Hiring your first employee in the Netherlands: what employers need to know
Key takeaways
- You do not need a Dutch entity to hire. You need either a registered Dutch employer (a BV) or an Employer of Record (EOR) that employs the person on your behalf.
- Budget 18% to 25% in employer social security on top of gross salary, plus the mandatory 8% holiday allowance. Fixed-term contracts cost more: AWf is 7.74% versus 2.74% for permanent.
- Two Dutch rules catch international employers out: up to two years (104 weeks) of employer-paid sick leave, and the chain rule that converts repeated fixed-term contracts into a permanent one.
- An EOR can complete a first hire in one to two weeks; setting up a BV and running your own payroll typically takes four to eight weeks for an EU/EEA hire with no immigration.
Introduction
Hiring your first employee in the Netherlands is not complicated if you know what is required. Dutch employment law is well-structured and employee-friendly, which is a strength when you want to attract good people, but requires careful setup if you are coming from outside the country.
Most international companies get stuck on the same questions: do we need a Dutch legal entity before we can hire? What are our payroll obligations? How much does an employee actually cost? And what happens if we hire the wrong person?
This guide covers the practical steps for making a first hire in the Netherlands: what you need to set up, what Dutch law requires, and where Employer of Record (EOR) fits in as a hiring model if you do not yet have a local entity.
Key facts at a glance
| Topic | Detail |
|---|---|
| Country | Netherlands |
| Dutch entity required to hire? | No; a BV or an Employer of Record (EOR) works |
| Minimum wage (from 1 Jan 2026) | €14.71 per hour (age 21+), reviewed twice a year |
| Employer social security on-costs | Roughly 18% to 25% of gross salary |
| Holiday allowance (vakantiegeld) | 8% of gross annual salary, statutory |
| Employer sick pay obligation | Up to 104 weeks (2 years), minimum 70% of salary |
| Payroll filing | Monthly loonheffingen returns to the Belastingdienst |
Do you need a Dutch entity to hire your first employee?
You do not need a Dutch legal entity (a BV or NV) to hire your first employee in the Netherlands. However, you do need a registered employer or a legal structure capable of running Dutch payroll and fulfilling employer obligations under Dutch law.
International companies typically solve this in one of two ways: they set up a Dutch BV and register as an employer, or they use an Employer of Record (EOR) that employs the person on their behalf. A third option, engaging the person as a contractor, is possible but carries classification risk, particularly if the relationship looks like employment in practice.
The right model depends on how committed you are to the Netherlands. If you are making a first exploratory hire to test the market, EOR gives you speed and avoids the cost and administrative burden of entity setup. If you are building a team of ten or more, or need direct control over employment contracts and HR policies, setting up a Dutch BV may make more sense in the medium term. Our guide on EOR vs local entity in the Netherlands walks through that decision in detail.
The main hiring models in the Netherlands
Dutch BV (private limited company). You incorporate a legal entity in the Netherlands, register as an employer with the Dutch Tax and Customs Administration (Belastingdienst) and the Chamber of Commerce (KVK), and run payroll directly. This gives you full control and is the right structure for long-term presence, but takes time to set up and comes with ongoing administrative obligations.
Employer of Record (EOR). A Dutch-registered organisation employs the worker on your behalf. You direct the work; they handle the employment contract, payroll, social security, benefits, and compliance. This allows you to hire in the Netherlands within days without a local entity. See our Employer of Record in the Netherlands page for how this works.
Contractor engagement. Engaging an individual as a self-employed contractor (ZZP'er) avoids the employer relationship. However, Dutch authorities are increasingly strict on false self-employment (schijnzelfstandigheid). If the relationship involves control, exclusivity, and personal labour, it is likely employment, and misclassification exposes you to backdated tax and social security liabilities.
How to register as an employer in the Netherlands
If you are setting up a Dutch BV to hire directly, registration involves two steps:
Register with KVK. The Dutch Chamber of Commerce registers your business and issues a KVK number. This is the company's formal identification in the Netherlands.
Register with the Belastingdienst. Once registered with KVK, you apply for a loonheffingennummer, a wage tax number that allows you to withhold and remit payroll taxes (loonheffingen) on behalf of your employees. This number is required before you can run your first payroll.
You will also need your employee's BSN (Burgerservicenummer), the Dutch citizen service number used for tax and social security administration. If you are hiring someone already resident in the Netherlands, they will have a BSN. If you are relocating someone from abroad, obtaining their BSN should be part of the onboarding process.
Monthly payroll tax returns (aangifte loonheffingen) must be filed with the Belastingdienst. Payroll records must be retained for at least seven years.
Employment contracts in the Netherlands: what you need to know
Dutch employment law requires that employees receive written confirmation of their employment terms. The core terms must be provided within one week of the start date and must include:
- Name and address of the employer and employee
- Place of work
- Job title and nature of work
- Salary and payment schedule
- Working hours
Additional terms, including notice periods, dismissal procedures, and contract type, must be confirmed within one month.
Contracts can be written in any language, but if there is any dispute, Dutch courts will apply Dutch law regardless. If your employee works primarily in the Netherlands, Dutch employment law governs the contract.
Most employment contracts in the Netherlands also reference a CAO (Collectieve Arbeidsovereenkomst), a collective labour agreement for the sector. If your business or your employee's role falls under a sector CAO, its terms apply on top of the statutory minimums. Some CAOs mandate higher minimum salaries, additional leave, or specific bonus structures. It is worth confirming whether a CAO applies to your situation before finalising the contract.
Probation periods and fixed-term contract rules
Probation periods in the Netherlands are regulated by law:
| Contract length | Maximum probation |
|---|---|
| Less than 6 months | Not permitted |
| 6 months to 2 years | 1 month |
| Indefinite or 2 years or more | 2 months |
A probation period must be agreed in writing. During probation, either party can terminate the contract without notice and without giving a reason.
Fixed-term contracts are common for a first hire, but the Netherlands has strict chain rules (ketenregeling). An employee becomes entitled to a permanent (indefinite) contract after three consecutive fixed-term contracts, or a total of three years of consecutive fixed-term contracts.
Breaking the chain: if you break the chain with a gap of more than six months, the count resets. This means companies cannot indefinitely keep employees on a series of short-term contracts, and courts will enforce permanent status if the rules are breached.
Payroll setup and tax obligations in the Netherlands
The Netherlands uses a combined payroll tax system called loonheffingen, which brings together income tax withholding (loonbelasting) and social insurance contributions into a single monthly payment to the Belastingdienst.
2026 income tax rates applied through payroll:
| Income bracket | Tax rate |
|---|---|
| Up to €38,883 | 35.70% |
| €38,883 to €79,137 | 37.56% |
| Above €79,137 | 49.50% |
The employer withholds tax from the employee's gross salary each month and remits it alongside the employer's own social security contributions.
Minimum wage (2026). The statutory hourly minimum wage from 1 January 2026 is €14.71 per hour for employees aged 21 and over. The minimum wage is adjusted twice per year, on 1 January and 1 July.
Holiday allowance (vakantiegeld). Employers must pay an additional 8% of gross annual salary as holiday allowance. This is typically paid out in May or June and is a statutory requirement, not optional.
Employer social security contributions in the Netherlands (2026)
In addition to withholding employee tax and social security from the payslip, employers must pay their own contributions. These are a significant additional cost on top of gross salary and should be factored into total employment cost modelling before you make an offer.
The key employer contributions for 2026, applied on gross salary up to a maximum annual premium base of €79,409:
| Contribution | Employer rate (2026) | Notes |
|---|---|---|
| AWf (unemployment insurance) | 2.74% permanent / 7.74% flexible | Deliberate lever to encourage permanent contracts |
| Aof (disability insurance) | 6.26% small / 7.61% larger employers | Rate depends on employer size |
| Whk (return-to-work premium) | ~1.52% | Sector-dependent |
| Kinderopvangtoeslag (childcare) | 0.50% | Flat rate, unchanged for 2026 |
Permanent vs fixed-term: the AWf difference is a deliberate policy lever to encourage permanent employment. If you hire on a fixed-term contract, your unemployment contribution is almost three times higher (7.74% versus 2.74%).
Total employer on-costs typically add between 18% and 25% to gross salary, depending on contract type and employer size. This is an important number for budget planning. For a wider country-by-country comparison, see our guide on hiring your first European employee.
Statutory employment rights you must provide
Dutch law sets minimum standards that apply to all employment relationships regardless of contract type.
Annual leave. The statutory minimum is four times the number of working hours per week. For a standard 40-hour week, this means a minimum of 20 days' leave per year. Many CAOs and most competitive employers offer more (typically 25 days).
Sick leave. Employers are responsible for paying sick employees at least 70% of their salary for up to 104 weeks (two years). During the first year, most employers pay the full salary. The two-year sick pay obligation is one of the more significant employment risk areas for international companies unfamiliar with Dutch law: it is long by European standards.
Maternity leave. At least 16 weeks, fully covered through UWV (the Dutch social security agency). The employer advances the payment and reclaims it from UWV.
Partner and paternity leave. One week at full pay immediately after birth, plus five additional weeks' leave within the first six months at 70% of salary via UWV.
Notice periods. After probation, the statutory minimum notice period on the employer side starts at one month and increases with length of service (up to four months after 15 years). Employee notice periods are shorter by default. Notice periods can be extended by contract but not reduced below the statutory minimum.
Hiring a foreign national in the Netherlands
If the person you want to hire already has the right to live and work in the Netherlands, as an EU/EEA citizen or as a holder of a valid residence permit, you can proceed directly to the employment steps above.
If they are a non-EU national without existing Dutch work authorisation, you will need to apply for a combined permit for residence and work (GVVA) or a Single Permit through the IND (Immigration and Naturalisation Service). For highly skilled roles, the Highly Skilled Migrant (Kennismigrant) permit is the most common route.
For the Highly Skilled Migrant permit, the salary threshold for 2026 is set by the IND and varies by age. Your company must be a recognised IND sponsor to use this route, and registration as a recognised sponsor takes several weeks and should be factored into your hiring timeline.
EOR and immigration: if you are using an EOR to hire the employee, the EOR must be the registered IND sponsor, since it is the legal employer. Check this specifically with your EOR provider if immigration is part of your first hire scenario.
The 30% expat scheme: what employers should know
If you are hiring someone from abroad who meets the eligibility criteria, the Netherlands offers the 30% ruling, officially now called the Expat Scheme, which allows the employer to pay up to 30% of the employee's gross salary as a tax-free allowance.
2026 eligibility requirements:
- Recruited or transferred from abroad
- Lived more than 150 km from the Dutch border for at least 16 of the 24 months before starting in the Netherlands
- Holds a genuine employment relationship with a Dutch payroll-running employer
- Taxable wage meets or exceeds €48,013 (2026 threshold)
- For employees under 30 with a qualifying master's degree: €36,497
The maximum tax-free amount for 2026 is €78,600 per year. The ruling is applied for by the employer through the Belastingdienst, and a written approval decision is required before it can be applied.
Change from 2027: from 1 January 2027, the maximum tax-free allowance reduces from 30% to 27%, with an updated income standard of €50,436. If you are planning to use this scheme for a hire made in the next 12 months, this transition is worth factoring into your offer and employment cost modelling.
The Expat Scheme applies to the tax side only. It is separate from the work permit process, which is managed by the IND.
How long does it take to hire your first employee in the Netherlands?
Via EOR. A first Dutch hire through an Employer of Record can typically be completed within one to two weeks, assuming the employment offer is agreed and the employee has the right to work in the Netherlands. The EOR handles contract issuance, payroll setup, and social security registration without you needing a local entity.
Via your own Dutch BV. Timeline depends on entity setup. Incorporating a Dutch BV takes two to four weeks, after which you register with KVK and the Belastingdienst. Once registered, you can issue an employment contract and run payroll. Total timeline from decision to first payroll is typically four to eight weeks for an EU/EEA hire with no immigration requirements. If you also need to become an IND Recognised Sponsor, required to hire non-EU nationals on a Highly Skilled Migrant permit, that process runs independently of entity setup and can take anywhere from several months to over two years depending on application volume and your organisation's circumstances. Do not assume entity setup and IND sponsorship registration run in parallel on the same timeline.
If immigration support is also needed. Add four to eight weeks minimum for IND processing under the Highly Skilled Migrant route, and longer if recognised sponsor status needs to be established first.
Conclusion
The Netherlands is one of Europe's most accessible markets for international companies making a first hire. The legal framework is clear, the talent market is well-developed, and the infrastructure for employment (payroll, immigration, benefits) is mature. What catches international companies out is not complexity, but unfamiliarity: the two-year sick pay rule, the chain contract limits, the difference in AWf rates between permanent and flexible contracts, and the realities of CAO obligations.
The first decision is always the hiring model. If you are testing whether the Netherlands works for your business, an EOR gives you a compliant employment structure without the overhead of entity setup, and you can make your first hire within weeks. If you are committing to the market, building a team, establishing commercial presence, or needing direct control over employment terms, incorporating a Dutch BV is the right direction for the medium term.
Either way, getting the employment contract, payroll setup, and benefits structure right from day one matters. The cost of fixing a misclassification, a missed CAO obligation, or a two-year sick pay exposure is significantly higher than getting proper advice at the start.
Planning your first Dutch hire?
If you want to understand your options across EOR, payroll, and entity setup, Jackson & Frank's team in the Netherlands can walk you through the specifics. Contact our team or explore our Netherlands hiring and EOR services.
Sources
- Business.gov.nl, Employing your first staff in the Netherlands: employer registration and first-hire requirements
- Business.gov.nl, Employment contracts in the Netherlands: contract term and written statement requirements
- Business.gov.nl, Statutory minimum wage in the Netherlands: minimum wage rules and twice-yearly updates
- Business.gov.nl, The expat scheme (30% ruling): expat scheme eligibility and thresholds
- Business.gov.nl, National and employee insurance schemes (Dutch social security): employer social security framework
- Belastingdienst, Table 9: Employed persons' insurance contributions 2026: AWf, Aof, Whk rates and maximum premium base
- IND, Fees and required amounts for 2026: Highly Skilled Migrant salary thresholds
- ICLG, Employment & Labour Laws Netherlands 2026: notice periods, chain rules, dismissal framework
Disclaimer: This article is for general guidance only and does not constitute legal, tax, or immigration advice. Employment regulations change regularly. Consult a qualified local expert before making hiring or compliance decisions.
