1 Legal framework

1.1 Are there statutory sources of labour and employment law?

In the Netherlands, the sources of employment law primarily include:

  • the Dutch Constitution;
  • (civil) law;
  • numerous acts;
  • jurisprudence;
  • labour regulations; and
  • collective labour law and collective labour agreements.

Thanks to the court of labour disputes, case law is also a pertinent source of Dutch employment law.

Furthermore, the European Union has had a significant supplementing role due to binding legislation, complemented by the jurisdiction of the Court of Justice of the European Union.

1.2 Is there a contractual system that operates in parallel, or in addition to, the statutory sources?

The Civil Code and the individual employment contract apply to all employees.

In addition to the legal provisions, some companies may have a collective labour agreement. In these agreements, deviating provisions can be agreed on certain matters.

In addition, many companies have company regulations that apply to the employment relationship through the employment contract.

1.3 Are employment contracts commonly used at all levels? If so, what types of contracts are used and how are they created? Must they be in writing must they include specific information? Are implied clauses allowed?

Yes, employment contracts are used at all levels.

There are different kinds of contracts whereby individuals perform work in return for payment. In most cases, this is an employment contract. At other times, however, an individual works as a self-employed person, performing work on the basis of a contract for services. Although a commission contract is not strictly speaking an employment contract, both types of contracts have a lot in common.

The characteristic difference between an employment contract and an agreement for services is that only in the case of an employment contract is there a relationship of authority (the employment relationship). It is mainly the factual circumstances that determine whether there is an employment contract. It sometimes happens that an agreement for services is in fact an employment contract (in disguise).

Many variations are possible in a certain type of contract. In the case of an employment contract, for instance, a distinction can be made between fixed-term contracts (temporary contracts) and permanent contracts. And for an assignment contract, it makes a difference whether the contract is concluded with a self-employed natural person or with a company. In the case of temporary employment or secondment, there is even a combination of an employment contract and a contract for professional services.

Each type of contract has its own specific characteristics. It is of great importance that the right agreement be entered into – for example, to prevent a commission contract from being considered by the tax authorities as an employment contract, with the result that they come knocking on the employer's door to levy wage tax and social security contributions.

It is not required by law to enter into an employment contract in writing. An employment contract can therefore also be agreed orally or even tacitly, although the latter is not advisable. If an employment contract is not executed in writing, the employer in particular runs great risks, both legally and financially.

Employment contracts in the Netherlands must include the following information:

  • the name and place of residence of the employee and the employer;
  • the place or places where the work is to be conducted;
  • the employee's position or the type of work that he or she will be doing;
  • the date of commencement of employment;
  • the duration of the contract (in the case of a temporary contract);
  • how many hours the employee will be working (per day or per week);
  • the amount of the employee's salary and when it will be paid;
  • where applicable, the length of the probationary period;
  • the amount of holiday allowance;
  • the number of vacation days;
  • the duration of the notice period;
  • where applicable, the employee's pension scheme;
  • where applicable, a non-compete clause; and
  • where applicable, the collective labour agreement.

As it is not required by law to enter into an employment contract in writing, implied clauses can be and are often a major issue. In case of a dispute, the court will consider the reality of the situation, as implied both by fact and by custom and usage. On top of that, the actual situation can lead to a situation in which the legal reality is far from the formerly intended situation between the parties; it will depend very much on the specific situation what the outcome of implied clauses by operation of the law means in practice.

Ensure that you tell your Dutch employment specialist upfront what the intended legal and actual situation should be, and have the correct employment agreement prepared and signed before the employee starts work.

2 Employment rights and representations

2.1 What, if any, are the rights to parental leave, at either a national or local level?

In the Netherlands, there are two types of parental leave: maternity leave and paternity/partner leave.

The right to parental leave in the Netherlands consists of 26 times the number of hours that the parent works a week, comprising 1,040 hours with a working week of 40 hours.

The right to parental leave can be exercised only while the child is under the age of eight.

2.2 How long does it last and what benefits are given during this time?

Maternity leave: Maternity leave prior to the predicted due date lasts for six weeks. Following childbirth, maternity leave lasts for 10 weeks. Thus, the right to paid maternity leave comprises a total of 16 weeks.

Employees on maternity leave have the right to maternity benefits. Furthermore, an employer is not allowed to terminate the contract of a pregnant woman. This includes the period of 16 weeks during and an additional six weeks after the maternity leave.

Self-employed pregnant women can apply for special benefits at the Institute for Employee Benefit Schemes.

Paternity/partner leave: In January 2019, a new act granted fathers/partners in the Netherlands five paid days of ‘childbirth leave' that should be used within the first four weeks of childbirth.

Besides these five days, from 1 July 2020 onwards, the act also allows an additional five weeks of partner leave to be utilised in the first six months after childbirth. During these five weeks, partners have the right to a benefit amounting to 70% of their wages.

Furthermore, as from August 2022, the Dutch government will be introducing nine weeks of partially paid parental leave. The aim of this extension is to give both partners the opportunity to spend time with their child in the first year after birth. In addition, the leave can ensure a more equal division of work and care tasks between parents. During these nine weeks, parents are entitled to benefits of up to 50% of the maximum daily wage.

A person entitled to parental leave has the right to keep his or her own position with the working hours as stated in the employment contract. In principle, the parent is free to decide how and when to take the leave of absence.

The employer must respect the distribution of hours that the employee wishes to have, save in cases where this would severely harm the company.

2.3 Are trade unions recognised and what rights do they have?

The Dutch Constitution guarantees the right to freedom of association and assembly.

Trade unions in the Netherlands are expected to protect and safeguard the interests of their members with regard to wage development, social security, employment protection, safe working conditions and so on.

One of the most efficient tools that trade unions have are collective bargaining agreements and their say in the establishment of such.

Furthermore, termination cases concerning more than 20 employees within the same company (collective termination) will be approved by the court only when a social plan is formulated in cooperation with a trade union.

Dutch trade unions have yearly negotiations with cabinet members and employers' organisations concerning the development of wages and social security.

Lastly, members of Dutch trade unions have a seat on the Economic and Social Council.

2.4 How are data protection rules applied in the workforce and how does this affect employees' privacy rights?

In accordance with the European Convention on Human Rights, everyone has the right to respect for his or her private and family life, his or her home and his or her correspondence. Case law has shown that this article includes protection against employers.

With the implementation of the European Union's General Data Protection Regulation (GDPR) in May 2018, employees' rights and protections regarding personally identifiable information have been considerably expanded. Employers must provide employees with information about their personal data processing in a transparent, concise and comprehensible manner that is easily accessible using clear language.

Data can be lawfully processed only if and to the extent that it is:

  • compliant with the initial purpose for which it was collected;
  • in the legitimate interest of the business; or
  • necessary to perform the employment contract.

In fact, all personal data that has been collected must be deleted once the data is no longer needed for the original purpose.

The processing of personal data relating to issues such as ethnicity, political views, genetic information and sexual orientation is forbidden. The GDPR further requires employers to obtain their employees' consent for the processing of their data. The consent must be "freely given, specific, informed and unambiguous".

As all EU member states ensure equal protection of personal privacy under the GDPR, personal data can be freely transferred within the European Union without restriction. Only when the European Commission has decided that a third country guarantees an adequate level of data protection or that appropriate protection measures have been taken, or in single cases, is it permitted to transfer such data. Appropriate measures include:

  • binding corporate rules;
  • standard contractual clauses accepted by the European Commission;
  • approved codes of conduct; or
  • legally binding instruments between authorities.

2.5 Are contingent worker arrangements specifically regulated?

All employees – even those under a fixed-term contract – generally enjoy the same protections and enjoy equal rights. However, employees such as those who are pregnant, members of a works council or sick enjoy additional protection with regard to termination of contracts. Furthermore, employees with open-ended contracts enjoy added protection when exchanging their contract for a fixed-term contract.

It is also compulsory to make an offer to on-call workers who have worked on an on-call basis for 12 months. This offer must be based on the average number of hours worked in the previous 12 months. The on-call worker then has one month to accept this offer. The Collective Labour Act (SZW 2021) stipulates when this fixed scope of work must take effect if the on-call worker accepts this: at the latest on the first day after two months have elapsed following the 12 months for which the average working hours have been calculated.

As of 1 January 2021, payroll employees are entitled to the same basic pension scheme as staff in equivalent positions or to an alternative that meets a number of requirements. This means that in a number of cases, the payroll company will have to set up a pension scheme as from 2021.

The characteristic difference between an employment contract and an agreement for services is that only in the case of an employment contract is there a relationship of authority (the employment relationship). It is mainly the factual circumstances that determine whether there is an employment contract. It sometimes happens that an agreement for services is in fact an employment contract (in disguise).

If there is a genuine case of an independent entrepreneur, all protective measures of labour law are inapplicable. However, if it is a case of disguised employment, then all rules of labour law apply (eg, social security contributions, protection against dismissal, continued payment in the event of illness, the right to paid holidays).

It is therefore very important to qualify the relationship properly and realistically in advance.

3 Employment benefits

3.1 Is there a national minimum wage that must be adhered to?

In the Netherlands, all employees from the age of 21 are entitled to the statutory minimum wage. The minimum youth wage applies to younger employees.

3.2 Is there an entitlement to payment for overtime?

As from 1 January 2019, employers are obliged to pay the minimum wage, including holiday allowance, in cash for all overtime hours if the employee earns less than the statutory minimum wage for the total number of hours worked as a result of the overtime hours. Above that minimum, whether overtime is paid depends in the first instance on the agreements made in the employment contract and any collective labour agreement.

In some industries (eg, the legal world), overtime is simply part of the job and is already included in the basic salary. The point is that the work is simply finished. In other industries, there are regulations that overtime is simply paid or is compensated with extra time off in a quiet period (also called ‘time for time').

If nothing is laid down in an employment contract or collective labour agreement about overtime, this does not mean that overtime need not be paid. If nothing has been laid down, it must at least be established that:

  • the employer has assigned the overtime to the employee; or
  • the circumstances of the case show that the employee has agreed to the overtime.

The following factors should also be considered:

  • whether overtime has been paid in the past (eg, on the basis of a collective labour agreement);
  • whether it is customary in the industry for overtime to be paid (or not); and/or
  • whether the level of the position entails payment of overtime.

3.3 Is there an entitlement to annual leave? If so, what is the minimum that employees are entitled to receive?

Employees are legally entitled to annual leave. This is a very strong right of employees.

In hours, this is four times the number of hours that the employee works per week. It is customary to get five times the number of hours worked per week, although only four times is mandatory by law; however, once granted more by contract, the additional entitlement cannot be cancelled unilaterally.

All employees are entitled to legal holidays, even when they are sick. During sick leave, wages continue and vacation days are accrued.

3.4 Is there a requirement to provide sick leave? If so, what is the minimum that employees are entitled to receive?

An employee who is unable to work due to illness is eligible for paid sick leave.

The employer must pay a sick employee at least 70% of his or her normal wages during the first two years of his or her illness or until the existing contract expires, whichever comes first.

3.5 Is there a statutory retirement age? If so, what is it?

Yes; however, the statutory retirement age is gradually being raised from 65 to 67 in 2024.

In 2021, the statutory retirement age is 66 years and four months.

4 Discrimination and harassment

4.1 What actions are classified as unlawfully discriminatory?

The Act on Equal Treatment is one of the main sources of the enforcement of discrimination prohibitions and equal treatment in the Netherlands.

This act prohibits discrimination on grounds such as:

  • race;
  • religion and belief;
  • political affiliations;
  • gender;
  • pregnancy;
  • sexual orientation;
  • nationality; and
  • civil/marital status.

4.2 Are there specified groups or classifications entitled to protection?

Employers are not allowed to distinguish between employees in the workplace on the basis of characteristics such as age, gender, nationality or religion.

To ensure that people are not discriminated against, the government has described these characteristics – so-called ‘grounds of discrimination' – in the Constitution.

This so-called ‘principle of equality' is further elaborated in some specific laws. The most important of these is the General Equal Treatment Act.

However, certain employees are protected from dismissal. The act concerns:

  • employees who are protected because of their special function (eg, members of the works council, trade union delegates); and
  • employees who are protected because of a special situation (eg, pregnant employees, employees who are the victim of discrimination).

4.3 What protections are employed against discrimination in the workforce?

The Dutch Civil Act obliges employers to ensure that the working environment is free of discrimination.

In principle, distinctions based on the grounds outlined in questions 4.1 and 4.2 are prohibited and will be allowed only when underlined by an objective justification, meaning that the distinction must serve a legitimate aim, achieved by proportionate and necessary measures.

4.4 How is a discrimination claim processed?

A complaint regarding discrimination can be filed with the Netherlands Institute for Human Rights. The complaints procedure is partially written and partially oral. The complaint must be filed in writing.

Once the institute has collected enough information and heard the (candidate) employer, the formal inquiry (hearing) will take place. Within eight weeks of the hearing, the institute will render a verdict. While the verdict is not legally binding, employers must follow the judgment in the vast majority of cases.

To obtain a legally binding judgment, the civil court must be involved. The civil court is obliged to consider the ruling of the Institute for Human Rights. The claim usually consists of compensation for material and immaterial damages.

The court will often attempt to move both parties towards a settlement. If this fails, the court will issue its verdict in writing after approximately four weeks. Both parties have the right to appeal the decision of the court.

4.5 What remedies are available?

The most common remedy that is available to employees is compensation for material as well as immaterial damages as a consequence of the discrimination. Furthermore, the employee in question has the right to reintegration in the organisation or in his or her previous function under the same working conditions.

4.6 What protections and remedies are available against harassment, bullying and retaliation/victimisation?

Under the Working Conditions Act, employers are obliged to implement a working conditions policy to ensure that sexual harassment is prevented or, if that is not possible, at least limited as much as possible.

To be able to do this properly, organisations are required to map all occupational health risks, including sexual harassment, in their risk inventory and evaluation (RI&E).

The action plan, which is based on the RI&E, must specify what the employer will do to prevent the identified risks. The employees concerned must be informed of the risks and the measures taken by the employer. The employer must demonstrably carry out all of these actions.

A general prohibition of sexual harassment is included in the Civil Code. This is understood to mean "any form of verbal, non-verbal or physical behaviour with a sexual connotation that has the purpose or effect of compromising the dignity of the person, in particular when a threatening, hostile, abusive, degrading or hurting situation becomes created". On that basis, it is possible for a victim to claim damages from the offender through the courts or to enforce other measures at the employer.

5 Dismissals and terminations

5.1 Must a valid reason be given to lawfully terminate an employment contract?

The Civil Code prescribes that employers can dismiss employees where there are reasonable grounds to do so and where reinstatement of the employee – including through training in another suitable position – is impossible within a reasonable term.

Reasonable grounds can include:

  • prudential reasons (loss of jobs);
  • long-term incapacity;
  • frequent absence with unacceptable consequences;
  • malfunctioning;
  • conscientious objections;
  • disrupted employment relationships; or
  • other grounds.

Ultimately, an employer is entitled to dismiss employees based on a single ground or cumulative grounds, for both individual and business-related reasons.

Both permanent and temporary employees may be entitled to compensation in the event of dismissal, also known as ‘transition compensation'. Employees are entitled to transition compensation starting from the first day of their employment. The amount of compensation is based on the monthly salary and the number of working years.

Even if there are reasonable grounds, an employee cannot be dismissed peremptorily by means of a letter, not even with observance of the notice period. The employee must consent to the dismissal; otherwise, the employer must request permission for dismissal, either from the Employee Insurance Agency (UVW) – an autonomous administrative authority that is commissioned by the Ministry of Social Affairs and Employment – or from the court.

5.2 Is a minimum notice period required?

An employer that wishes to terminate an employee's contract must take notice of termination into account. The notice of termination must be given in writing and starts to run once the notification has reached the recipient.

Collective bargaining agreements contain provisions on the notice of termination.

If no period has been specified, the legal term is applicable. The longer an employee has been in service, the longer the notice period. This varies from a notice period of one to four months.

The notice period can be extended by written agreement between employee and employer. Shorter notice periods are permitted only where this is laid down in a collective bargaining agreement.

A termination notice, even if it contains the correct notice period, does not terminate the employment. Very strict procedural rules must be observed.

5.3 What rights do employees have when arguing unfair dismissal?

If there is a dismissal during the probationary period or if the employment contract is not renewed, there is usually no possibility to take steps against the employer in the event of unfair dismissal. This may be different if, for example:

  • there is discrimination;
  • there is an invalid probationary period; or
  • the chain regulation is violated.

If the employment contract is terminated via the UWV, the employee has the option to submit an opinion to the UWV before a decision is made to issue the dismissal permit. It is wise to consult a lawyer about the best strategy. If the UWV nevertheless decides that a dismissal permit will be issued, the circumstances of the case must be examined to see whether there other options are available.

If a ruling of unfair dismissal is issued through the sub-district court (dissolution), the employee can also submit an opinion to the court. Again, it is wise to engage a lawyer, despite the fact that as from 1 July 2015, employees have the option to appeal an unfavourable decision.

If the employer tries to force the employee to resign or to sign a termination agreement, the employee can simply refuse to do so. If an employee has nevertheless signed an agreement whereby he or she has been dismissed, there are often still options to consider. As from 1 July 2015, the employee has at least a two-week cooling-off period after signing a termination agreement.

5.4 What rights, if any, are there to statutory severance pay?

Both permanent and temporary employees may be entitled to compensation in the event of dismissal, also known as ‘transition compensation'. Employees are entitled to transition compensation starting from the first day of their employment. The amount of compensation is based on the monthly salary and the number of working years.

6 Employment tribunals

6.1 How are employment-related complaints dealt with?

Individual dismissals in the Netherlands require a procedure at either the cantonal court or the Employee Insurance Agency (UWV), an autonomous administrative authority that is commissioned by the Ministry of Social Affairs and Employment. The question of where the case is brought depends on the grounds for dismissal.

An employer must apply for a dismissal permit at the UWV if the cause for dismissal is either business-related reasons or long-term incapacity. Once the application is completed, the UWV will notify the employee and provide a copy of the request for a dismissal permit. The defence of an employee must be be made known in writing within 14 days. Typically, the UWV handles the application in four weeks.

6.2 What are the procedures and timeframes for employment-related tribunals actions?

In the event of dismissal due to reasons relating to the individual employee, the application for a dismissal permit can be submitted to a cantonal court. The application must be in writing and supported by a reasoned opinion. After the cantonal judge has informed the employee of the application, he or she can file a statement of opposition. Subsequently, both parties are invited by the court for an oral hearing. Whether the contract will be terminated depends on the seriousness of the reasons.

Depending on whether the case is brought before the court of first instance or the UWV, 95% of cases are decided within three months at first instance.

However, the first instance verdict, decision or judgment is open for appeal, which must be filed within three months. The appeal procedure takes approximately four months.

7 Trends and predictions

7.1 How would you describe the current employment landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

The COVID-19 pandemic has had an impact on the Dutch employment landscape, as many sectors have been affected by the measures imposed by the government (eg, lockdown and working from home).

As in most countries, in order to support the businesses affected most by these measures, the Dutch government introduced the temporary emergency bridging measure for job retention (NOW), enabling employers that faced loss of turnover due to COVID-19 (measures) to retain employees, as well as other measures.

NOW has been extended and adapted several times over the past year.

As regards the prevailing trends, in Dutch labour law, employees enjoy a high degree of protection, which often means extra costs for the employer. This has led employers to seek ways to exempt workers from the rules of labour law, especially through flexible contracts and by hiring people as small independent contractors.

To counteract this trend, the legislature has introduced a series of rules to limit it or make it more difficult. Recent judgments relating to Deliveroo and Uber are typical examples.

Employers are also looking for ways to reduce the permanent employment of employees and the legislature is similarly trying to make this unattractive, partly because the self-employed are underpaid and are not insured by social security.

The Balanced Labour Market Act, which was introduced on 1 January 2020, will have an additional impact as of 1 July 2021. On the basis of that act, an employer must offer a fixed scope of work to employees with an on-call contract who have been employed for at least 12 months. The offer of the fixed number of hours must be at least the average number of hours worked over the previous 12 months.

With effect from 1 July 2021, the employer's offer is valid for one month. If the employee returns to the offer after one month and one day, this is too late and the offer will have lapsed. If the employee accepts the offer on time, the ‘new' scope of work must commence on the first day of the 15th month at the latest.

On 1 June 2021, the Social and Economic Council (SER) presented an advisory report on the labour market, which was jointly drafted by employers' and employees' organisations. It is expected that this advisory report will play an important role in the upcoming cabinet formation. The most important points are as follows.

According to the SER, the motto for flexible workers is now: "Available for everything, entitled to nothing." According to the SER, a permanent contract should once again become the norm and flexible work should be made less attractive. Employers should use flexible workers only where this is really necessary – for example, during seasonal peaks or to replace sick employees. The use of flexible workers to avail of more favourable conditions for the employer is out of the question.

The rules on temporary workers must also be changed. Currently, they are entitled to a permanent contract only after 5.5 years with the temporary company; the SER seeks to reduce this to three years. Temporary workers must also be given the same fringe benefits as permanent workers, including bonuses, a 13th-month salary and pension.

On-call contracts, including zero-hours contracts, will disappear and will be replaced by ‘basic contracts'. These basic contracts entitle the employee to a minimum number of working hours per quarter. Only for pupils and students will a variant of on-call contract remain.

Employers complain that the terms of permanent contracts are overly rigid. Therefore, in exchange for curbing flexible work, the SER wants to make employment more attractive to employers. For example, employers will be allowed to send employees home for up to 20% of their working time when the economy is not doing well. The employer will pay less, but the employee will keep his or her full salary. This scheme was inspired by the NOW wage subsidy. It is still unclear from which pot the remainder of the salary will be paid.

Furthermore, in the event of impending dismissal, the employer and employee must be able to opt for termination of the employment contract by mutual consent, including a ‘work-to-work' route. The transition payment can then be waived.

The SER also wants to relax the so-called ‘counselling obligation', which requires employers to continue to pay sick employees for two years and to provide them with guidance on returning to work. The SER wants a medical examination to take place after one year. If the examination shows that the sick employee cannot return to work, the insurer can take over the employer's duty of assistance.

The SER further wants to get rid of false self-employment, where someone is classed as self-employed when he or she should actually be an employee. This problem occurs, for example, in the delivery sector and in home care. In recent years, however, it has proven difficult to assess whether there is false self-employment.

The SER wants to solve this problem by having the self-employed earn at least €35 per hour. Anyone earning less must be employed by the company, unless the company can demonstrate entrepreneurship. The burden of proof for this lies with the employer/client. Together with the adjustment of certain tax incentives, the SER hopes to improve the position of the self-employed.

All in all, this SER advice – although it certainly does not tackle all practical problems for employers, and may even create some new ones – should have a considerable impact. In any case, it is clear that labour law will remain a hot topic in the coming term of office.

8 Tips and traps

8.1 What are your top tips for navigating the employment regime and what potential sticking points would you highlight?

The most important tip for those who are not specialists in Dutch labour law is to seek help from those who are. Dutch labour law is extremely complicated and can throw up very expensive surprises, especially for employers, if they do not seek professional advice before hiring.

Dramatic examples include Deliveroo, where the question of whether someone is self-employed or an employee has a significant impact; but on top of that, in such case, pension contributions must be paid retroactively for all ‘non-employees' whom the court rules are employees.

Another important tip is that it does not matter what is written at the top of a contract (eg, "This is not an employment contract and both parties agree on this"); the court will assess the nature of the agreement based on criteria from the law, case law and the actual situation.

In short: do not let foreign lawyers or accountants draw up the contract; engage a Dutch labour lawyer to avoid very expensive surprises.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.