules can vary meaningfully by sector, so the same role can carry different obligations depending on the industry it sits in.

Check the Netherlands payroll, benefits, and taxes guide to understand how the sector-level obligations feed into payroll.

5. Sponsoring non-EU talent requires becoming a recognized sponsor first

To hire a non-EU, non-EEA, non-Swiss national under the Highly Skilled Migrant route, a company must first become an IND-recognized sponsor, which costs roughly €5,080 (or €2,539 for smaller or younger companies) and takes up to 90 days, before any individual permit application can even begin. Salary thresholds also apply, currently €5,942/month for hires aged 30 and over, and €4,357/month for those under 30, excluding the 8% holiday allowance. Skuad's Netherlands work permit and visa guide covers the TWV and GVVA routes this sponsorship requirement feeds into.

Skuad supports the work permit process on your behalf, including:

• Supporting work permit and visa applications for foreign employees joining your team
• Helping coordinate documentation with local immigration authorities
• Assisting with permit renewals and conversions as residency categories change
• Helping track salary threshold compliance, documentation requirements, and deadlines across the full permit lifecycle
• Helping keep your team aligned with compliance requirements as immigration rules and sponsor obligations change

Hire in the Netherlands without setting up an entity

Hiring in the Netherlands can involve several layers of administration, from employment and payroll requirements to contractor classification and immigration processes. For companies entering the market for the first time, setting up and maintaining a local entity can add further operational work.

An employer of record can provide another route. Skuad helps companies hire, onboard, pay, and manage employees in international markets without requiring them to establish their own local entity first. Skuad also supports workforce administration across areas such as contracts, payroll, benefits, compliance, and global immigration.

For companies building a team in the Netherlands, this approach can help simplify the operational side of international hiring while keeping workforce management more centralized.

Book a demo to learn how Skuad can support your global hiring plans

FAQs

1. What is an employer of record in the Netherlands?

An employer of record in the Netherlands is a licensed local entity that acts as the legal employer for your workers, registering with the Kamer van Koophandel (KVK) and Belastingdienst, running payroll and statutory contributions, and administering benefits like the mandatory 8% holiday allowance, so foreign companies can hire without registering their own entity.

2. What is the minimum wage in the Netherlands?

The Dutch statutory minimum wage is set hourly rather than monthly, and adjusted twice a year, every January and July. As of July 2026, it stands at €14.99 per hour for employees aged 21 and older, before the mandatory 8% holiday allowance is added on top.

3. Can a foreign company hire in the Netherlands without a local entity?

Foreign companies can typically hire in the Netherlands through an EOR without registering a local entity, since the EOR holds the legal employment relationship, handles KVK and Belastingdienst registration, and manages payroll and statutory contributions on the company's behalf from the first hire.

4. What compliance risks should employers know about in the Netherlands?

The Netherlands has tightened rules on false self-employment: under the VBAR Act, contractors earning below roughly €36 per hour and working under company direction are presumed to be employees from July 2026 onward, which raises real reclassification risk for companies that rely heavily on Dutch contractors.

5. Is an EOR or a local entity better for hiring in the Netherlands?

This usually depends on scale and timeline. An EOR generally suits smaller or early-stage teams in the Netherlands, since setting up a local entity typically takes six to ten weeks and requires KVK and Belastingdienst registration. A local entity tends to make more sense once headcount justifies running Dutch payroll directly.

6. How long does it take to onboard an employee in the Netherlands through an EOR?

Onboarding through an EOR in the Netherlands generally takes one to two weeks once the employment contract and Belastingdienst registration are in place. Hiring a non-EU national who needs a work and residence permit usually extends that timeline considerably.