Before your first Dutch employee starts

Four of the things you have to settle before hiring in the Netherlands are decisions, and they belong in the offer. Five others are administrative acts, and they have to be done before the first working day. Groups that get this wrong almost always get it wrong in the same order, by making the offer first and discovering the sector rules afterwards, at which point the offer is already binding.

Four decisions that belong in the offer

Whether a collective labour agreement applies. A Dutch cao is not something you opt into. For many sectors it is declared generally binding, which means it applies to your entity because of the work it does, whatever your group's employment policy says. A cao typically sets pay scales with annual increments, allowances for irregular hours, notice periods and travel rules, and almost all of it sits above the statutory minimum. Establish this before you name a salary, because a cao pay scale is not negotiable downwards.

Whether there is a mandatory industry pension fund. Membership of an industry-wide pension fund follows from the sector as well. If you do not register, the obligation still exists, and the fund can claim the premiums for the years you missed. This is the single most expensive oversight available to a new Dutch employer, and it usually surfaces years later during a review or a change of adviser.

Fixed term or indefinite. This is a payroll cost question as well as a legal one. The employer contribution to the unemployment fund has a low and a high rate, and the low rate may only be applied if there is a signed written contract for an indefinite period which is not an on-call contract, and that signed contract has to be in your records at the time of the payroll run. If it is not, you pay the high rate for that period and correct it afterwards.

What gross salary means here. A Dutch gross annual salary is not the full employment cost, and it is also not the take-home reference your parent may be used to. From 1 January 2026 the statutory minimum hourly wage is €14.71 for employees aged 21 and over, rising to €14.99 from 1 July 2026. There is no statutory minimum monthly wage any more, only the hourly figure, and it applies whether someone works 32 or 40 hours. On top of the gross salary the employee is entitled to holiday allowance of at least 8% of the gross annual salary, paid out once a year, and to paid leave of at least four times the weekly working hours per year. A 40-hour employee therefore accrues 160 hours of statutory leave.

Five things to arrange before the first working day

1. Register as an employer with the Belastingdienst. Use the form Melding Loonheffingen Aanmelding werkgever. The Belastingdienst is explicit about the timing, which is at the latest on the day the first employee starts. You then receive a wage tax number and an aangiftebrief, usually within a week. Without that number you cannot file, and the filing deadline runs anyway.
2. Verify the employee's identity from the original document. A passport, a national identity card or a valid residence document. A driving licence is not acceptable for this purpose. You check the original in person rather than a scan that was emailed to you, and you keep a copy in the payroll records.
3. Collect the wage tax details. Name, address, date of birth, the citizen service number (BSN) and the employee's written statement on whether you should apply the payroll tax credit. That credit may be applied by one employer only. Someone with a second job who ticks the box twice ends up with an income tax assessment they did not expect, and the conversation about that lands with you.
4. Have the signed employment contract in place. The main terms have to be in writing, and in practice you want the signature before the first payroll run for the reason described above.
5. Arrange occupational health and safety. Dutch law requires a basic contract with an occupational health service and a written risk assessment covering the risks in your workplace and the measures against them. Arrange sick pay insurance at the same time, for the reason set out at the end of this article.

What the employment costs beyond gross salary

Four components, and none of them is visible in the gross figure you agreed.

Employer contributions to the social insurance funds are calculated on the wage and paid to the Belastingdienst with the wage tax return. Holiday allowance of at least 8% is a separate annual payment. The employer share of the pension premium follows from the fund or the pension scheme. And there is the work-related costs scheme, which sets a budget for untaxed allowances and benefits. In 2026 that budget is 2.00% of your fiscal wage bill up to €400,000 and 1.18% of the excess. Anything above the budget is taxed at the employer's expense at a final levy of 80%, which makes a Christmas gift or a staff outing an accounting question rather than a discretionary one.

The wage tax return itself is monthly or every four weeks. The Belastingdienst sends an aangiftebrief each year listing, per period, the final filing date, the final payment date and the payment reference. With four-week periods those dates do not coincide with month ends, which is worth knowing before your group treasury builds a payment calendar around them. How this fits with the other Dutch filings is set out in what a Dutch bv has to file, and when.

What is hard to undo

Dutch employment protection is the part that surprises groups most, so it is better understood before the first contract than after it.

There is no unilateral termination. If the employee does not agree, you need permission from UWV or a ruling from the subdistrict court, and which of the two applies depends on the ground. UWV handles dismissal for business economic reasons and dismissal after long-term incapacity for work. Every other ground, including underperformance and a broken working relationship, goes to the court. The third route is agreement, recorded in a settlement agreement, which needs no permission from anyone. In practice most Dutch terminations take that third route precisely because the first two are slow and uncertain.

Severance is not discretionary either. A transition payment is due from the first day of the employment, including during a probationary period, at one third of the gross monthly salary per year worked. From 1 January 2026 it is capped at €102,000 gross, or at one year's salary if the annual salary is higher than that.

And sickness is the largest single exposure a small Dutch employer carries. You continue to pay wages for up to 104 weeks. The statutory minimum is 70% of the wage, and in the first year you top that up to at least the statutory minimum wage. In the second year the top-up no longer applies. A cao frequently requires more. For an entity with two or three people that is a risk you insure rather than carry, and the insurance has to be in place before the first working day rather than after the first absence.

We run the Dutch payroll, produce the payslips under the applicable cao, file the wage tax returns and keep the pension reporting and the leave administration. What we need from you each period, and what stays with you, is on the page about payroll. For the employment data of your staff you are the controller and we are the processor, so a data processing agreement forms part of the engagement letter and does not have to be requested separately.