Let’s say you wish to hire employees in your Dutch business since you are a new business owner, or it is necessary due to your workload. Once you have found suitable employees, you naturally want to handle all payrolling requirements correctly. This article will tell you how to employ staff in the Netherlands, plus our payrolling services in the Netherlands can make the process even more smoothly for you.
It is important that you maintain a payroll administration when you register with the tax authorities as an employer. Consider the paystubs and an annual statement, for instance. Many business owners use a third-party (payrolling) company to handle this administrative task because they are unfamiliar with it. A payroll service can take care of almost all the management of your human resources.
A payroll service would formally employ staff members in the Netherlands and enable them to receive their pay slips and salary payment from the payroll service. This way, you limit your risks as an entrepreneur, in case of sickness or absence of the employee.
However, in the Netherlands, the downside of such payroll service is the extra expenses, and it might be more practical, and cheaper to employ the staff members yourself. To limit your risks, you can apply for insurance against the sickness of your employees.
Hire your own personnel
If you decide to hire someone and handle the employer duties yourself, you will be responsible for the following:
- keeping up a salary and staff administration;
- setting the travel allowance, transition payment, publications, and the collective bargaining agreement;
- paying premiums and payroll taxes on a monthly basis;
- keeping track of employment legal rules and regulations;
- handling salary, holiday compensation, and pension plan;
- quantifying costs associated with illness, absence, and disabilities;
- appraising the benefits for maternity leave, employee statements, garnishments of wages, etc.
Bolder Launch can provide you with such payroll services, at a fixed fee per year, per employee.
There are several things to set up when you employ a staff member in the Netherlands as a new employee. This helpful checklist contains that information.
Point 1: Employee identification
You must legally confirm the identity of your employee before the start of the first workday. Follow these five steps to accomplish this:
- Request an authentic and legally binding proof of identity from the employee;
- If the employee is not a citizen of the Netherlands, determine if and under what circumstances can the employee work there;
- Verify the ID’s validity. Read the instructions on how to accomplish this here;
- Verify the identity of the employee who presents the proof of identification;
- Make a copy of the identity document and store it with your payroll records
You should also remind your employee to always keep their ID on while they are working. On the other hand, authorities must be able to determine if a business pays or hires employees in violation of the law.
Point 2: Tax officials
As soon as you begin to employ staff in the Netherlands, you must be registered as an employer with the tax authorities. The “Notification of payroll taxes registration employer” form can be used for this. The following is what you will get from the tax authorities:
- A payroll tax number, which is required to pay employee insurance premiums and complete payroll tax filings;
- A letter of declaration outlining the deadline for filing that declaration;
- An email regarding the unique Work Resumption Fund (Whk) premium. Every employer must pay this fee to the UWV in order to be covered under the Partially Disabled Persons Act and the Sickness Benefits Act. By bearing the advantages and expenses of reintegration yourself or by purchasing insurance against them, you can lower the premium.
The succeeding personnel that you recruit separately do not require registration (unless the tax authorities specifically instruct you to do so). They are included in the declaration after that.
Point 3: Payroll management
You have a responsibility to maintain a payroll administration as an employer, for which there is specialized software. You may also contract out this task.
Point 4: Conduct statement (Verklaring omtrent Gedrag)
Every so often, you may want to do a background check on the applicant. Such instances may occur if they would handle a significant amount of cash, confidential information, or valuables. In this case, you may ask the Ministry of Security and Justice’s screening agency for a Certificate of Good Conduct. Such evidence of good behaviour is required for various occupations, including those of a teacher, nanny and taxi driver.
Point 5: Information for the employee
Within one month of the employee’s start date, you must inform them of the following:
- the employer and employee’s names and addresses
- location of employment
- job description
- working hours (per day or per week)
- compensation amount and the terms of payment
- length of the agreement (if it is for a definite period)
- duration and conditions of the probationary period
- holiday permission and allowance
- notice period
- pension, if applicable
- provision prohibiting solicitation or competition
- application of Collective Bargaining Agreement
All this information may also be included in the employment contract. To avoid issues, provide a contract to your employee that has been reviewed by a legal specialist, such as your company officer at Bolder Launch.
Point 6: Insurance
Let your insurers know. Consider purchasing insurance for pensions, employee absences, business liability, business property damage, and group accidents. Verify the employee’s health insurance coverage as well. If not, you must settle a fee to the National Health Care Institute, which will purchase health insurance on your behalf.
There are several matters that you should consider when you payroll a staff member in the Netherlands:
The 30% tax ruling for expats in the Netherlands
For expats (these can also be the entrepreneurs who own a Dutch business but are also receiving salary), the 30% tax ruling enables the Dutch business (employer) to compensate foreign workers financially by withholding no more than 30% of their yearly taxable wage before paying them net (i.e., tax-free). The requirement is that the employee’s pay must be greater than the calculated test wage. You must keep an eye on the minimum salary requirement. The ruling should be received from the Tax Authorities in the Netherlands before the tax discount can be applied. If the ruling is received at a later stage, the tax discount will be applicable as per the start date of the employment agreement (but within 6 months) and will be processed by the payroll department.
The tax-free reimbursement for work-related charges
The HR department, the financial department, and the salary administration all have to deal with the work-related charges program (WKR). It is up to the payroll administrator to process this on the pay slips. Meanwhile, the business pays for the expenses and determines (as the employer) which expenses would be eligible for tax-free reimbursement to the employee. This means it is important to keep a clear overview of all work-related reimbursements.
Dealing with salary liens
Wage attachments are another aspect you must be aware of as a payroll administrator. Today, even if the employee’s pay is less than the garnishment-free rate, at least 5% of the wage must be paid in the event of wage garnishment. You must provide a deviation if the wage is less than the attachment-free rate in order for it to still be paid. You ought to monitor these circumstances. For workers, whose pay fluctuates between just above and just below the attachment-free foot from month to month, this can be a labour-intensive task. This is especially true if you frequently experience income garnishments.
This guide is part of Relocate Staff to the Netherlands in our Launch Guide.
