Social security in the Netherlands can be subdivided into social insurance benefits (in Dutch: sociale verzekeringen) and social welfare benefits (in Dutch: sociale voorzieningen), depending on the source of the funding. Social insurance is funded from the contributions paid by employees. This system is compulsory. All employees are automatically insured and pay a contribution. Social welfare benefits are financed from central governmental funds.
Dutch law requires employers to make certain withholdings from the employee’s salary for income tax purposes and the employee’s national insurance contributions. An employer is furthermore required to pay certain social security premiums for its employees.
Healthcare and Insurances
In the Netherlands, there is no obligation for the employer to provide for a healthcare insurance policy.
Holidays and Annual leave
Pursuant to Article 7:634 of the Dutch Civil Code, employees are entitled to a statutory minimum number of vacation days equivalent to four times the weekly working hours. For example, an employee with a full-time workweek of 40 hours is statutorily entitled to a minimum of 20 vacation days per year.
As from 1 January 2012, vacation days will lapse if they are not taken within six months after the year in which they were accrued, unless the employee was not reasonably able to take them, but the scheme applies only in respect to the statutory minimum of vacation days. In addition, ill employees will be entitled to accrue the same full number of vacation days as employees who are not ill.
In general, the vacation period is fixed according to the employee’s wishes. If compelling business reasons would not allow the employee to take vacation during that specific period, the employer should inform the employee (in writing) within two weeks after the employee’s request (in writing), in default of which the period is fixed according to the employee’s wishes.
In addition to vacation days, employees are entitled to a holiday allowance, which, in general, equals 8% of the annual salary, insofar as the annual salary does not exceed three times the annual equivalent of the minimum wage.
Female employees have the right to (at least) 16 weeks of maternity leave. During this maternity leave, the Employee Insurance Agency will pay 100% of the daily wage, not to exceed the maximum daily wage.
The maximum daily wage in the Netherlands is currently EUR 219,28.
From 1 January 2019, partners will have five days of birth leave at full pay after the birth of their child (based on full-time employment). Partners can choose to take this leave immediately after the birth of their child, or to spread the leave over the first four weeks after the birth.
As of 1 July 2020, partners can take additional birth leave for up to 5 weeks. First, the partner must take the 5 days of birth leave (based on full-time employment). During this leave, the employee is entitled to 70% of his or her salary (increased up to the maximum daily wages). The additional birth leave must be taken within 6 months of the child’s birth (on or after 1 July 2020).
An employee with a child under eight years old in his or her care, is entitled to parental leave. The employee can take at most 26 times his/her number of weekly contractual hours as parental leave. The right of parental leave ends when the child becomes eight years old. Parental leave is unpaid leave and no holiday entitlements will be built up during the hours of parental leave.
Pursuant to Article 7:629 of the Dutch Civil Code, employers are obliged to continue to pay the salaries of sick employees for the first two years of illness. The employer is obliged to pay 70% of the employee’s salary. The salary paid by the employer during the first year of sickness cannot be less than the minimum wage. For the second year, the minimum wage limit does not apply. The 70% is not calculated on the amount of salary that exceeds the maximum daily wage. Most employees in the Netherlands are bound to a diverging clause laid down in either an individual employment contract or a Collective Labour Agreement (such clauses are often more favourable to the employee).
Pensions: Mandatory and Typically Provided
In general, an employer is not obliged to provide pension benefits to an employee unless it has promised the employee that it would provide for a pension scheme, or if a Collective Labour Agreement or government initiative requires so. If the employer has offered a pension scheme to one of the employees, it is obliged to offer the same pension scheme to all other employees.