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:

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.

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

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.

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.

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:

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.

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):

Cost. The costs are as follows:

Time frame. The time frame for obtaining these approvals is as follows:

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:

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:

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.

The employer must confirm the following to the employee electronically or in writing (Article 7:655, 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).

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

For companies operating in The Netherlands there are generally:

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.

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:

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.

There is a minimum wage, which is dependent on age and applies from 1 July 2012:

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:

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.

The following rules apply to rest breaks:

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.

The following provisions apply to shift workers:

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.

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:

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 are not included in the minimum holiday entitlement. In The Netherlands, there are eight public holidays:

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:

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.

See above, Entitlement to time off.

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

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.

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.

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.

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.

Short-term care leave. An employee is entitled to leave to render necessary care to an ill person, including:

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 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.

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:

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 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.

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:

The data controller has statutory obligations concerning the processing of employee personal data, which can give rights to the employer as well.

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:

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:

See above, Protection from discrimination.

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.

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:

The employee must give a notice period of one month.

Deviation from these notice periods is possible in writing, on condition that both:

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.

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:

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).

By law, an employment agreement entered into for an indefinite period can be terminated:

Dismissal is not possible if one of the statutory bans on termination applies, for example dismissals related to (Civil Code):

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:

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.

Categories of protected employees include:

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).

Individual. If a position becomes redundant due to reorganisation, a company must take the following steps before it can terminate an employment contract:

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:

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:

See Question 17, Severance payments.

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:

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.

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):

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.

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

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.

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).

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.

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).

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).

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

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:

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.

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).

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.

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:

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.

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).

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.

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:

Different amounts apply if the state old age pension was provided before 1 February 1994.

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:

In a defined contribution system, the pension benefit is linked to the:

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.

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:

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:

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.

See above, Tax relief on employer contributions.

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:

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).

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.

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.

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.

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.

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.

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 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.

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

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).

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.

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:

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.