Employment and employee benefits in The Netherlands : overview | Practical Law

Employment and employee benefits in The Netherlands : overview | Practical Law

A Q&A guide to employment and employee benefits law in The Netherlands.

Employment and employee benefits in The Netherlands : overview

Practical Law Country Q&A 7-503-3884 (Approx. 30 pages)

Employment and employee benefits in The Netherlands : overview

by Karin Bodewes, Baker & McKenzie Amsterdam NV
Law stated as at 01 Aug 2012The Netherlands
A Q&A guide to employment and employee benefits law in The Netherlands.
The Q&A gives a high level overview of the key practical issues including: permissions to work; contractual and implied terms of employment; minimum wages; restrictions on working time; illness and injury; rights of parents and carers; data protection; discrimination and harassment; dismissals; redundancies; taxation; employer and parent company liability; employee representation and consultation; consequence of business transfers; pensions; intellectual property; restraint of trade agreements and proposals for reform.
To compare answers across multiple jurisdictions, visit the Employment and Employee Benefits Country Q&A tool.
The Q&A is part of the PLC multi-jurisdictional guide to employment and employee benefits law. For a full list of jurisdictional Q&As visit www.practicallaw.com/employment-mjg.

Scope of employment regulation

1. Do the main laws that regulate the employment relationship apply to:
  • Foreign nationals working in your jurisdiction?
  • Nationals of your jurisdiction working abroad?

Laws applicable to foreign nationals

Whether Netherlands laws apply to the employment relationship depends on whether the parties have made a choice of law. If no choice is made, the applicable law is determined by Regulation (EC) 593/2008 on the law applicable to contractual obligations (Rome I) or the applicable international private law. Even if a choice of law is made, certain mandatory provisions of law may still apply.
For example, the following always apply to foreign nationals, even if they are otherwise subject to foreign law:
  • The Act on Cross-border Employment Working Conditions 2 December 1999 (Wet arbeidsvoorwaarden grensoverschrijdende arbeid) (Waga).
  • Minimum Wage and Minimum Holiday Allowance Act 23 February 1969 (Wet minimumloon en minimumvakantiebijslag).
  • Working Hours Act 1 January 1996 (Arbeidstijdenwet) (ATW).
  • Working Conditions Act 1998 (Arbeidsomstandighedenwet 1998) (Arbowet).
  • Equal Treatment Act (Algemene wet gelijke behandeling) (Awgb).
  • A number of Articles in the Civil Code.

Laws applicable to nationals working abroad

If Dutch law is chosen to govern the employment relationship, it applies in principle to Dutch nationals working abroad. If the law of another country is chosen, Dutch nationals can still invoke mandatory provisions of Dutch law that would apply without a choice of law under Rome I. Further, Waga applies to Dutch nationals working abroad, irrespective of which law applies to the employment relationship.

Restrictions on managers and directors

2. Are there any restrictions on who can be a manager or company director?

Age restrictions

There are no age restrictions on managers or company directors. Under equal treatment legislation, these types of restrictions are in principle prohibited.

Nationality restrictions

There are no nationality restrictions on managers or company directors. Under equal treatment legislation, these types of restrictions are in principle prohibited.


Dutch law does not provide for any other restrictions limiting who can be appointed as a manager or director.


3. Are any grants or incentives available for employing people? Do any filings need to be made when employing people?

Grants or incentives

There are no grants or incentives available for employing people.


In principle, no filings need to be made when employing people, however, in some very specific circumstances, the Dutch tax authorities may request the employer to inform them of employing someone.

Permission to work

4. What prior approvals do foreign nationals require to work in your country?

Schengen/short stay visa

Procedure for obtaining approval. All foreign nationals are subject to the visa requirement except those from visa waiver countries (visa waiver countries include EU countries and the US), if they are to stay in The Netherlands for 90 days or less every 180 days. The visa can be obtained from the Dutch embassy or Dutch consulate in the foreign national's country.
There are two ways of using a Schengen visa. Either way, after the 180 days, the visa can be renewed if either:
  • The foreign national stays in The Netherlands for 90 days and physically leaves the country for a subsequent 90 days on expiry.
  • The foreign national divides the 90 days over a 180 day period and re-enters The Netherlands multiple times. In this, the foreign national must request a multiple entry visa.
A short stay visa provides residence privileges only (that is, no work privileges, which generally, although not always, require a work permit (see below, Permits)).
Cost. The charge for a visa is EUR60 (as at 1 August 2012, US$1 was about EUR0.8).
Time frame. Acquiring a visa can take, at a minimum, a number of days, and at a maximum, up to two months.

Entry visa

Procedure for obtaining approval. Foreign nationals subject to the visa requirement that is, all foreign nationals except those from visa waiver countries (see above), who will stay in The Netherlands for more than 90 days, require an entry visa (and a residence permit). The visa can be obtained from the Dutch embassy or Dutch consulate in the foreign national's country, or the sponsoring company in the Netherlands can start the procedure at the Dutch Immigration and Naturalisation Service.
The entry visa can be used by non-visa waiver foreign nationals to enter Dutch territory and apply for a residence permit. The duration of the visa is 180 days (as from the date of issue). Consequently, the foreign national has six months to travel to The Netherlands.
Cost. The charge for an entry visa depends on the reasons for requested entry. For a regular work for pay, the charge is EUR600. The cost for renewal is EUR375.
Time frame. This can take approximately three to six months, depending on the purpose of the stay. However, for employment purposes, and if the Dutch employer applies by means of an expedited procedure, the entry visa can be granted within two to three weeks.


Procedure for obtaining approval. The following documents are required to work in The Netherlands (there is a general exception for highly skilled migrants and there are additional exceptions for short duration activities, such as incidental business visits):
  • Work permit. This is required for non-EU/EEA nationals (unless they qualify as highly skilled migrants (see below, Highly skilled migrants), or they receive the following note on their residence permit, "work activities free, no work permit required").
    To obtain a work permit, the employer must file a request with the Employee Insurance Agency (Uitvoeringsinstituut Werknemersverzekeringen) (UWV). To grant a work permit, the employer must comply with the following requirements:
    • the employer must first try to recruit employees in The Netherlands and Europe (during a period of three months);
    • the employer must report the vacancy to the UWV (during a period of five weeks);
    • the employer must offer the foreign employee terms and conditions of employment in accordance with the terms and conditions of employment and working conditions provided for under Dutch law, or which are customary in that business sector;
    • the employee must have a valid residence permit (or the procedure for obtaining the permit must have been started);
    • other requirements, for example, the foreign employee must reside within a reasonable distance from the place of work and must be older than 18 and younger than 45 years old.
  • Residence permit. This is required for non-EU/EEA nationals if the foreign national will stay in The Netherlands for longer than three months. The permit is obtained from the Immigration and Naturalisation Service.
  • Statement of identification with the local police (a sticker on the passport). This is required for foreign nationals who will stay in The Netherlands for less than three months. The permit is obtained at the local police office (within three days of arrival in The Netherlands) unless they stay in a hotel or at an official camping site (in that case the hotel and/or camping personnel will take care of registration).
Cost. The costs are as follows:
  • Work permit. Free of charge.
  • Residence permit. The charge depends on the reasons for requested residence. In case of regular work for pay, the charge is EUR300 (if the foreign national also applied for and received an entry visa) or EUR600 (if the foreign national is a visa waiver national and did not apply for an entry visa). The cost of renewal is EUR375.
  • Statement of identification. Free of charge.
Time frame. The time frame for obtaining these approvals is as follows:
  • Work permit. A work permit takes five to six months (including the three months of active search and the five week vacancy registration with the UWV (see above, Procedure for obtaining approval)).
  • Residence permit. A residence permit takes between three and six months after arrival in The Netherlands. During this period, the foreign national cannot start work activities, unless he has a valid entry visa.
  • Statement of identification. This can be requested, if needed, at the local police station immediately after scheduling an appointment.

Highly skilled migrants

Procedure for obtaining approval. Foreign nationals who meet specific financial thresholds (that is, the remuneration levels set out below) can qualify as highly skilled migrants. They do not need a work permit and instead only have to apply for a residence permit with the annotation "work as highly skilled migrant". This gives them residence and work privileges.
The highly skilled migrant scheme is for foreign nationals who will reside in The Netherlands for longer than three months. For stays of less than three months, a separate short stay pilot scheme was introduced from 1 January 2012 (for two years).
Under the scheme, the employer must be admitted to the highly skilled migrant scheme. The main conditions for acceptance include:
  • The employer is a Dutch legal entity or has a branch office in The Netherlands.
  • The employer has good employment practices, which can be demonstrated by submitting the following documents:
    • proof of registration in the Commercial Register not older than 30 days, issued by the Chamber of Commerce (if applicable) or proof demonstrating that registration is not required;
    • proof that a subsidised or approved educational institution or research institute, directly or indirectly, fully or partially paid or subsidised by the government is involved (if applicable);
    • a payment history statement issued by the tax authorities;
Other conditions apply for start-up companies.
Once the employer is registered, a special residence permit can be obtained from the Immigration and Naturalisation Service provided that the following financial thresholds (2012, indexed per calendar year) on the employee's salary are met:
  • Migrants under the age of 30: EUR37,575 gross per year.
  • Migrants aged 30 and over: EUR51,239 gross per year.
  • Migrants graduated in The Netherlands: EUR26,931 gross per year.
If the employer is established in, and the Highly Skilled Migrant will reside in, a city with its own Expat Centre (for example, Amsterdam, Rotterdam or The Hague), parties can make use of the Expat Center pilot to obtain a residence permit. One of the advantages of the pilot is that the application for a residence permit can be filed before the highly skilled migrant arrives in The Netherlands. Consequently the waiting period in The Netherlands can be kept to a minimum.
Cost. A residence permit for a highly skilled migrant is EUR188 if the foreign national also applied for and received an entry visa, or EUR750 if the foreign national is a visa waiver national and did not apply for an entry visa. The cost of renewal is EUR375.
Time frame. An application for a residence permit for a highly skilled migrant is processed significantly faster than regular applications and takes approximately two to four weeks, provided that the employer has been admitted to the Highly Skilled migrant scheme.

Regulation of the employment relationship

5. How is the employment relationship governed and regulated?

Written employment contract

The employer must confirm the following to the employee electronically or in writing (Article 7:655, Civil Code):
  • Name and residence of the parties.
  • Place where the work will be carried out.
  • Position and a description of it.
  • Hiring date.
  • If the employment contract is for a definite period, the time period.
  • Holiday rights.
  • If a notice period applies, the duration of the notice period.
  • Salary and payment intervals and, if the remuneration depends on the results of the work to be performed, the amount of work to be rendered per day or per week, the price per item, and the reasonable time required to perform the work.
  • Customary number of working hours per day or per week.
  • Employee's pension rights (if applicable).
  • If the employee will work outside The Netherlands for a term exceeding one month, the:
    • duration of the employee's work;
    • details of their accommodation;
    • application of Dutch social security legislation, or the bodies enforcing the legislation;
    • currency in which payments will be made;
    • allowances to which the employee is entitled; and
    • arrangements for his return, on condition that all this is done before the employee leaves.
  • The application of a collective bargaining agreement (CBA) (if any).
  • Whether the employment contract is a temporary employment contract, within the meaning of Article 7:690 of the Civil Code.
The employer must give these particulars within one month of the start of the employment, or earlier if the employment contract terminates earlier. An employer who fails to provide this or includes incorrect particulars is liable to the employee for any damage caused. The employer must sign the written particulars.
If a person performs work for three consecutive months, either weekly or at least for 20 hours per month for payment, the person is deemed to be performing the work on the basis of an employment contract (Article 7:610a, Civil Code).

Implied terms

There are no terms implied by law into employment contracts other than the mandatory rules in Question 1.

Collective agreements

For companies operating in The Netherlands there are generally:
  • A company CBA.
  • CBAs for specific industries, for instance, the metal or cleaning industry.
Not all employers are bound by a CBA. Some industry-wide CBAs are declared generally binding by the Ministry of Social Affairs and Employment. In this case, if the activities of an employer fall under the scope of this CBA, the employer must still apply that CBA, even if it is not party to it.
6. What are the main points to consider if an employer wants to unilaterally change the terms and conditions of employment?
The basic principle is that an employer cannot unilaterally amend employment conditions. In principle, the amendment of a condition of employment requires the employee's prior consent. An employee is generally not obliged to accept an amendment to an employment condition or (company) regulation. However, the employer should consult the employee to gauge their willingness to accept the intended amendment.
Employees must be informed, in a timely and clear manner, of intended changes and the consequences of those changes. Employees must also be informed of the reasonable grounds for the decision. The employer should apply a transitional or phasing-out arrangement. By offering the amended employment conditions and allowing the employee time to review the intended amendment, the employer acts in accordance with good employment standards. Similar standards apply to employees for being good employees (goed werknemerschap).
Unilateral amendment clause (section 7:613, Civil Code). If the employment contract includes a unilateral amendment clause, the employer can amend the employment conditions without the employee's prior consent. An employer can invoke a unilateral amendment clause only if it has such a substantial interest in the amendment, and this outweighs the interest of the employee in maintaining the status quo in accordance with the standards of reasonableness and fairness.
A substantial interest is not readily accepted and can only be demonstrated where there are compelling commercial or organisational circumstances, for example, a necessary reorganisation or the company's financial difficulty. The employer must provide substantive proof that the application of the current employment conditions is unacceptable in accordance with the standards of reasonableness and fairness in the given circumstances. Prevailing case law illustrates that Dutch courts exercise restraint in allowing the unilateral amendment of employment conditions.
The principle of reasonableness and fairness (sections 7:611 and 6:248, Civil Code). Under a recent decision of the Supreme Court, there are three criteria relevant in determining whether it is reasonable to expect an employee to accept a unilateral change:
  • Is a change in circumstances involved and, if so, what is the nature of that change of circumstances?
  • Is the employer's proposal reasonable? In this respect, all the circumstances of the case should be taken into consideration, including:
    • the nature of the changed circumstances and the nature and significance of the proposal;
    • the interest of the employer and the business it conducts;
    • the employee's position and their interest in not changing the employment conditions.
  • Can the employee reasonably be required to accept the reasonable proposal in view of the circumstances?
Unforeseen circumstances (section 6:258, Civil Code). A final (and not commonly used) option is that the court may, at request of one of the parties, amend an employment contract (in full or in part), or terminate (ontbinden) a contract (in full or in part) on the grounds of "unforeseen circumstances". The circumstances must be of such a nature that the employee, in all reasonableness and fairness, could not expect the contract to remain unchanged. However, the court will not allow a contract to be amended or terminated just to bring the contract in line with generally accepted practice. Both the legislature and the Supreme Court have indicated that the court should act with great reluctance in these matters.

Minimum wage

7. Is there a national (or regional) minimum wage?
There is a minimum wage, which is dependent on age and applies from 1 July 2012:
  • For employees aged 23 years and older: EUR1,456.20 gross per month.
  • For employees aged 15 to 22 years: from EUR436.85 gross to EUR1,237.75 gross per month.

Restrictions on working time

8. Are there restrictions on working hours?

Working hours

Employers must comply with the Working Hours Act of 23 November 1995. In brief, it stipulates that for an employee of 18 years and over the:
  • Maximum length of a shift is 12 hours.
  • Maximum length of a working week is 60 hours.
  • Average working week must be 48 hours in every period of 16 consecutive weeks.
  • Employee can at most work for 55 hours on average per week, in every period of four consecutive weeks.
It is possible to agree, through a CBA, that the employee will work longer.
After a working day, an employee of 18 years and over must have 11 consecutive hours of non-work time. This rest period can be shortened to eight hours once every seven-day period if the nature of the work or the business circumstances require this.
In the event of a five-day work week, an employee must have 36 consecutive hours of non-work time after the end of the work week.
A longer work week is also possible, provided the employee has at least 72 consecutive hours of non-work time in a period of 14 days. This period can be split into two periods of at least 32 hours each.

Rest breaks

The following rules apply to rest breaks:
  • If an employee works for more than five-and-a-half hours, they are entitled to at least 30 minutes of break time. This can be split into two 15-minute breaks.
  • If an employee works for more than ten hours, they must have at least 45 minutes of break time. This can be split into several breaks, each of which must be at least 15 minutes.
A CBA can include agreements allowing for fewer breaks. But if the employee works for more than five-and-a-half hours, they must have at least 15 minutes of break time.

Shift workers

The following provisions apply to shift workers:
  • The maximum length of a shift is 12 hours.
  • The maximum length of a working week is 60 hours.
  • The average working week must be 48 hours in every period of 16 consecutive weeks.
  • The maximum length of a night shift in a three-shift schedule is ten hours.
  • The maximum length of a working week with over 16 night shifts in a period of 16 weeks in a three-shift schedule is 40 hours.
  • The maximum number of night shifts in a period of 16 weeks is 36.
The maximum length of a night shift can be extended by two hours, for five times in a period of 14 times 24 hours, or 22 times in a period of 52 weeks.

Holiday entitlement

9. Is there a minimum holiday entitlement?

Minimum holiday entitlement

The main rule is that an employee, for each year in which they are entitled to remuneration in the agreed work period, is entitled to holiday of at least either:
  • Four times the weekly work period.
  • If the work period is expressed in hours per year, a corresponding period.
For example, if the employee has agreed to a 40 hour working week (five days), they are entitled to at least four weeks holiday (20 days).
If the employee is employed for only part of the year, they acquire a proportionate amount of holiday. In the case of full or partial incapacity to work, employees still accumulate holiday in full.
Parties are free to negotiate more days' holiday per year.
As from 1 January 2012, employees must take accrued but untaken statutory vacation days (which have accrued as from 1 January 2012) within six months of the end of the calendar year in which they have accrued, otherwise they will lapse. For example, statutory holidays accrued in 2012 will, in principle, lapse, if untaken by 1 July 2013. This six month limitation period will not apply if an employee has not had a reasonable opportunity to take the statutory vacation days accrued in the previous calendar year within the first six months of the next calendar year. The six month statute of limitation only applies to statutory vacation days and not to additional vacation days. The limitation period for these additional vacation days remains unchanged at five years after the calendar year in which they have accrued.

Public holidays

Public holidays are not included in the minimum holiday entitlement. In The Netherlands, there are eight public holidays:
  • 1 January, New Year's Day.
  • Good Friday and Easter Monday.
  • 30 April, Queen's Day.
  • Ascension Day.
  • Whit Monday.
  • 25 December, Christmas Day.
  • 26 December, Boxing Day.

Illness and injury of employees

10. What rights do employees have to time off in the case of illness or injury? Are they entitled to sick pay during this time off? Can an employer recover any of the cost from the government?

Entitlement to time off

By law, during an employee's illness, the employer must pay at least 70% of the employee's most recent gross base salary, for up to two years in a row. The purpose of holiday is to let employees recover from work. If an employee is ill, they cannot work, and therefore, in theory, they do not take holiday and/or cannot actually enjoy their holiday during this time. However, the following exceptions relate to holiday exceeding the statutory minimum:
  • An employer and employee can, where appropriate, agree that periods in which the employee cannot perform work due to illness are deemed holiday, to the extent it is holiday exceeding the statutory minimum (four times the agreed work period). It is not common to treat holiday as used during garden leave and to do so would require the agreement of the employee.
  • Parties can also agree (in advance) that days during which the employee cannot work due to illness are deemed holiday. There are no set forms for such an agreement, except that it must be in writing or by CBA. This is only possible for days' holiday exceeding the statutory minimum.
The employee's consent is required to consider days during which the employee cannot perform work due to an illness as holiday. However, case law shows that the position is different if the employee is actually able to enjoy their holiday, for instance, where the illness is the result of a conflict at work. In that case, the reason the employee reported ill would not stop them from actually enjoying holiday. Where it is reasonable and fair to do so, these days can be counted as holiday. However, the fact the time is taken as holiday must not interfere with the employee's recovery process.

Entitlement to paid time off

Recovery of sick pay from the state

An employer cannot recover sick pay made to employees from the government.

Statutory rights of parents and carers

11. What are the statutory rights of employees who are:
  • Parents (including maternity, paternity, surrogacy, adoption and parental rights, where applicable)?
  • Carers (including those of disabled children and adult dependants)?

Maternity rights

A female employee is entitled to at least 16 weeks of pregnancy and maternity leave. She is entitled to continued payment of 100% of her salary, up to the maximum daily wage (as of 1 July 2012, EUR193.09 gross per day), for at least 16 weeks. In practice, employers usually, where appropriate, continue paying 100% of the salary of the female employee.

Paternity rights

After the birth, partners are entitled to two working days of paid paternity leave. The two days' leave must be taken within four weeks after the date of birth. Wages continue to be paid. Different provisions can be agreed by CBA, a works council or a staff representative body resolution.


Dutch law does not provide for specific rules and regulations in respect of surrogacy.

Adoption rights

Each adoptive parent is entitled to up to four consecutive weeks of paid leave. The employee can issue a request (three weeks before the start date of the leave) through their employer to the UWV, for payment of benefits of up to 100% of salary, up to the maximum daily wage (as of 1 July 2012, EUR193.09 gross per day), for a maximum of four weeks. Adoption leave can start from two weeks before the adoption date. It must be taken within 18 weeks after the child is taken into the family. Adoption leave also applies to the adoption of a foster child, if the foster child is permanently taken into the family. Different provisions can be agreed by CBA, a works council or a staff representative body resolution.

Parental rights

An employee is entitled to unpaid parental leave if they have been employed at the company for one year of up to 26 times his working hours (that is, 26 times the average number of weekly hours worked by the employee). An employee is not entitled to parental leave once the child reaches the age of eight. This leave is taken by the week for consecutive periods up to one year. The number of hours per week is subject to a maximum of 50% of the weekly working hours. These provisions also apply to foster parents who live at the same address as the child and are permanently responsible for the child's upbringing and care. Different provisions can be agreed by CBA, a works council or staff representative body resolution.

Carers' rights

Short-term care leave. An employee is entitled to leave to render necessary care to an ill person, including:
  • The employee's spouse or registered partner or the person with whom they cohabit.
  • A child living as part of the employee's household with whom the employee has a family-law relationship.
  • A child of the employee's spouse or registered partner or the person with whom they cohabit who lives as part of the employee's household.
  • A foster child living at the same address as the employee for whom the employee is permanently responsible for upbringing and care.
  • A first-degree blood relative, not being a child.
The maximum duration of the leave is twice the weekly working hours per 12 months of service with the company. The employee is entitled to continued payment of 70% of their salary, up to 70% of the maximum daily wage.
Long-term care leave. An employee is entitled to unpaid leave to give necessary care to a person with a life-threatening illness, including:
  • The employee's spouse, registered partner or the person with whom the employee cohabits.
  • A child living as part of the employee's household with whom the employee has a family law relationship.
  • A child of the employee's spouse or registered partner or the person with whom the employee cohabits who lives as part of the employee's household.
  • A foster child living at the same address as the employee.
  • A first-degree blood relative, not being a child.
The maximum duration is six times the weekly working hours in a period of 12 months. Such leave is taken by the week for consecutive periods up to a maximum of 12 weeks. The number of hours per week is subject to a maximum of 50% of the weekly working hours.
Different provisions can be agreed by CBA, a works council or a staff representative body resolution.

Continuous periods of employment

12. Does a period of continuous employment create any benefits for employees? If an employee is transferred to a new entity, does that employee retain their period of continuous employment? If so, on what type of transfer?

Benefits created

A period of continuous employment creates certain benefits for employees if individual employees are transferred to a new entity (by operation of law), which is classified as a transfer of undertaking within the meaning of Article 7:662 of the Civil Code (see Question 22), for example relating to:

Consequences of a transfer of employee

If individual employees are transferred to a new entity (by operation of law), and this is a transfer of undertaking within the meaning of Article 7:662 of the Civil Code, they retain their period of continuous employment (see Question 22). Case law has also established that where an entrepreneur transfers the responsibility for the operation of a service provided to the company (an economic entity) to another company, that transfer of operations can be regarded as a transfer of an undertaking.

Temporary and agency workers

13. To what extent are temporary and agency workers entitled to the same rights and benefits as permanent employees?
Temporary and agency workers are often subject to different terms and conditions of employment under an applicable CBA for temporary workers. If not, temporary and agency workers must, in principle, be treated equally with permanent employees. The employer also has more flexibility in terminating the employment contracts of temporary and agency workers, compared to permanent employees.
Depending on the applicable CBA, after a certain period or number of contracts, a worker may be deemed to be a permanent worker of the temporary employment agency.
An employee who is misclassified as a temporary worker may in fact be entitled to receive full dismissal protection.

Data protection

14. What data protection rights do employees have?
The Personal Data Protection Act of 6 July 2000 (PDP Act) prescribes rules on the processing of personal data. The PDP Act specifies the rights of data subjects (for example, employees) whose personal data is being processed:
  • Right to access. A data subject has the right to request access to their personal data.
  • Right to correction. The data subject can request that the data controller correct, supplement, erase or block their personal data.
  • Right to object. The data subject has the right to object to certain uses made of their personal data by a data controller.
The data controller has statutory obligations concerning the processing of employee personal data, which can give rights to the employer as well.

Discrimination and harassment

15. What protection do employees have from discrimination or harassment, and on what grounds?

Protection from discrimination

Employers must have in place a policy to prevent employees from experiencing any psychosocial burden, and implement measures to prevent causing any psychosocial burden (Working Conditions Act 1998 (Arbeidsomstandighedenwet)). Employers must also have in place a policy to prevent discrimination and (sexual) harassment.
The General Equal Treatment Act 1994 (Algemene wet gelijke behandeling) (AWGB) prohibits making a (direct or indirect) distinction on the basis of:
  • Religion.
  • Political views.
  • Race.
  • Gender.
  • Nationality.
  • Sexual orientation.
  • Civil status.
If an employer does not comply with the Working Conditions Act 1998, the employer can be fined. Further, the employer can risk a compensation claim from the employee, who may state that the employer has violated their duty of due care and the employee as a consequence has incurred damage.
The Civil Code provides for two statutory time limits to bring claims:
  • A short time limit of five years.
  • A longer time limit of 20 years, or for toxic substances the time limit is 30 years.

Protection from harassment


16. Do whistleblowers have any protection?
Dutch legislation does not provide any specific protection for whistleblowers. However, there is an ongoing discussion concerning whether this should be provided for in legislation.

Dismissal of employees

17. What rights do employees have when their employment contract is terminated?

Notice periods

The notice period is either the contractually agreed notice period or the statutory notice period. For the following lengths of service, the statutory notice periods are as follows:
  • Less than five years: one month.
  • From five years up to ten years: two months.
  • From ten years up to 15 years: three months.
  • 15 years or longer: four months.
The employee must give a notice period of one month.
Deviation from these notice periods is possible in writing, on condition that both:
  • The notice period that the employee must give is no longer than six months.
  • The notice period that the employer must give is no shorter than double the notice period given by the employee.
Deviation is possible by CBA, on condition that the notice period given to the employee is at least equal to any extended notice period to be given by the employee.

Severance payments

There is no statutory severance pay. However, there is a general rule in the Recommendations of the Association of Cantonal Courts, revised as of 1 January 2009. The severance payment is calculated according to the formula A multiplied by B multiplied by C.
A is the weighted years of service:
  • Aged up to 35 years, multiply the years of service by 0.5.
  • Aged from 35 to 45 years, the years of service count as one.
  • Aged from 45 to 55 years, multiply the years of service by 1.5.
  • Aged from 55 years up, multiply the years of service by two.
B is the fixed monthly wage payments. The basis is the fixed (gross) monthly salary, plus all fixed and agreed salary components, such as bonus payments, if regular. Other perquisites are not taken into account. Similarly, the employer's share in pension premiums and a company car, if any, are not usually taken into account.
C is the adjustment factor (at the discretion of the court, expressing the special circumstances of the case).

Procedural requirements for dismissal

By law, an employment agreement entered into for an indefinite period can be terminated:
  • By giving notice with the prior consent of the UWV.
  • By dissolution by the competent court.
  • For urgent cause (instant dismissal).
  • By mutual consent.
18. What protection do employees have against dismissal? Are there any specific categories of protected employees?

Protection against dismissal

Dismissal is not possible if one of the statutory bans on termination applies, for example dismissals related to (Civil Code):
  • Illness (at the time the consent is requested).
  • Pregnancy.
  • Marriage.
  • Parental leave.
  • Membership of a trade union.
  • Membership of a works council.
  • Transfer of an undertaking.
In the case of dissolution by a court, the court will ascertain whether one of the statutory bans on termination applies. If so, the court determines whether the request for dissolution relates to the ban on termination. If so, the court will refuse to terminate the employment contract, and the employee remains employed by the employer.
In a number of cases, the bans on dismissal do not apply, in particular if:
  • An employee agrees to the dismissal in writing.
  • The employment contract is terminated for urgent cause or during the probation period.
  • The dismissal has nothing to do with circumstances relating to the ban on dismissal, for example, if the dismissal is the result of the termination of activities of the enterprise, or part of it, in which the employee performs most or all of his work.
The competent court will only dissolve an employment contract if there is a "serious cause". A serious cause is either an urgent cause or a change in circumstances which justifies termination of contract.

Protected employees

Categories of protected employees include:
  • Employees subject to illness (at the time the termination is initiated).
  • Pregnant employees.
  • Married employees.
  • Employees on parental leave.
  • Members of a trade union.
  • Members of a works council or employee participation body.
  • Employees on leave based on the Work and Care Act 2001 (Wet Arbeid en Zorg).
  • Employees subject to a transfer of undertaking.
  • Employees who do not consent to work on Sundays.


19. How are redundancies/layoffs defined, and what rules apply on redundancies/layoffs?

Definition of redundancy/layoff

Redundancy can be defined as dismissal, both individual and collective, as a result of a position, or positions, becoming redundant (for example, as result of a reorganisation).

Procedural requirements

Individual. If a position becomes redundant due to reorganisation, a company must take the following steps before it can terminate an employment contract:
  • The company must clarify the reasons behind the reorganisation. These reasons can simply be cost reduction or profit maximisation. It is the company's prerogative to implement the reorganisation. However, the explanation for the need to reorganise influences the level of severance paid to the employee whose position will be made redundant.
  • Making positions redundant must be seen as an ultimate remedy. The company should first show that it took, or at least considered, alternative measures. It should show that it either took these measures but they did not have the desired effect, or that alternative measures were not possible.
  • The company must determine which positions will become redundant. It is the company's prerogative to determine in which department positions will become redundant, but it must be able to substantiate its decision.
  • Selection of employees. After the company has decided where redundancies will be made in the company, the actual positions to be terminated must be selected using legal principles. The first principle is the reflection principle. Under this principle, the employer must first categorise all interchangeable positions. The employees within a category must then be divided into the following age groups:
    • 15 to 25 years;
    • 25 to 35 years;
    • 35 to 45 years;
    • 45 to 55 years;
    • 55 years and older.
    Subsequently, the employer must apply the last-in-first-out principle to every age group. The employee who entered into the service of the employer last should be dismissed first. This does not apply when a unique position is made redundant or when an entire category of interchangeable positions is to disappear.
Once the position that must be made redundant is determined, the company must explain what will happen to the current responsibilities of this employee.
The company must then look within the organisation for an alternative suitable position for the employee. This should be a vacant position. Positions that are filled by temporary agency workers are generally regarded as vacant. Whether a position is suitable depends on the:
  • Content and level of the position.
  • Employment conditions.
  • Whether the position is based in The Netherlands.
In principle, the company should also offer the employee a position abroad. Offering the employee an alternative position, although it might not strictly be suitable, could have a reducing influence on the level of severance.
If the employee does not accept this position, or there is no suitable alternative position, the company can move towards terminating the employment contract.
Collective. If a company will terminate the employment contracts of at least 20 employees within three months in one UWV area, the redundancy qualifies as a collective dismissal. Additional legal requirements to terminate the employment contracts apply.
In summary, a collective dismissal procedure involves the following:
  • The works council or personnel representative committee ((PVT) and the trade unions must be consulted on the restructuring plans at the earliest opportunity (see Question 20).
  • The company must formally request the advice of the works council/PVT, in writing, on the proposed restructuring (and for that matter, on any significant restructuring leading to a termination of at least a quarter of the personnel). Advice must be requested in accordance with legal requirements. The company must submit the intended decision to the works council/PVT in writing. Advice must be requested at a time appropriate for the decision to be made. When a request for advice is submitted to the works council/PVT, it must be provided with at least a statement of:
    • the grounds for the decision;
    • the alternative measures it has taken and considered;
    • how the employer selected the employees to be dismissed;
    • the anticipated social consequences for the persons who will be dismissed and who will remain in the employ of the employer; and
    • the projected measures to be taken in that respect.
  • If a decision is taken after the works council/PVT has given its advice, the employer must inform the works council/PVT of that decision in writing as soon as possible. If the advice of the works council/PVT has not, or has not wholly, been followed, the works council/PVT must also be informed why its advice has not, or has not wholly, been followed.
  • The company must formally notify the UWV of its intention to lay off the employees. Explanation should be provided as to why there is sufficient cause for dismissal, together with explanatory documents (for example, general information on the business, balance sheets, profit and loss statements and organisational charts). On receipt of notification, a one-month waiting period applies, which allows the company to negotiate a social plan and formally ask the works council/PVT for advice. This period does not apply, however, if the trade unions have declared that there is sufficient cause for dismissal.
  • The social plan contains the severance package negotiated with the trade unions. The package can also consist of arrangements relating to, for example, supplementing social security benefits or work-to-work agreements or outplacement. On expiration of the one-month waiting period (or earlier, if no waiting period has to be observed), the company must ask the UWV for permission to terminate the employment contracts. The UWV, among others, assesses whether there is sufficient cause for dismissal. If no permission is granted, the employment contracts cannot be terminated.
  • If UWV approval is obtained, each employee should be notified that his employment contract will be terminated with due observance of the applicable notice period (minus one month, as long as one month remains).
  • A settlement is usually reached between the employer and the employees. If so, the route with the UWV does not have to be followed or completed.

Redundancy/layoff pay

Employee representation and consultation

20. Are employees entitled to management representation (such as on the board of directors) or to be consulted about issues that affect them? Is employee consultation or consent required for major transactions (such as acquisitions, disposals or joint ventures)?

Management representation

Employees are not entitled to management representation.


Where an enterprise employs 50 or more people, the employer must set up a works council. If an employer with 50 or more employees considers transferring all or part of an undertaking, it must, before its decision on the matter, request the advice of the works council. If the employer disregards the works council's advice where that advice is negative for the employer, the works council can file a complaint against the employer's decision to proceed with the transfer. This complaint is made to the Enterprise Chamber of the Amsterdam Court of Appeal (Ondernemingskamer), which can order the company to reverse its decision.
An enterprise with at least ten but fewer than 50 employees which does not have a works council can set up a PVT. A PVT has consent and advisory powers, and the right to receive general information. Its consent powers apply to:
  • Working hours.
  • Working environment.
  • Policy on illness.
Its advisory powers apply to proposed decisions that could result in the loss of jobs or in major changes in the work or a change of employment conditions affecting at least a quarter of the active employees. However, if a subject is already covered by an applicable CBA, the advisory powers of the PVT no longer apply. The PVT does represent the employees' interests but cannot impose its (positive or negative) advice or consent on these employees. Individual employees can still agree or object to the intended company decision. In relation to the advisory powers of the PVT, the PVT does not have the right to appeal to the Enterprise Section of the Amsterdam Court of Appeal. If the PVT has given negative advice, the company can still implement the proposed decision without the PVT being able to appeal against it. However, if the company does not adhere to the advisory and consent rights of the PVT at all, the PVT has the right to appeal to the competent court.

Major transactions

The employer (management) must seek the prior advice of the works council for proposed decisions concerning a number of important subjects. These subjects include (Article 25, Works Council Act 1971):
  • Termination of, or a major change in, the activities of the enterprise.
  • Major investments.
  • Important reorganisations.
  • Mergers.
  • Takeovers.
  • Change of location.
  • Major redundancies.
The advice of the works council must be sought at the appropriate time, so that it can influence the proposed decision. If the advice is positive, the employer can go ahead. For proposed major decisions subject to Article 25, the same applies on a share sale as well as an asset sale.
21. What remedies are available if an employer fails to comply with its consultation duties? Can employees take action to prevent any proposals going ahead?


The employer must observe proper procedures, particularly those in the Works Council Act 1971.

Employee action

If the advice (see Question 20, Consultation) is negative but the employer takes the proposed decision anyway, the employer must observe a waiting period of one month before it can implement its decision. During that one-month waiting period, the works council can petition the Enterprise Chamber of the Amsterdam Court of Appeal, and claim that the decision could not have been reasonably arrived at in view of the interests concerned.
The Court can order the employer to revoke its decision and/or reverse any act of implementation (either permanently or temporarily). However, the Court rarely rules in favour of the works council if the objections of the works council are only based on the merits of the case. The employer has considerable freedom in determining company policy. The Court is far stricter when the petition is based on procedural matters.

Consequences of a business transfer

22. Is there any statutory protection of employees on a business transfer?

Automatic transfer of employees

In a transfer of undertaking, all employees employed for those activities transfer to the acquirer by operation of law under their current terms and conditions of employment (Articles 7:662 to 665a, Civil Code). Separate arrangements apply to pensions (see Question 31).

Protection against dismissal

An employee is protected against dismissal on a business transfer (Article 7:670(8), Civil Code). Only economic, technical or organisational reasons (ETO reasons) can justify a dismissal as part of a transfer of undertaking.

Harmonisation of employment terms

In principle, a transfer of undertaking in itself cannot be a reason to amend the employment conditions. If the amendment is based solely on the transfer of undertaking, the arrangements or amendments are void.
An employee who agrees to other terms and conditions of employment (even if comparable to his current ones) before or during the transfer can, even afterwards, successfully claim that the amendment is invalid, and claim their former terms and conditions as of the transfer date, or a one-off payment for the differences between the packages. Further, the employee can request a court to terminate the employment contract. Where this occurs, the court holds the employer liable for the termination if the new terms and conditions are substantially detrimental to the employee, and will order the employer to grant the employee severance payments (see Question 17, Severance payments).

Employer and parent company liability

23. Are there any circumstances in which:
  • An employer can be liable for the acts of its employees?
  • A parent company can be liable for the acts of a subsidiary company's employees?

Employer liability

An employer is liable for the acts of its employees if the employee is liable to a third party because the employee has caused damage while performing their work, unless the damage is the direct result of the employee's intent or willful recklessness (Article 7:661, Civil Code and Article 6:170(1), Civil Code).

Parent company liability

In principle, a parent company cannot be liable for the acts of a subsidiary company's employees.

Health and safety obligations

24. What are an employer's obligations regarding the health and safety of its employees?
An employer must take those measures relating to the safety of the workplace, and provide instructions, as are reasonably necessary to prevent employees from incurring any damage (duty of due care) (zorgplicht) (Article 7:658(1), Civil Code). The duty of due care extends to the:
  • Layout of the workplace.
  • Maintenance of rooms.
  • Raw materials, tools and equipment used by employees in performing their duties/work.
An employer must draw up a risk assessment and evaluation (risico inventarisatie en evaluatie) (RI&E) (Working Conditions Act 1998). In this respect, an employer must investigate the specific dangers connected to the company's activities. Following determination of the risks, the employer must take and enforce those measures which may reasonably be required, taking into account all circumstances, to establish an optimum safety level. In doing so, the employer must take into account the:
  • Nature of the activities.
  • Foreseeability of the danger.
  • Risk of danger.
  • Gravity of possible consequences.
  • Burden of taking these measures.
The employer must take into account in advance that employees may be forgetful, and that the everyday routine may result in a slackening of attention to their own safety and the safety rules. It is not sufficient to provide the employees with instructions on only one occasion. The employer must regularly point out the risks to employees and check whether they comply with the safety rules. If an employee violates the safety rules repeatedly, the employer should sanction the employee.
The employer has a duty of care based on the Working Conditions Act 1998 and the Working Conditions Decree 1999 (Arbeidsomstandighedenbesluit). The employer is in principle liable for damage incurred by an employee in an accident caused by the employer's violation of this statutory duty.

Taxation of employment income

25. What is the basis of taxation of employment income for:
  • Foreign nationals working in your jurisdiction?
  • Nationals of your jurisdiction working abroad?

Foreign nationals

In general, if an individual is living and working in The Netherlands, this person is taxable on his worldwide income (including employment income). This is irrespective of whether the individual is a foreign or Dutch national.
However, foreign nationals can qualify for what is known as the "30% tax ruling". Under this tax ruling, 30% of the salary can be paid out as tax-free compensation for costs, and the employee can benefit from treatment as a non-resident for tax purposes. Consequently, the employee is not taxed on passive income but only on Dutch-source income (that is, employment income related to employment activities performed in The Netherlands). If an individual only works in The Netherlands (and does not live there), the individual is taxable only on Dutch-source income. All income (including income in kind) related to employment activities in The Netherlands is taxable at progressive tax rates, unless a certain exemption applies (for example, specific business costs).

Nationals working abroad

If Dutch nationals are living and working abroad, they are not taxed in The Netherlands on employment income. An exemption can apply in relation to a directorship fee for a Dutch company. This is determined by the applicable tax treaty (if any). If a Dutch national is living in The Netherlands but working abroad, the applicable tax treaty is the basis for determining which country has the right to tax the employment income earned abroad. In most tax treaties, it is generally determined that the working country has the right to levy taxes. However, if the employee is present in that working country for fewer than 183 days a year or any 12-month period (depending on the applicable tax treaty), and the salary costs are carried by a Dutch employer, the employment income is taxable in The Netherlands.
26. What is the rate of taxation on employment income? Are any social security contributions or similar taxes levied on employers and/or employees?

Rate of taxation on employment income

Tax rates on employment income are progressive. There is a distinction between national insurance (NI) premiums and employee insurance (EI) premiums. NI premiums are included in income tax and are due, for example, for the state old-age pension.
For 2012, the income tax and NI premiums are:
  • EUR0 to EUR18,945: 33.1% (1.95% tax and 31.15% NI).
  • EUR18,945 to EUR33,863: 41.95% (10.8% tax and 31.15% NI).
  • EUR33,863 to EUR56,491: 42% (tax only).
  • EUR56,491 and above: 52% (tax only).

Social security contributions

Premiums are paid by the employer and are due, for example, for unemployment and disability. The amount of these premiums depends on the individual circumstances of the employee and the employer. For 2012, EI premiums are approximately EUR8,000 per employee. This estimate is based on the maximum amount, since no premiums are due for income up to about EUR50,000.


State pensions

27. Do employers and/or employees make pension contributions to the government in your jurisdiction?

Contributions paid to the government

Each individual subject to the social security system (usually resident employees) must pay a contribution to the state old age pension (AOW) until the state old age pension date has been reached (currently 65, which will increase as of 2013 to 67 in 2023 (see Question 37, Pensions)). The yearly contribution amounts to 17.9% of taxable income from employment and home ownership (with the contribution ceiling set at EUR33,863 for 2012).

Taxation of contributions

AOW contributions are levied in the same way as tax on employment income (see Question 26), and are withheld as part of NI premiums from gross salary. As wage tax and contributions to the state old age pension are an advance levy on income tax and NI premiums, the contributions made by payroll are deducted from the final personal income tax assessment.

Monthly amount of the government pension

The monthly amounts of state old age pension are established twice a year. At 1 July 2012, the monthly state old age pension per person is:
  • Married couples: EUR722.74 (plus EUR42.25 monthly holiday allowance).
  • Single persons: EUR1,051.98 (plus EUR59.16 monthly holiday allowance).
  • Single persons with a child below the age of 18: EUR1,334.83 (plus EUR76.06 monthly holiday allowance).
Different amounts apply if the state old age pension was provided before 1 February 1994.

Supplementary pensions

28. Is it common (or compulsory) for employers to provide access, or contribute, to supplementary pension schemes for their employees? Do these schemes provide pensions, the value of which:
  • Is linked to the employee's salary?
  • Is linked to employer and/or employee contributions and investment return on those contributions?

Linked to the employee's salary

Supplementary pension plans can exist in addition to the state old-age pension. These plans are financed by contributions paid by the employer and/or employee and managed by industry or company pension funds or by insurance companies.
Employee contributions are withheld from the employee's salary and paid by the employer to the pension provider. The employee cannot, in principle, directly make contributions to the pension provider himself.
The employer should be the policyholder of the pension plan. Exceptions exist for employees who already had an individual pension plan (c-policy) before 1 January 2007, and have not switched employer.
An employer is not obliged to provide supplementary pension plans unless it has promised the employee a pension plan, or a CBA or government initiative requires it. There are several ways in which supplementary pension benefits can be arranged and financed:
  • Defined benefit system (such as years of life, final pay or average pay plan). In a defined benefit system, the pension benefit as of the pensionable date is in principle linked to the employee's salary and years of participation in the pension plan.
  • Defined contribution system (see below, Linked to employer and/or employee contributions).

Linked to employer and/or employee contributions

In a defined contribution system, the pension benefit is linked to the:
  • Contribution paid.
  • Return on investment.
  • Applicable interest rates as at the pensionable date.
29. Is there a regulatory body that oversees the operation of supplementary pension schemes?

Regulatory body

The Dutch National Bank (DNB) supervises compliance of pension funds and pension insurers with pension regulations. This supervision focuses on the financial solidity of pension funds (whether they are solvent) and the financial stability of the pension funds sector. The Authority for the Financial Markets (AFM) is responsible for supervising the communications of pension providers.

Regulatory framework

Once a pension fund is set up or an insurer is administering pension plans, supervision involves gathering and assessing information. DNB has the following sources of information for ongoing supervision:
  • Articles of association of the pension fund, pension rules and regulations, and administration agreements between the pension fund and the employer(s).
  • Actuarial and technical business reports (ABTN).
  • Reports and financial statements.
  • Quarterly reports.
  • Continuity analysis.
  • Reports requested on an ad hoc basis.
The Financial Assessment Framework (FTK), which is part of the Pension Act and is currently under revision, sets out the statutory financial requirements for pension funds. Based on the FTK, a pension fund must have sufficient own funds to ensure, with a confidence level of 97.5%, that the value of the fund's investments will not be less than the level of the technical provisions within a period of one year (minimum required capital).
If the pension fund will face a funding shortfall or reserve deficit, it must submit a short or long-term recovery plan to DNB. This recovery plan must outline how the pension fund will eliminate the shortfall or deficit within three (temporarily extended to five) years (in case of a funding shortfall) or 15 years (in case of a deficit shortfall).
To exercise effective supervision, DNB can penalise breaches of the Pension Act (such as the FTK), including:
  • Administrative fines.
  • Orders (possibly subject to periodic penalty payment).
  • Public warning.
  • Appointment of an administrator or curator.

Tax on pensions

30. Are any tax reliefs available on contributions to supplementary pension schemes (by the employer and employees)?

Tax relief on employer contributions

As long as the pension contribution is within the tax limits established by law, a deferred taxation system applies. This means the pension benefit that will be received from the pensionable date is subject to tax, but the pension contributions paid, either by the employee or the employer, are not subject to tax.

Tax relief on employee contributions

31. Is there any legal protection of employees' pension rights on a business transfer?

Automatic transfer of pension rights

In an asset transfer, all rights and obligations of the employer under employment contracts with employees at the time of the transfer pass to the acquirer of the company by operation of law. In relation to pensions, specific rules and situations apply:
  • If the seller does not provide a pension plan and the acquirer does: the transferred employees are entitled to the pension plan of the acquirer as of the transaction date (for the accrued years of service with the acquirer only).
  • If the seller provides a pension plan and the acquirer does not: the transferred employees are entitled to the same pension plan as before the transaction date and the acquirer must continue this pension plan (acknowledging all accrued years of service with the seller).
  • If both the seller and acquirer provide pension plans that differ: the acquirer can choose between offering the transferred employees:
    • the acquirer's pension plan as of the transaction date (for the accrued years of service with the acquirer only); or
    • a continuation of the seller's pension plan (acknowledging all accrued years of service with the seller) after the transaction date.
    This acquirer's choice must be made before the transaction date and must be effectively communicated to the transferred employees by the seller and the acquirer. If the seller and/or acquirer are contractually or legally obliged to join an industry-wide pension fund, or a CBA includes pension requirements, very detailed exceptions may apply.
    A new pension plan or pension provider does not automatically imply a transfer of the accrued pension entitlements.

Other protection for pension rights

The Pension Act also contains a prohibition against commuting (that is, cashing-in) pensions (afkoopverbod). An exception is made for small pension entitlements up to the amount of EUR438.44 (for 2012).
32. Can the following participate in a pension scheme established by a parent company in your jurisdiction:
  • Employees who are working abroad?
  • Employees of a foreign subsidiary company?
If an employer offers its employees a pension promise, the employer must administer this pension promise with a pension provider (pension fund or insurance company). To facilitate this, a pension execution agreement should be agreed on between employer and pension provider. An employer can only offer a pension promise to its own employees. If a Dutch subsidiary participates in pension plan of its parent company, the Dutch subsidiary must agree on a pension execution agreement with the pension administrator of the parent company. If the pension provider of the parent company is based outside The Netherlands, the pension provider must obtain a licence from the foreign regulatory authority before accepting any pension contributions from the Dutch subsidiary. Detailed conditions apply where the pension provider of the parent company is based in The Netherlands while the subsidiaries are based abroad.

Employees working abroad

No additional approval or authorisation requirements from the local regulator apply.
Whether an employee can continue its Dutch pension plan while working abroad depends on whether the employee's employment remuneration is taxable in The Netherlands. If the employment remuneration is taxed locally, the question of whether an employee can continue its Dutch pension plan depends on local legislation. During a secondment, deviating conditions may apply.

Employees of a foreign subsidiary company

If the employee of the foreign subsidiary is not employed by the Dutch employer (assuming that a secondment, if any, does not qualify as an employment relationship), the employee is not entitled to the tax reliefs referred to in Question 30.
Exceptions can apply if the employee falls in the scope of a generally declared binding CBA or mandatory industry-wide pension fund.
Subject to certain taxation-related conditions, it may be possible to continue the foreign national's 'home' state pension, subject to the laws of the foreign national's home jurisdiction. Confirmation from the Dutch tax authorities is required to continue the home state pension.
33. Is there any protection provided for pension scheme benefits where the sponsoring employer becomes insolvent? If so, who provides the protection, and how does this operate?
An employer's pension promise must be administrated by external pension providers in order to protect employees against a loss of accrued pensions due to insolvency of the employer. Consequently, employees will still have a pension claim for accrued entitlements against the pension provider, as the insolvency of the employer does not release the pension provider from its contractual obligation to make pension payments in accordance with the plan's rules.
In the case of an employer's insolvency, the Institute for Employee Insurance Agency (UWV WERKbedrijf) takes over some of the employer's financial obligations towards the employees, including any pension contributions that have remained unpaid over a maximum of one year before the termination of employment.


34. Is it common to reward employees through contractual or discretionary bonuses? Are there restrictions or guidelines on what bonuses can be awarded?
There are no mandatory requirements relating to bonus/commission payments. An employer is not, for example, obliged to pay bonuses. This differs if the employer and the employee have agreed a certain bonus scheme/plan. Whether bonuses are usual depends on what the industry, level and kind of position of the employee.
If an employer chooses to grant bonus payments, all employees must be treated equally for the employer to avoid any discrimination claims (see Question 15). An employee is, for instance, in principle entitled to receive bonus payment equal to that commonly paid to an employee of the opposite sex performing work of an equivalent value. Dutch law specifically provides for the equal treatment of men and women. Further, discrimination relating to entitlement to a bonus on the grounds of race, gender, handicap or chronic illness is not allowed. For these reasons, it is not advisable to make a distinction relating to bonus entitlement between employees who work part time and those who work full time (most part-time workers are women).
The conditions and criteria under which the employee is entitled to a bonus payment must be objective.
A bonus entitlement based on the performance of the employee and/or the company is permissible.

Intellectual property (IP)

35. If employees create IP rights in the course of their employment, who owns the rights?


The employer is considered to be the maker and rights-holder of the copyright protected work if all the following apply (Copyright Act 1912):
  • The creation of the work falls within the scope of the activities of the employee (that is, the creation of the work must fit the job description).
  • The employment relationship is of such nature that the employer has control over the creating process.
  • The employer and employee have not agreed otherwise.
The employer is also considered the copyright owner if the work does not fit the job description but results from a firm assignment of the employer that has been accepted by the employee.


An employee who makes an invention in the course of their employment has, in principle, a claim to the patent (Patent Act 1995). However, the claim to a patent accrues to the employer if the nature of employment requires the employee to make inventions of the same kind to which the patent application relates. Parties can deviate from this in writing.
A person who has the right to a patent (employer) must pay the inventor (employee) a reasonable fee for relinquishing their rights to the patent. This reasonable fee must be paid where it is considered that the employee has not received adequate payment in the form of wages, allowance or other payment made (Patent Act). Any clause that deviates from this provision is null and void.

Restraint of trade

36. Is it possible to restrict an employee's activities during employment and after termination? If so, in what circumstances can this be done? Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

Restriction of activities

It is possible to agree in the employment contract to a prohibition on other work during the course of employment.

Post-employment restrictive covenants

An employer is not obliged to pay its former employees if they are subject to post-employment restrictive covenants, for example, a non-competition clause. However, an employee can claim compensation for the duration of the non-competition clause if the clause prevents them, to a large extent, from taking up employment with another employer (Article 7:653(4), Civil Code).

Proposals for reform

37. Are there any proposals to reform employment law or pensions law in your jurisdiction?

The Coalition Agreement

On 29 October 2012, the leader of the liberal Party for freedom and Democracy (VVD), Mark Rutte, and the leader of the Labour Party (PvdA) Diederik Samsom, presented the Coalition Agreement (Regeerakkoord). The Coalition Agreement is an arrangement between the coalition parties VVD and PvdA on new budget cuts and reforms. The Coalition Agreement only entails proposals on headlines, concrete legislative proposals on these propositions will have to be drafted and submitted. After that, the Senate and House of Representatives still have to decide on the content of the Coalition Agreement.

Dismissal system

The Coalition Agreement contains plans for sweeping reforms of the Dutch dismissal system. The following are the most important propositions in relation to the current dismissal system:
  • The dismissal procedure by dissolution by the competent court will disappear, except where a ban on termination applies or in the case of termination of an employment contract for a definite period of time without a clause to terminate the employment contract prior to the period agreed on.
  • The preventive analyses of dismissal by the UWV will be maintained. The employer must request the UWV to provide its advice on the intended dismissal. This procedure with the UWV could be replaced by a similar procedure in a collective bargaining agreement.
  • Employees who are involuntary dismissed or where the employment contract for a definite period of time will not be renewed will receive a transition budget from their employer (to be used for education) (transitiebudget) of a quarter monthly salary per year of service, with a maximum of four months' salary.
  • When the employee disagrees with the dismissal or the dismissal conditions, he may have the dismissal reviewed by the court. Where the employer departed from the advice of the UWV, the court may revoke the dismissal. Where the court finds the dismissal unlawful or finds the employer mainly to blame for the dismissal, the court may award a severance. This severance will be half a month's salary per year of service, with a maximum of EUR75,000.
  • The unemployment insurance contribution for employers will increase.
  • Parties may deviate by collective bargaining agreement from the current legal principle for selecting the actual positions which will become redundant in the case of a reorganisation (the reflection principle).

Severance payments and remuneration

In 2012, there will be no correction for inflation to the progressive tax brackets applicable for wage/personal income tax purposes (adopted in the Bill Budget 2013). From 31 March 2013, employers may have to report and contribute additional wage taxes (Werkgeversheffing). The extra tax burden is determined for each individual employee, and equals 16% (flat rate) of any wages (including salaries, bonus, benefits in kind) earned above the threshold of EUR150,000 in the calendar year 2012. This extra wage tax contribution is an extra cost for the employer (deductible for income tax purposes), and cannot be recovered from employees. However, it only applies in the calendar year 2013. As of 2014, severance pay will be limited. The standard for the severance payment will be a quarter of a month's salary for each year of service, with a maximum of six months. The remaining severance payment must also be used for training and retraining, and for "work-to-work" initiatives. It is not yet clear exactly how this policy will be implemented. The employer's levy (Werkgeversheffing) for excessive severance payment will be increased from 30% to 75%. If an employee receives a payment totalling more than one year's annual salary and he earned more than EUR531,000 gross (2012 figures) in the two years preceding dismissal, this is deemed an excessive severance payment. In this case, the employer must pay an additional final levy on the severance payment on top of the usual withholding taxes.


The retirement age for state pensions (AOW) will increase. In 2013, the retirement age will increase by one month. In subsequent years, the retirement age will increase further and in larger increments until reaching 66 in 2019 and 67 in 2023. In 2024, the retirement age will be linked to life expectancy. For occupational pensions, the retirement age will increase to 67 in 2014. Under the Coalition Agreement, the retirement age for state pensions will increase sooner: to 66 in 2018 and to 67 in 2021. As of 2021, the retirement age will be linked to life expectancy. Furthermore, with respect to the supplemental pension, income above EUR100.000 will no longer accrue pension entitlements. As already mentioned, these are just proposals; concrete legislation has not been drafted or submitted yet.

Online resources

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Contributor details

Karin Bodewes

Baker & McKenzie Amsterdam NV

Qualified. The Netherlands, 1986
Areas of practice. Labour and employment law.
Recent transactions
  • Representing large international companies and top executives.
  • Boardroom consultancy and dismissal law, especially individual dismissals, dissolution proceedings and dismissals of statutory managing directors.
  • Non-competition clauses, tort, full employee competition and corporate governance.

Mirjam de Blécourt

Baker & McKenzie Amsterdam NV

Qualified. The Netherlands, 1990
Areas of practice. Labour and employment law.
Recent transactions
  • Advising boards of directors of multinationals about employment law matters.
  • Major collective dismissals, providing consultancy services concerning requests for advice from works councils and the harmonisation and integration of employment conditions packages in connection with mergers and takeovers.
  • Strategic matters relating to works councils and trade unions.
  • Outsourcing, collective agreements and stock option schemes.
  • European and other works councils.
  • Conducting legal proceedings relating to social plans, major dismissals and board resignations.