Challenges Faced by Companies Set Out to Hire in Netherlands

Before getting into the specifics of how to hire in Netherlands, you should get familiar with the key challenges that may slow your efforts to hire Dutch employee legally.

1. Complex Employment Laws & regulations

The Netherlands has detailed policies for working hours, non-standard working times, work breaks, vacations, annual leave, special types of leave (like maternity, illness, and others), minimum wages, holiday allowances, and more and it gets quite overwhelming for employers to wrap their heads around them. 

Moreover, employers are required to manoeuvre a landscape where collective bargaining of working hours is common. So, a thorough and careful understanding of the complex laws and regulations is necessary for efficient remote workforce management with compliance.

2. Dynamics of Employment Market & Talent Discovery

The Dutch employment market displays an abundance of stable and flexible employment contracts like permanent, part-time, short-term, and long-term jobs, which makes it more difficult for international employers who intend to hire locally in the Netherlands. 

While it’s true that the Netherlands has many professionally skilled workers, to attract and hire the best candidates legally, companies need to plan out their hiring strategies with undivided attention. 

This means that employers should have a clear understanding of direct hiring costs like average minimum wage and indirect costs associated with hiring employees in the Netherlands like business registration, workplace safety assessments, and minimum wage compliance.

3. Intricate Payroll Management

Extensive labor laws in the Netherlands make payroll administration a complicated affair. Employers must learn to be immaculate while calculating and withholding various contributions and taxes like social security, income tax, healthcare, and pension contributions. 

Moreover, there are stringent rules for overtime pay, bonuses, and other allowances that employers must follow. To ensure compliance when hiring international workers in Netherlands, employers should gain expertise in payroll laws and install a powerful payroll system, which eventually drains a lot of company resources and energy.

While these challenges might discourage international hiring efforts, companies can apply the best hiring practices to overcome them. Here’s a payroll guide for the Netherlands to improve your understanding.

How to Hire in Netherlands

Contrary to the buzz around the skilled workforce in the Netherlands, most of it remains untapped. And companies have started to take notice of this vast potential and they are quickly turning the gears of hiring in the Netherlands. 

If you’re planning to build a remote team in the Netherlands, here are the three best ways to hire in Netherlands.

Whether you’re looking to hire employees in Netherlands or hire contractors in Netherlands, these ways will help you hire Dutch candidates legally.

1. Directly hiring international workers in Netherlands by setting up a local entity.
2. Hire Dutch employees legally through a Netherlands EOR service.
3. Hire contractors in Netherlands via an AOR service.

An employer could choose to set up a local entity for direct hiring or use an efficient EOR/AOR platform, like Skuad, to hire employees and contractors legally. Here’s a hiring guide that helps you hire in the Netherlands.

To understand these ways better, here’s a comprehensive comparison table.

Now, let’s take a detailed look at the best ways to hire locally in the Netherlands.

1. Setting up a local entity

Companies may opt to hire local talent directly by setting up an office in the Netherlands, and this does give more control over operations, whether business or hiring. One gets to improve their brand visibility locally, connect the dots of presence globally and it helps in the long run.

However, choosing to set up a local office in the Netherlands to hire Dutch employees legally invites greater risks like high start-up costs for administrative setup, legal fees, liabilities of a long-term commitment, and all these responsibilities are endured by your parent company.

So, choosing this option keeps your company worried about the constant risks and denies your right to acknowledge and celebrate your expansion into the Netherlands.

2. Hire employees in Netherlands through an EOR, like Skuad

Using a Netherlands EOR service, like Skuad, is one of the best ways to hire Dutch employees legally. Here’s how it works.

Skuad will hire employees in the Netherlands on your account. This enables companies to hire Dutch candidates legally without having any physical presence in the country.

What partnering with Skuad will mean for your company

Your company gets a quick footing in the Netherlands market, faster onboarding, full compliance with Dutch employment laws is ensured, and relaxed accountability to improve your focus on business operations. 

Skuad manages HR, payroll, benefits, and the whole works with maximum efficiency at a minimum cost.

3. Hire contractors in Netherlands with a leading AOR, like Skuad

If a company is doubtful and feels it’s complicated to hire employees in Netherlands, they can simply hire contractors for short-term work, and test out the waters before taking a deep dive into the employment landscape of the Netherlands. One of the top ways to hire contractors in Netherlands is by utilizing Skuad’s AOR service.

Hiring contractors gives the company less control over the day-to-day operations, and opens doors for possible compliance risks, and misclassification fines. Still, It’s flexible and cost-effective, comes with reduced administrative burden, and the work contract can be molded per project requirements.

Partnering with Skuad ensures contractual agreements that are compliant & flawless, and on-time payments. You get a great experience of hiring contractors in the Netherlands at optimal costs.

Costs Related To Hire in Netherlands

There are many direct and indirect costs associated with hiring in Netherlands. So, companies must plan their hiring strategies with close consideration of any financial ramifications. Here’s a brief look at some of the costs.

Direct Costs

• Salary & Wages - This number varies based on the skills, experience, and industry of the employee.
• Employee Benefits - This includes paid time off, social security & retirement contributions, healthcare allowance, and other perks.
• Talent Discovery & Acquisition - Expenses related to sourcing, interviewing, and hiring Dutch candidates legally, and other spends related to recruitment agencies, job advertising, and background verification.
• Onboarding & Training - Costs associated with inducing new employees into your organization, making sure they are provided with all the relevant information, resources, and tools.

Indirect Costs

• Administrative Costs - Includes expenses related to HR operations, benefits management, payroll processing, and labor law compliance.
• Legal & Compliance - Costs associated with legal liabilities, misclassification fines, penalties, or any other non-compliance faults.
• Workplace Safety & Health - To ensure the workplace is compliant with all the safety regulations and prevent any occupational hazards.

To know the exact cost of hiring employees in the Netherlands, use Skuad’s cost calculator to gain the necessary insights.

A Brief About Employment Laws, Payroll, Taxes, and Compliance Risks in Netherlands

It feels like a bundle of riddles to hire in Netherlands, while it seems complicated, it’s simple to deal with once you implement an effective strategy, like using an EOR to hire Dutch employees legally.

Here are a few elements of compliance and laws that should be kept in mind when hiring employees or contractors in the Netherlands.

Sailing through the labor laws of the Netherlands necessitates businesses to follow certain regulations in terms of 

• Working hours
• Employment contracts & conditions
• Minimum wages
• Statutory benefits
• Data privacy & security
• Overtime pay
• Employer & employee contributions
• Income tax
• Leaves
• Insurance
• Social security contributions

Businesses should also be aware and steer clear of compliance risks like inaccurate payments & taxes, establishment risks, misclassification risks, and risks related to immigration and talent mobility.

Hire in Netherlands with Skuad

Skuad helps converge all your hiring and management efforts across 160+ countries.

You can hire, manage, and pay employees and contractors legally in the Netherlands, with Skuad as your EOR partner. 

This enables you to focus all your resources and energies on growing your business without having to worry about any legal, payment, or compliance issues.

Explore Skuad today!

FAQs

What is the average cost per hire in the Netherlands?

The average cost per hire in the Netherlands varies by industry and job role, but it generally includes expenses such as advertising, recruitment agency fees, and time spent by the HR department, averaging around €4,500 to €5,000 for mid-level positions.

How to hire an employee in the Netherlands?

To hire an employee in the Netherlands, you must register your business with the Dutch Chamber of Commerce, draft a compliant employment contract, register the employee with the Dutch tax office, and ensure adherence to Dutch employment laws and regulations. Or you may simply choose Skuad as your EOR to hire Dutch employees legally.

What is a good salary in Netherlands?

A good salary in the Netherlands depends on the job, industry, and location, but as of 2023, a gross monthly salary of around €3,000 to €4,000 is considered good for a single person covering living expenses comfortably in most cities.

What is the employee law in Netherlands?

Dutch employment law covers regulations on employment contracts, dismissal, working hours, holidays and leaves, minimum wage, and health and safety. It emphasizes strong protection for employees, including extensive dismissal protections and comprehensive benefits.