Netherlands Payroll Overview 2016 - IPASS · Netherlands Payroll Overview 2016 Tim Kelsey ... • Example – XYZ (UK ) Ltd send three painters to paint an oil rig in the Dutch port

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Netherlands Payroll Overview2016

Tim KelseyMCIPP, AIPA

The NetherlandsInteresting facts …

• The Dutch are the tallest people in Europe – average male is 6’1’’ andfemale 5’8’’

• There are 16 million bicycles in Holland – one for each person• Holland has 0.008% of the world surface but is the third largest exporter

of agricultural produce (including 70% of the worlds bacon) ...• And only employs 3% of the population in agriculture• Schipol airport is 4.5 M below seas level – about 25% of the country is also

below sea level• The national dish is raw herring (Hollandse nieuwe haring) served with

chopped onion and pickles. The Dutch consume 12 million Kilos of it a year• Two official languages Dutch and Frisian.

Customs and EtiquetteKey factors:

• Remember that the Dutch invented the multi-national company – the DutchEast India (VOC) was the largest trade organisation in the world for twocenturies

• The Dutch have a reputation for “frugality”• Key work is “Teamwork” – much business structure is horizontal• The Dutch have a direct and frank way of speaking that can be perceived by

others as bordering on rudeness• Tolerance is also a key trait in The Netherlands• Do not call the Netherlands "Holland." Holland is a region within the

Netherlands• Control and moderation are important – Dutch saying “High trees catch a lot

of wind”.

Not for distribution

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Withholding obligationsThe obligation on an employer to operate a withholding

for tax and national insurance contributions is a wideone and covers :

• Any business that has a permanent establishment in theNetherlands

• Any business that has employees in the Netherlands• Anyone who works on the Dutch continental shelf• Any employee who is subject to the Dutch national insurance

scheme.

Withholding ObligationsAdditional issues:

• Dutch end user customer has to meet liability of foreignsupplier does not meet obligations

• Example – XYZ (UK) Ltd send three painters to paint an oil rigin the Dutch port of Rotterdam, The work is being done for aDutch client Windmill N.V. The painters are at work for ninemonths. XYZ fail to register the workers for Dutch tax andperform no Dutch withholding. Windmill N.V. become liablefor operating and accounting for the withholding due.

Tax AdministrationTax and Customs Administration

• In Dutch Belastingdienst• Website available at www.belastingdienst.nl• Some information available in english.


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What to Withhold?A number of individual taxes

• Wage Tax – an advance income tax• National Insurance Contributions for the following schemes:• Old Age Pensions Act (AOW)• Surviving Dependents Act (Anw)• Exceptional Medical Expenses Act (AWBZ)• General Child benefit Act (AKW).

What to Withhold?• Employed Persons Insurance Scheme Contributions covering:• Sickness benefit Act (ZW)• Invalidity Insurance Act (WAO/WIA)• Unemployment Act (WW)• Income Dependent Care Insurance Contribution – employee

contribution that must be reimbursed by the employer, it isthen part of taxable income.

What the Employer Must DoThe initial administration procedure is

• Registering the employer in writing with the tax and CustomsAdministration and obtaining a registration number

• Establishing the identity of each employee and keeping copiesof the relevant identity documents

• Performing the First Day registration process for newemployees only if required to do so by the Tax and CustomsAdministration.


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Employee StatementBefore commencing work the employee must provide

• Surname and Initials• Date of Birth• BSN number• Address and postcode• Country of residence if they are outside of the Netherlands• Confirmation of whether or not the employee wishes to claim

the payroll tax credit.

Anonymous PersonIf the employee fails to provide the data:

• Treat the employee as an anonymous person• Not provide any payroll tax credit• Not allow the maximum earnings ceilings for the calculation

of National Insurance• Take tax and National Insurance at the highest current rate

(52%).

Standard Wages RecordEmployers must maintain a standard wage record

• Part 1 – Kept in section. Provides the employee’s personaldetails, the employer details and their registration number

• Part 2 – Kept in columns. Lists the wage amounts, taxdeductible items, deductions for tax and national insuranceand net pay. The statement must include cumulative figuresfor the tax year to date.

• The record is usually kept in electronic format, and since 2007all filings of data to the Tax and Customs Administration havehad to be made electronically.


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PayslipWritten Payslip must cover:

• Make up of gross pay• Deductions listed individually• Agreed working time• Period of calculation• Minimum wage applicable to the employee in the period• Employee and employer name• Taxable wages• Table used for payroll taxes (White or Green)• Whether the payroll tax credit has been applied or not.

JaaropgaafformulierEmployees annual income statement:

• The wage received• Tax and national insurance deducted• BSN number• Wages for Care Insurance Act contribution• Whether the payroll tax credit has been used or not• Total amount of tax credit• Total amount tax credit used under the life course savings

scheme.

GuidanceLoon Handboek

• Comprehensive guide to employers on all payrollprocedures

• Available online at the following link:http://www.belastingdienst.nl/bibliotheek/handboeken/html/boeken/HL/#top .


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BSN NumberUsed to identify employee:

• Citizen Service Number used for all dealings with Dutch state• Replaced old Sofi number in 2007, existing Sofi became BSN• Must be obtained from Municipality of residence within 5

days of arrival in NL• The number is also needed for a number of everyday

activities such as buying/renting a house, enrolling children atschool ,and visiting a GP or hospital.

Life Course Savings SchemeScheme closed to new entrants January 2012

• Enabled employees to finance a period of unpaid leave• Employer could also contribute• Contributions had a different tax treatment for EPIC Vs Wage tax and care

insurance contributions• Withdrawals paid via employers payroll and subject to wages tax and care

insurance•

Tax periodsEmployer tells Tax & Customs Administration of

proposed pay cycle:

• Weekly pay or derivatives every 4 weeks• Monthly pay or derivatives every month• Final tax period must end 31st December.


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Tax PeriodExample:

ABC pay their employees monthly on the 25th of eachmonth. The January monthly tax return is due fromABC on 25th February

If the due date is a weekend or public holiday, go to theprevious working day.

Monthly Tax returnMust be filed every month or 4 weeks by employer

• Must be filed electronically• Based on Standard Wage record• Comes in two parts• Part 1 provides detailed breakdown of employees pay and

deductions• Used to update UWV social security records• Part 2 provides a summary to reconcile remittance of

deductions.

Tax ratesTax rates show 2 different tables for use by the under

or over 65 age groups

• Four different rates dependent on income• Up to €19,923 36.55%• Top rate 52% on income of €66,422 +• Includes EE’s National Insurance contribution• See handout for details and breakdown of each

individual contribution.


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Employed Persons Insurance Contributionand Health Insurance

Employer only contributions

• Unemployment (WW-Awf) 2.44%• Occupational Disability (WAO/IVA/WGA) 5.88% + 0.5% surcharge• Contribution sector fund for retail 3.72% (varies by sector, average

2.16%)• Surcharge on sector funds 0.78%• Health Insurance 6.75%• Maximum monthly income used is €4,396.91 or €52,763 pa –

doesn’t apply to anonymous persons• Administered by Uitvoeringsinstituut Werknemersverzekeringen,

UWV website at : http://www.uwv.nl/OverUWV/english/.• Contributions paid to Tax and Customs Administration.

Employers On CostsExample• An employee earns €5,000 per month• The employer contribution is calculated as follows:• Unemployment @ 2.44% x €4,396.91 = €107.28• Invalidity @ 6.38% = €280.52• Contribution sector fund @ 3.72% = €163.57• Sector fund surcharge @ 0.78% = €34.30• Health Insurance @ 6.75% = €296.79• Total On-cost = €882.46• No regional contributions regime.

Discounts for certain workersA reduction in the standard EPIC contribution may be

obtained for certain workers:

• Hiring a worker previously in receipt of a benefit under theWork & Income (capacity for work) Act

• Hiring a worker over 50 who currently receives anunemployment, social assistance or occupational disabilitybenefit

• Hiring a person over 50 who has not worked for two years andcurrently receives a benefit under the Surviving DependentsAct ...


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Discounts for certain workers

• EE aged between 18 and 27 in receipt of socialwelfare aid (ww)

• They must work for at least 6 months and have aminimum 32 hour week (24 hours from July 2015)

• Discount is dependent on circumstances and can becalculated using following link:

• http://www.subsidiecalculator.nl/calculator• Claimed as part of monthly remittances to Tax and

Customs Administration.

Discounts for certain workers

Mobility Bonuses

• Payable for a maximum period of 3 years• €7,000 pa for a benefit recipient age 56+• €7,000 pa who starts working and earns at least the monthly minimum

wage• €3,500 pa for an occupationally disabled person who starts working with

wage dispensation (this allows you to pay them less than minimum wagefor between 6 months and up to 5 years) – must have lower productivity

• EE must obtain a doelgroepverklaring statement from UWV.

Marginal Labour ContributionExemption (MLCE)

Provides full exemption from EPIC in followingcircumstances:

• You temporarily employ a person entitled tounemployment benefits

• The employment lasts for no longer than 6 weeks• You have not employed the person before in this

calendar year• You or another employer have not applied for MLCE

earlier in the calendar year in respect of the individual• Requests to apply MLCE made to Tax & Customs

Adminsitration.


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Tax CreditsDutch equivalent of UK personal allowance

• General credit worth maximum €2,242 (reduces with incometo a minimum €0)

• Labour credit for those working of additional €3,103 (reduceswith income to minimum €0)

• Used to reduce initial calculated tax bill• Other credits linked to personal circumstances also available• Additional credit to apply to national insurance calculation.

Tax CreditsComparison to UK personal allowance

• Personal allowance of £10,600 is worth tax relief of£2,120

• Compared to Dutch tax credits of €5,345 (/£1 =€1.35) - £3,959 approx.

Calculating TaxSteps taken by payroll provider

• Gross pay reduced by pension contributions andnational insurance contributions

• Select correct tax table – White Table for currentemployment, Green table for previous employment

• Tables include allowance for standard tax credits• Read tax off against net income.


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Tax Information Line

Non Resident Employers helpline manned in English0031 555 385 385Opening hoursMonday _ Thursday 08.00 – 20.00Friday 08.00 – 17.00Dutch time (GMT +1 hour).

Penalty RegimePenalties for late filing and payment:

• For payment grace period of 7 days for first offence• For second offence or after grace period 2% of late

payment• Grace period of 7 days for late returns• Thereafter €65 per day.

Pension SchemesMembership not nationally compulsory

• But CAO’s mandate the provision of Industry widepension funds

• Around 90% of Dutch employees are in some form ofoccupational pension scheme

• Netherlands uses a blend of scheme based on the DB, DCor CDC models

• Scheme for retail industry is Pensioenfonds Detailhandel :https://www.pensioenfondsdetailhandel.nl/welkom.


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Employee Pension PlansNew conditions from January 2015 for contributions to be tax

exempt

• Plans must have a retirement age of 67 – current stateretirement age 65 and six months for 2016

• Final salary schemes must have maximum accrual rate of1.657% per year of service

• Career average schemes must have maximum accrual rate of1.875% per year of service

• Maximum pensionable salary set at €100,000 pa.

Pensioenfonds DetailhandelKey details:

• Scheme is mandatory for all employers who have at least 50%of their business activity in the retail sector

• Members must be all employees age 20 or older• The style of scheme is similar to a career average scheme• The employee accrues an entitlement to a pension of 1.75%

of salary for each year of service• Retirement age is 67 – scheme allows for partial retirement• Contribution rates are currently fixed until December 2016.

PensionKey numbers:

• Pension is limited to a maximum salary of €51,976 (2015)• Contributions due on salary between the franchise level (currently

€12,564 and maximum pensionable salary• Current employee contribution 5.119% of pay• Current employer contribution 14.281% of pay• Premium rates will only change between now and December 2016

if there are drastic changes in the circumstances of the fund• Remittance of contributions deducted from salary matches pay

cycle – contributions filed via an employer portal• Scheme provides age retirement and widows/orphans pensions.


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Supplementary Pension SchemeThe employer may also offer access to a supplementary

scheme provided by the fund

• Covers income above €51,976 to a maximum of €100,000• Contribution rate is 22.2%• Employer and employee agree between them the split of

contribution to make 22.2%• Employees can also pay voluntary contributions to build

up entitlement (minimum contribution €25 per month).

PensionsRegister at the following address:

Pensioensfonds DetailhandelPO Box 12339701 BE GroningenThe Netherlands

WerkkostewregelingWork Costs Scheme – referred to as WKR

• Compulsory for employers to follow from January 2015• Prior to introducing this scheme, employers could compensate

some expenses to employees tax free, some were partially tax freeand some not tax free at all

• The previous system of agreed tax free allowances and benefits isvoid from 1st January 2015

• The new regime is designed as a simplification of this process• Under the new regime all remuneration and provisions to

employees is regarded as being salary, and therefore potentiallytaxable in full

• It could allow you to provide BIK free of tax.


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WKRPayroll Obligations

• Employers are allowed a nominal budget of 1.2% of totalcombined taxable salaries paid by the company to be used tocover such allowances tax free

• If this is exceeded anything paid in excess of it is potentiallysubject to a tax borne by the employer of 80%

• The employer must classify each payment within payrollrecords as either being subject to WKR or being salary.

WKRDoes that mean absolutely everything paid/given to an

employee?

• Potentially yes• But fortunately certain expenses (such as business

travel reimbursements) are exempt• And others are set as being tax neutral (ie they are

valued as “0” for tax purposes).

WKR – Intermediate CostsThese can be ignored for WKR purposes

• Covers expenditure by an employee on goods andservices on behalf of their employer

• For example purchasing stationary supplies for theoffice and making a claim back from petty cash

• In effect anything that the employee is handing on tothe employer in full.


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WKR – Exempt ExpensesThe following items are exempt from the WKR regime:

• Transport and travel costs for commuting• Public transport season tickets• Business travel• Mileage claims reimbursed at 0.19c/KM• Overnight accommodation and subsistence on business trips• Work courses and conferences aimed at improving knowledge

and skills relevant to the employment• Study and training costs ...

WKR – Exempt ExpensesWhat is exempt

• Expat 30% facility• Cost of meals during overtime or late night working• Removal expenses where the move is driven by work needs• Computers, tablets, mobile phones and other

tools/equipment used for the employment• Staff discounts within limits.

WKR – Exempt ExpensesRules on tools provided for employees:

• The resource is provided because in the opinion of the employer it isnecessary for the proper performance of the employment

• Necessary means that it is provided to get the optimal performance (soyou might be able to do the hob without it, but you can do it better withit!)

• The tool must be provided at the employers cost – the employee must notpay anything towards it

• The tool must be returned to the employer at the emd of the employment– if it is retained by the employee it could then be counted as part of the1.2% nominal tax free budget.


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WKR – Exempt ExpensesStaff Discounts:

• Products that a discount is awarded on must be thoseprovided by your industry (so TK Maxx couldn’t give adiscount on a car for example)

• The discount must not exceed 20% of the usual retail price• Total discount value provided per employee should not

exceed €500 pa – any that does can be set against the 1.2%budget

• Discounts can also be provided through affiliated companies,provided they are at least 1/3 owned by the employer.

WKR – Zero rated ItemsZero rated items:

• Facilities at work including corporate gyms• Health and safety provisions in both the workplace and the

home (if the individual does some work from home)• Teas, coffees etc at work which are not part of a meal• Clothing provided for work – lab coats, safety shoes etc which

are left at work• Staff Uniforms with logo – must be at least 70 cm2• Interest on a staff loan made to purchase a bike or electric

bike or scooter.

WKR – Items covered by the 1.2%budget

In short anything provided to an employee that is not covered bya specific exemption or zero rated. Examples include:

• Christmas Boxes• Meals in staff canteens – value €3.15 per meal• Gym membership for a non company gym (facilities provided by the

company on their site are exempt)• Staff parties off site and trips• Newspapers and journals• Electronic or manual bicycle• Work clothing taken home that is suitable for out of work use• Reimbursement of employee’s legal costs in respect to a compromise

agreement.


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WKR – Items that cannot be coveredby the 1.2% budget

Certain items must always be classified as wages andtaxed through the payroll on provision:

• Company Cars• Accommodation• Fines.

WKR – Convention TestMeasure to combat potential abuse of the 1.2% budget

• It is up to the employer to decide how to spread the 1.2%budget across their workforce

• But a benefit should not generally exceed by more than 30%an amount provided “by convention” in a particular industry

• This provision applies where the benefit exceeds €2,400 pafor any one individual employee - Tax and CustomsAdministration can demand evidence to support a claim thatany benefit is provided “by convention” within a particularindustry.

WKR - ExampleHow will it work?

• Dutch business has 30 employees with an annual gross wages bill of €800,000• The WKR budget is therefore €800,000 x 1.2% = €9,600• The business decides to provide hot meals to employees every Friday• The value for WKR purposes would be 30 x 52 (weeks in the year) x €3.15 =

€4,914 – this is within the budget so no additional charge is incurred• The business then decides to extend the free meals to every day of the week• The value for WKR purposes would therefore be 30 x 5 x52 x €3.15 = €24,570• This exceeds the annual budget by €14,970 therefore the 80% employer levy

would be charged, resulting in an additional cost of 14,970 x 80% = €11,976.


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WKR - LevyHow is any 80% levy paid?

• The calculation may be performed annually at the end of thefiscal year

• This allows the employer to use the known total gross wagesbill to calculate the 1.2% budget

• The calculation of the levy can either be added to the finalperiod of the tax year or included in the first period of thenew year.

WKR - LevyDoes the employer have to pay this?

• In short yes• If the employer wants the employee to be liable for tax on the

particular benefit then documentation within the contract needs todefine the benefit as wages

• It would need to be added to pay and taxed through the payroll• It might not be possible to do this for existing employees who

already have a commitment to receive a benefit or if its provision isprescribed under a collective bargaining agreement.

WKRMore information can be found at:

• http://www.werkkostenregeling-wkr.nl/


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Expatriate StaffGenerous tax concession known as 30% facility

Employer can pay allowance of 30% of salary tax free to coveradditional expenses

• Example – John earns a salary equivalent to €40,000. He issent on assignment to the Netherlands. He can be paid a taxfree allowance of €17,143. This is calculated as :

• €40,000 / 70 x 100 = €57,143. 30% of €57,143 is €17,143 .

30% FacilityCan be paid for up to 8 years provided employee was previously

resident at least 150KM from Dutch border. In addition (withand without the 30% facility applying) employer canreimburse tax free:

• Removal costs• Familiarisation costs for the employee to visit the Dutch

business• Cost of work permit• Commuting expenses• Telephone line costs• Cost of business meals.

30% Facility – Further rulesOther rules applied to the scheme:

• Specific Expertise test – where the skills are hard to obtain in the localemployee pool. Requires minimum salary of €50,000 gross of 30% (notapplicable to scientists and researchers)

• 25 year look back – any previous time spent working in The Netherlands in thelast 25 years gets deducted from the 8 year period. Visits of up to 20 workingdays per year or personal stays of six weeks per calendar year can be ignored

• 150KM rule covers those in this area in Germany/Belgium/Luxembourg andFrance (not UK) in the 24 months prior to the Dutch employment starting

• Those obtaining a PhD in The Netherlands can apply for the facility providedthey start a job in The Netherlands within one year of obtaining theirDoctorate (and subject to the minimum salary rule).


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Employment LawAdministered by Inspectie SZW

• Compulsory works councils with 50+ employees• Collective Bargaining Agreements made law by Ministry

Decree• CBA’s (shown as CAO in Dutch) will need to at least meet the

national law – but will often provide better entitlements• Working time limited to 45 hours per week, 9 hours per day• Overtime premiums range from 25% to 100%• Compulsory holiday allowance of 8% of gross salary• Minimum wage €1,495.20 per month for age 23+.

Dutch Employment LawGeneral position is outlined in the Dutch Civil Code

• Book 7 of the code provides much of the law that governs theemployment relationship

• Also provides the law governing the payment of wages• Specific issues such as working time dealt with under separate

legislation• Use the following link to access an on line English translation:

http://www.dutchcivillaw.com/legislation/dcctitle771010.htm

Minimum Wage – July 2016Applicable to everyone in Netherlands who works & is under 65

Age Per month Per week Per day23 and older € 1,537,20 € 354,75 €70,9522 € 1.306,60 € 301,55 € 60,3121 € 1.114,45 € 257,20 € 51,4420 € 945,40 € 218,15 € 43,6319 € 807,05 € 186,25 € 37,2518 € 699,45 € 161,40 € 32,8517 € 607,20 € 140,15 € 28,0316 € 530,35 € 122,40 € 24,4815 € 461,15 € 106,45 € 21,29


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Minimum Wage –July 2016Indicative hourly rates:

Age 36 hours perweek

38 hours perweek

40 hours perweek

23 years andolder 9.86 9.34 8.87

22 years old 8.38 7.94 7.5421 years 7.15 6.77 6.4320 years 6.06 5.75 5.4619 years 5.18 4.91 4.6618 years 4.49 4.25 4.0417 years 3.90 3.69 3.5116 years 3.40 3.23 3.0615 years 2.96 2.81 2.67

Minimum Wage

• Law sets a monthly/weekly/daily rate for full time work• This will be either a 36/38/40 hour week depending on the

industry• Part timers are simply paid a pro-rata amount of the

monthly/weekly/daily amount• Payslips must state the minimum wage applicable to the

employee• Rates are usually adjusted each January and July.

Minimum Shareholder SalaryDutch law assigns a minimum salary to substantial shareholders

regardless of what they are paid

• Substantial shareholder is someone holding at least 5% of thecompany shares (directly or indirectly)

• This salary must match that of the nearest comparableemployee in the business

• Directors must also have a salary equivalent to at least 75% ofthe nearest comparable employee.


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Contracts of EmploymentFixed term or indeterminate period must include the

following:

• The place of work• The position and a job description• Hiring date and whether fixed term or indeterminate period• Holiday rights and method of calculation• Salary and payment cycle• Customary number of working hours• Pension rights (if applicable).

Certificates of Good ConductVerklaring omtrent het gedrag, VOGnp

• Certificacate provided by the Ministry of Security and Justiceconfirming the new recruit has no relevant criminalconvictions

• Obtaining a certficate is mandatory in certain occupations –eg teachers, care workers or taxi drivers

• In others it is the employers choice• Applications can be made on-line or via local municipality –

employee needs to authorise an employer application.

Fixed Term ContractsThese cannot be used indefinitely

• A chain of temporary contracts covers 36 months ormore

• A chain of three fixed term contracts automaticallyconverts on the award of the third contract to anindeterminate one

• A chain is created where successive fixed term contractshave a gap of less than 3 months between them – coverscurrent and successor employers if business changeshands.


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Probationary PeriodsThese may be used

• Indefinite contracts or fixed term contracts for 2 yearsplus may set a maximum probationary period of twomonths

• Where a contract runs for six months – two years themaximum period is one month

• No probation period allowed for contracts less than sixmonths from 2015

• Probationary periods cannot be applied where theemployee already works for the company and takes anew post of a similar nature.

Restrictive CovenantsMay be added to contracts to regulate future behaviour

• Confidentiality clauses must be written in a language that theemployee understands

• Non competition clauses can be used – the employee must beat least 18 years old when signing the contract, and the clausemust be reasonable in respect of the employers business

• Non Solicitation clauses – must be in a language the employeeunderstands. Any clause must be limited to what would bereasonably necessary to protect the employer. Maximum timeperiod of operation usually one year.

Statutory Notice Periods

• Less than 5 years service – one month• 5 – 10 years service – two months• 10-15 years service – 3 months• 15 + years of service – 4 months• Unless explicitly agreed otherwise, notice period

commences from the beginning of the month followingthe month in which the notice was given

• Longer notice periods required by the contract compelthe employer to give twice as much notice as theemployee.


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Working HoursDetermined under the Working Hours Act

(Arbeidstijdenwet) and varied by Working Hours Decree

• Employee can work no more than 12 hours in a shift, and 60 hoursin any one week

• But over a 4 week period they must not work more than 55 hourson average

• And over a 16 week period they must not work more than the 48hours allowed by EU law

• So there is a flexibility to have short bursts of high hours but over a16 week period the average must always come back to 48 hours.

Working HoursBreaks

• Employees working more than 5.5 hours should be awarded30 minutes rest in two breaks

• Those working more than 10 hours must have 45 minutes –no one break less than 15 minutes

• An employee should have at least 11 hours unbroken worktime after finishing a working day, but with the provision tovary this once a week to just 8 hours

• The employee must have at least 36 hours consecutive rest atthe end of the working week.

Working HoursOther provisions:

• Stricter rules apply to Night Shift workers (anyone who doesat least one hours work between midnight and 6am)

• And 16/17 year olds (no night work)• And for those on stand-by• Sunday working strictly limited - only allowed in certain

industries• See English leaflet on memory stick for detailed summary of

the rules.


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Recording Working TimeEmployers must record working time

• The Act does not prescribe how this should be done but SZWInspectors should be able to ascertain that the Act has beencomplied with from the records

• Employee working patterns must be recorded in writing andavailable for employee inspection

• Changes should be announced at least 28 days in advanceunless the nature of the work precludes this, but should beannounced at least 4 days in advance as a minimum.

Adjusted Working HoursThe Working Hours Adjustment Act (Wet Aanpassing

Arbeidsduur)

• Allows employees to request to vary their hours after they havecompleted one years service

• The employer is obliged to agree any such request unless they candemonstrate that by agreeing to it the company will suffer seriousfinancial loss

• Consequently only around 10% of requests made a year are refusedwith a further 10% met in part

• The request must be made in writing at least four months beforethe change is due to start

• Employers with less than 10 employees are exempt from the Act.

Paid HolidayLegislation provided under Dutch Civil Code

• Covered by Article7:634• Employee entitled to four times their weekly working

hours as vacation (20 days for full time staff)• Those on annual hours contracts have to be given an

equivalent period• Mid year starters must be given a full year

entitlement unless a CAO allows this to be built upper month.


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Paid HolidayEmployees continue to accrue entitlement to paid

holiday during the following circumstances:

• During periods of military service• Whilst on holiday• During maternity and paternity leave• During sick leave• During other family leaves• Whilst on trade union business.

Paid HolidayCarrying over leave

• If the employee is prevented by one of the previous reasons from takingleave in year, it is carried forward and must be used within the first sixmonths of the next year

• Unless continuing absence or work circumstances prevent this – then it iscarried forward for up to 5 years

• The presumption is that employees will go on holiday when they request –the employer should respond in writing within two weeks of the requestrefusing the leave if needs of the business dictate that the employeeneeds to be at work during the requested leave

• If circumstances change after the leave has been agreed, the employermay vary when the holiday is taken but must pay the employeecompensation for damages suffered as a result of changing the dates.

Paid LeaveTermination of Employment

• Employer must pay the employee for all outstandingholiday

• The employer must also provide the employee with astatement of how many days/hours of holiday wereoutstanding

• The employee may then present this statement to a newemployer and be entitled to time off work (without pay)for this holiday which has been paid out by the previousemployer.


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Holiday AllowanceAdditional pay that must be paid to employees

• The minimum required under law is 8% of wages• So equivalent to another months pay for the year• May be paid out once a year• Or in part payments• It must be shown as a separate amount on the

payslip.

Public HolidaysHolidays for 2015:

• January 1st

• Good Friday April 3rd

• Easter Monday April 6th• Kings birthday April 27th• Ascension May 14th

• Whitsun May 25th

• Christmas Day• St Stephens Day (Monday 28th December• Liberation day May 5th is celebrated as a public holiday every 5 years and

will be celebrated in 2015• CAO will specify whether a holiday must be granted.

Short Term Care LeaveAvailable for those who care for sick children, partners or

parents

• Covers children and partners living at employees address plusparents where the employee is the only/main carer

• Maximum leave in any 12 month period of twice your normalweekly hours

• So those working a 36 hour week are entitled to 72 hours a year• Employer must pay 70% of ordinary salary, ensuring that at least

minimum wage is paid and subject to daily maximum of €202.17• Employer may ask for evidence (Doctors bill or note).


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Emergency LeaveAdditional entitlement to short term care leave

• Used to cover emergency situations• Examples include sudden child/partner illness, accidents, water pipes

bursting at the employee’s home etc.• The leave can vary from a few hours to a few days depending on what

situation is being covered• For sudden illness the first day would be emergency leave, thereafter

short term care leave• Employers must pay the employee for this leave• The employer can ask the employee to take such leave from their annual

leave entitlement, but only from contractual leave above the 20 days.

Long Term Care LeaveUnpaid leave scheme for longer care needs

• Covers children, partners and parents• The individual’s life must be at serious risk• The employee is entitled to half of their normal hours off from

work for a maximum period of 12 weeks• So they must at least keep working half time• The leave hours are unpaid• The employee and employer can agree to vary the period of leave

(for example six weeks of full leave could be taken) provided theleave is completed over a maximum period of 18 weeks.

Pregnancy and Maternity LeaveSeparate leave entitlements

• Combined leave is for a minimum of 16 weeks• Pregnancy leave is for six weeks prior to the EWC – ladies must commence

pregnancy leave at the latest four weeks before the EWC• Ladies have at least 10 weeks of maternity leave after the birth• This could be more if the baby was early – weeks of pregnancy leave get

moved into maternity leave to add up to 16 weeks• The total leave could be more if the baby was born late - a lady taking 6

weeks pregnancy leave and whose baby was two weeks late would have18 weeks leave in total

• Ladies can return to work before the leave has expired, but no soonerthan 42 days after the birth.


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Pregnancy and Maternity LeavePayments

• Ladies must apply to go on maternity leave just three weeks beforethe leave commences, and present evidence from aDoctor/Midwife

• Maternity benefit is funded by the state but paid via the employer• Employer must pay 100% of the wage but with daily pay capped to

the maximum of €203.85• Applications must be made to UWV 2-4 weeks before the allowance

is due to be paid – see:http://www.uwv.nl/werkgevers/werknemer-krijgt-kind/zwanger/werknemer-is-zwanger-wazo/detail/hoogte-zwangerschapsuitkering .

Maternity PayHow do UVW calculate the maternity allowance?

• They use pay subject to social security contributions• The pay is taken from total earnings in the one year

reference period ending on the last day of the monthor four weeks prior to the leave commencing

• This amount is then divided by 261 to calculate thedaily wages (capped to a maximum €203.85 per day)

• The allowance is known as WAZO.

Paternity LeaveCompulsory scheme

• Employees are entitled to two days paternity leave• Leave is at full pay at cost to employer – no social security

recovery• The leave is taken after the mother has given birth• The day of the birth and also a day spent registering the birth

come from short term care leave• The leave must be taken at any time in the four weeks after

the birth. Where the birth took place in a hospital the 4 weekwindow commences when Mum returns home.


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Adoption and Foster Care LeaveNot as generous as maternity leave

• Only four continuous weeks leave taken anytimebetween two weeks before the adoption starts and 22weeks after its start

• Employer must have evidence of adoption – certificateof registration of the child at the local municipality

• UWV again pay an allowance to the employer to pay theemployee

• Calculated the same as maternity – 100% of pay up to adaily maximum of €203.85.

Parental LeaveCompulsory right to unpaid leave

• Covers parents of children up to age 8• Each parent is entitled to 26 times their normal working week off in leave• So an employee who works a 36 hour week is entitled to 936 hours per

year• The leave must be taken part time so in effect the default position in law is

to compel employers to allow the employee to work half time• But the two parties are free to agree any variant of this between

themselves• The leave is unpaid but Dutch taxpayers are entitled to a tax rebate of

€4.24 per hour of leave• Statistics Netherlands calculate 49% of eligible women and 27% of eligible

men take some form of parental leave.

Sick leave and payExtremely generous scheme

• The employer must pay sick pay for two years• The first year is paid at the rate of at least 70% of salary

subject to receiving at least minimum wage – CAO couldrequire more (often 100%)

• The second year is paid at 70% of salary – subject tominimum income which would be topped up by UWV directto the employee

• No recovery from the state unless illness relates to pregnancy


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Sickness Reporting and Returns towork

Varying reporting requirements

• Illnesses of up to four weeks duration are not reported toUWV

• Illness of more than 4 weeks duration must be reported toUWV within six weeks of commencing – the employer mustdiscuss and produce a return to work plan

• Once the employee has been off for 42 weeks a special 42week report (commenting on any reintegration activity) mustbe produced and filed with UWV – used as part of the processto decide whether ill health retirement will be allowed aftertwo years. Final report required from employer at 18 months.

Sickness absence and ReintegrationEmployers must formulate a reintegration plan for those who are sick

for more than four weeks

• This should be drafted in conjunction with a Company Doctor orOccupational Health Services – specialist reintegration companies assistbusiness in this process

• Your first focus should be to try and get the employee back into their oldjob by making any reasonable adjustments to working practice,environment, hours etc.

• If this is not possible you must look for an alternative job within yourcompany

• If none of this is possible, you must then assist the employee to findanother job with another company (re-training etc)

• You must commence this step after the employee has been absent for oneyear.

Sickness – final position

• The employee is protected from dismissalthroughout the sickness period

• The protection ceases after two years and dismissalcan then go ahead

• If the employee is adjudged capable by UWV ofearning at least 65% of their previous pay benefitsalso cease

• If they are not then an ill health pension is payableby the state.


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Useful WebsitesLets look at the following:

www.belastingdienst.nl

www.inspectieszw.nl/Englishwww.uwv.nl/OverUWV/english/

http://www.inretail.nl/ - site for the trade association for fashionretailers

http://www.salaris-informatie.nl/index.php


Documents

Netherlands Payroll Overview 2016 - IPASS · Netherlands Payroll Overview 2016 Tim Kelsey ... • Example – XYZ (UK ) Ltd send three painters to paint an oil rig in the Dutch port