When hiring in the Netherlands, it’s not enough to offer a good salary – statutory employee benefits play a critical role in both legal compliance and workforce satisfaction. Dutch labour law is built on a strong foundation of employee rights, and local or international employers must meet specific obligations regarding paid leave, sick pay, holiday allowance, and more.
For international companies expanding into the Netherlands, understanding these requirements is essential. Failing to comply can result in penalties, employee disputes, or damage your company’s reputation. But with the proper knowledge and, in many cases, the right local partner, you can meet these obligations confidently.
This guide’ll explain the mandatory benefits employers must provide in the Netherlands and how a Dutch Employer of Record (EOR) can help you manage these benefits without setting up a local legal entity.
Why employee benefits matter in Dutch employment contracts
Employee benefits are not just optional extras in the Netherlands—they are a legal requirement. Dutch labour law ensures that employees have access to paid time off, continued income during illness, family leave, and financial support through pensions or allowances.
These benefits must be clearly outlined in written employment contracts, which are mandatory for all workers. Additionally, many Dutch sectors operate under collective labour agreements (CAOs) that set further benefit standards, such as extra vacation days or pension contributions. Employers are expected to comply with both statutory and industry-specific requirements.
For international employers, particularly those unfamiliar with Dutch employment law, keeping up with these standards can be complex, but it’s also non-negotiable.
Paid holiday entitlement
By law, employees in the Netherlands are entitled to a minimum of four times the number of days they work per week as paid annual leave. Full-time employees working a five-day week equals 20 days of paid holiday per year.
This statutory minimum must be offered, but many employers provide additional leave days through contracts or CAOs to remain competitive. Unused statutory leave must be taken within six months after the calendar year’s end unless the employee could not take the leave due to special circumstances.
Holiday entitlement must be calculated proportionally for part-time employees and clearly stated in the employment contract.
Holiday allowance (vakantiegeld)
One of the most distinct features of Dutch employee benefits is the holiday allowance (vakantiegeld). This is a mandatory 8% of an employee’s gross annual salary, paid out once a year, usually in May or June.
Holiday allowance is separate from paid leave and is intended to help employees cover the costs of taking a holiday. It must be explicitly mentioned in the employment contract and cannot be rolled into monthly wages unless it’s contractually agreed in writing and meets specific legal standards.
Even if employees don’t take time off, they’re still entitled to this benefit.
Sick leave and continued salary payment
Employers in the Netherlands have a statutory obligation to continue paying wages during employee illness for up to two years. The legal minimum is 70% of the employee’s salary, although many employers, especially those under CAOs, top this up to 100% for at least part of the illness period.
Alongside continued payment, employers must also comply with the Dutch Gatekeeper Improvement Act, which includes obligations around reintegration support, sick leave tracking, and collaboration with occupational health services.
This means you’re not only financially responsible during sick leave but also legally required to help employees return to work through a structured plan.
Maternity, paternity, and parental leave
The Netherlands offers generous family leave entitlements:
- Maternity leave lasts a minimum of 16 weeks. Expectant mothers must start leave at least 4 weeks before their due date and are entitled to at least 10 weeks after birth. The Employee Insurance Agency (UWV) pays the maternity allowance, but the employer typically facilitates the application.
- Partner or paternity leave includes one week of fully paid leave (by the employer) and up to five additional weeks paid at 70% (covered by the UWV), which must be taken within six months of the birth.
- Parental leave gives both parents the right to take 26 weeks of leave per child, with 9 weeks paid at 70% of their daily wage by the UWV if taken in the child’s first year. The remaining weeks are unpaid but job-protected.
These benefits reflect the country’s strong focus on work-life balance and family wellbeing, and employers must be prepared to manage them compliantly.
Pension contributions
Unlike in some countries, pension contributions are not universally mandatory under Dutch law. However, they are often required under industry-wide CAOs or offered as part of competitive employment packages.
Most employers in the Netherlands offer access to a group pension scheme. Contributions typically come from the employer and employee, and the structure depends on the agreement with the pension provider.
Even when not legally required, offering a pension plan helps attract and retain skilled employees and is increasingly seen as a standard benefit, especially in professional and technical roles.
Other statutory benefits to consider
While not always mandatory, several other benefits are standard or expected in many Dutch workplaces:
- Commuting allowance: Although not required by law, many employers reimburse commuting costs, especially for public transport.
- Insurance: Employees are required to take out basic health insurance individually, but employers may offer supplemental health or disability insurance as part of their benefits package.
- Public holidays: The Netherlands has several national public holidays, and rules around paid leave during these days can vary by CAO and contract.
How a Dutch Employer of Record can help you manage workforce benefits
If your business wants to hire employees in the Netherlands but doesn’t plan to open a local legal entity, a Dutch Employer of Record (EOR) offers a practical and fully compliant solution.
An EOR becomes the legal employer on your behalf, managing every aspect of the employment relationship, while you retain full control over daily work and performance.
A Dutch Employer of Record (EOR) ensures your employees receive all mandatory and contractual benefits in full compliance with Dutch employment law. Services typically include:
- Drafting legally compliant employment contracts: The EOR prepares contracts that meet Dutch labour law standards, including all required terms such as salary, working hours, leave entitlements, notice periods, and holiday allowance. If a relevant Collective Labour Agreement (CAO) applies, those terms are also incorporated.
- Registering with key Dutch authorities: The EOR takes care of all necessary registrations with government bodies, such as KvK (Kamer van Koophandel), which registers the employment relationship in the Dutch Business Register. We handle Belastingdienst’s tax registration for wage tax, social security, and payroll compliance, as well as UWV (Employee Insurance Agency), where we manage unemployment, maternity, and sick leave claims.
- Processing payroll, tax withholdings, and pension contributions: Monthly payroll is managed in line with Dutch tax and social insurance rules. This includes: accurate salary calculations and payslip generation, withholding and remitting income tax (PAYE) and National Insurance Contributions (NICs), employer contributions to mandatory social security schemes and pensions (where applicable under CAO or contract).
- Administering statutory benefits: The EOR ensures employees receive all benefits they’re entitled to, including: Holiday pay (20+ days minimum, plus additional days per CAO or contract). Holiday allowance (vakantiegeld) at 8% of gross annual salary. Sick leave payments of at least 70% of salary for up to two years. Maternity, paternity, and parental leave administration, including working with UWV to process allowances correctly.
- Ensuring full compliance with Dutch labour law and CAOs: The EOR continuously monitors updates to Dutch employment legislation and any sector-specific CAO requirements. This includes: adherence to working hour regulations and rest periods, legal notice periods and dismissal procedures, workplace pension schemes, if CAO requires, and ensuring fair treatment and equal rights under Dutch non-discrimination laws.
For example, a Canadian fintech company hired a product manager based in Amsterdam to support its European growth. The company struggled to navigate Dutch labour laws without a local entity, especially when offering mandatory benefits like holiday pay, sick leave, and pension contributions.
By partnering with a Dutch Employer of Record (EOR), the company could onboard the employee compliantly within days. The EOR handled the employment contract, registered the worker with Dutch authorities, and managed payroll, taxes, and statutory benefits—including holiday allowance and paid parental leave.
This allowed the Canadian business to offer a competitive, fully compliant benefits package without needing to set up a Dutch entity or build in-house HR capacity, ensuring both legal compliance and employee satisfaction.
This approach is ideal for:
- Startups and SMEs testing the Dutch market
- International companies needing to hire quickly
- Businesses wanting to offer competitive and compliant benefits without managing local HR infrastructure
With an EOR, you can confidently build a team in the Netherlands without managing legal, payroll, or administrative complexity.
Know the mandatory benefits
Hiring in the Netherlands requires more than just a competitive salary. Employers must provide a robust and compliant employee benefits package, including paid vacation, holiday allowance, sick pay, family leave, and often pensions.
Understanding and meeting these obligations is essential for legal compliance and workforce satisfaction. However, managing benefits across borders can be time-consuming and risky, especially if you’re unfamiliar with Dutch labour law.
Looking to hire in the Netherlands without managing local HR and legal complexity? Contact us today and discover how our Dutch Employer of Record can help. We ensure full compliance with benefit entitlements, so you can focus on growing your team and your business.