Running payroll in the Netherlands involves a layered system of statutory rules, collective agreements, and tax obligations that can catch foreign employers off guard. Whether you’re hiring your first Dutch employee or scaling up a local team, getting payroll right from day one matters. This guide covers what you need to know: pay schedules, minimum wages, employer contributions, and the administrative steps that keep you compliant with Dutch law.
Employment contracts and payroll basics
Before the first payslip goes out, you need a written employment contract in place. Dutch law requires the contract to specify at minimum the salary, working hours, job role, and contract type (fixed-term or indefinite). If your company has 50 or more employees in the Netherlands, you’ll also need to account for the rights of the works council (ondernemingsraad), which has consultation rights over certain business decisions including remuneration policy.
Payroll frequency and pay dates
Dutch payroll runs monthly. The standard pay date is the 27th of the month. If the 27th falls on a weekend or public holiday, payment moves to the preceding banking day. Monthly payroll is the norm across almost all sectors and contract types.
Working hours
The standard working week in the Netherlands is 40 hours. That said, many sector-level collective labour agreements (CAOs) set the standard at 36 to 38 hours per week. If a CAO applies to your sector, its working hours provision takes precedence over the statutory default. It’s worth checking whether a CAO governs your industry before setting contracted hours.
Minimum wage requirements
The Netherlands uses a statutory hourly minimum wage (Wet minimumloon, or WML) rather than a fixed monthly figure. The applicable monthly amount depends on the hours specified in the employment contract.
Minimum wage rates (january 2026)
For employees aged 21 and over, the statutory minimum is €14.71 per hour gross. At a 40-hour week, that works out to approximately €2,549.50 per month. At a 38-hour week (common under many CAOs), the monthly equivalent is approximately €2,435.92.
Youth minimum wages apply to employees under 21. As of 1 January 2026, the rates are:
| Age | Hourly rate | % of adult minimum |
|---|---|---|
| 20 | €11.77 | 80% |
| 19 | €8.83 | 60% |
| 18 | €7.36 | 50% |
| 17 | €5.81 | 39.5% |
| 16 | €5.07 | 34.5% |
| 15 | €4.41 | 30% |
Many CAOs set sector minimums above the statutory floor. If a CAO applies, you must pay the higher of the two rates.
Holiday allowance (vakantiegeld)
Every employee in the Netherlands is entitled to a holiday allowance, known as vakantiegeld. The statutory minimum is 8% of gross annual salary. The allowance accrues each month alongside regular pay and is typically paid out as a lump sum in May or June, covering the full accrued amount for the preceding twelve months.
One important rule: vakantiegeld must be paid even if the employment relationship ends before the standard payout date. Any accrued but unpaid holiday allowance is settled at the point of termination.
Some employers choose to incorporate the 8% into the monthly salary rather than paying it in a lump sum, but this requires explicit agreement in the contract and may not be permitted under all CAOs.
Employer social contributions
Dutch payroll involves a range of employer-side social insurance contributions. The main levies are:
Zvw (health insurance contribution): Employers pay 6.10% of gross salary. Employees also contribute 4.85%, which is withheld from their pay.
AWf (unemployment insurance): The low rate of 2.74% applies to employees on permanent contracts. The high rate of 7.74% applies to employees on flexible or temporary contracts. Using permanent contracts where possible isn’t just good employment practice; it also reduces this contribution.
Aof (work incapacity fund): The low rate is 6.26% (for smaller employers) and the high rate is 7.61% (for larger employers). The threshold for small versus large employer status is set annually.
WHK and childcare surcharge: An additional differentiated contribution (WHK) varies by sector and individual employer risk profile. A childcare surcharge is also applied on top of the base contributions.
These contributions are all payable on top of gross salary and represent a significant addition to the overall employment cost for Dutch hires.
Overtime
Dutch law doesn’t set a statutory overtime rate. The rules are determined by the employment contract or, more commonly, by the applicable CAO. In practice, overtime is typically compensated at 125% to 150% of the regular hourly rate, but the precise rate varies by sector and agreement. If a CAO applies to your workforce, check its overtime provisions before agreeing terms with employees.
Payroll tax (loonheffing)
Employers in the Netherlands act as the withholding agent for payroll tax. Loonheffing is a combined levy that encompasses wage tax and national insurance contributions. It’s calculated based on each employee’s taxable income and the applicable tax table for their situation.
Employers file a payroll tax return (aangifte loonheffingen) with the Belastingdienst (Dutch Tax and Customs Administration) on a monthly basis. The return must be submitted and payment made on time each month; late filings attract penalties.
The 30% ruling for international hires
If you’re hiring employees relocating to the Netherlands from abroad, the 30% ruling is worth understanding. Eligible expats can receive 30% of their salary as a tax-free allowance, which significantly reduces their net tax burden and makes Dutch positions more attractive for international talent.
To qualify, employees must meet specific conditions including expertise that isn’t readily available in the Dutch labour market. The minimum taxable salary threshold for 2026 is €48,013 per year. Note that the 30% ruling affects how payroll tax is calculated, so it needs to be factored into payroll setup from the outset if employees are eligible.
Using an Employer of Record in the netherlands
Setting up a legal entity in the Netherlands takes time and cost that doesn’t always make sense, particularly for initial hires or smaller teams. An Employer of Record (EOR) allows you to hire Dutch employees compliantly without establishing a local entity. The EOR acts as the legal employer, handling employment contracts, payroll processing, tax filings, social contributions, and vakantiegeld, while you manage the employee’s day-to-day work.
For companies scaling headcount or testing the Dutch market, EOR services reduce administrative overhead and eliminate the risk of non-compliance with Dutch labour law.
FAQ
Do I need a Dutch entity to hire employees in the Netherlands?
No. You can hire Dutch employees without a local entity by using an EOR. The EOR acts as the legal employer on your behalf, handling all Dutch payroll and compliance obligations while you direct the employee’s work.
When does the holiday allowance have to be paid?
Vakantiegeld accrues monthly at a minimum of 8% of gross salary. It’s typically paid out as a lump sum in May or June. If employment ends at any point during the year, the accrued but unpaid balance must be included in the final settlement.
What happens if a collective agreement (CAO) applies to my sector?
If a CAO covers your industry, its terms generally override the statutory minimum where they’re more favourable to the employee. This can mean higher minimum wages, different overtime rules, additional leave entitlements, or a shorter standard working week. You’ll need to identify the applicable CAO for your sector before setting contract terms.
How does the 30% ruling affect payroll calculations?
For eligible employees, 30% of their salary is treated as a tax-free expense allowance rather than taxable income. This reduces the amount subject to loonheffing. If an employee qualifies, you’ll need to apply for the ruling with the Belastingdienst and configure payroll accordingly from the start of employment.
