How much does it really cost to hire in the Netherlands in 2026?

The main cost components for a EUR 60,000 Dutch hire (illustrative figures based on verified statutory rates where indicated; social insurance contributions are sector-variable estimates):

All figures marked illustrative are computed from the statutory rates in this guide and are approximations only. Actual employer contributions depend on your sector classification, chosen pension fund, and the employee's health history. Run the Employer Cost Calculator for a personalised model.

1. Start with gross salary

   Fix the gross annual salary. This is the base against which every other cost line is calculated.

2. Add employer social insurance

   Apply the applicable ZVW, AWf, Aof, and WKO rates for your sector and contract type. Rates vary. Permanent contracts use the lower AWf rate.

3. Add the vakantiegeld

   Add the mandatory holiday allowance of at least 8 percent of gross salary. This is a cash payment due in May each year.

4. Reserve for sick pay

   Estimate a sick-pay reserve based on typical absence rates. Serious illness can trigger the full two-year obligation. Many employers take out sick-pay insurance to cap this exposure.

5. Reserve for transition payment

   Accrue one-third of monthly salary per service year from the employee's first day. The reserve grows with tenure and is payable on any employer-initiated termination.

The four employer contribution components:

• ZVW (Zorgverzekeringswet), the employer health care levy. A flat percentage on gross salary paid directly to the Belastingdienst.
• Aof (Arbeidsongeschiktheidsfonds), disability fund. Small employers pay the lower Aof rate; larger employers pay the higher rate. Employers who self-insure for sick pay (eigenrisicodrager) may pay a reduced Aof contribution.
• AWf (Algemeen Werkloosheidsfonds), unemployment fund. Permanent contracts attract the lower AWf rate. Flexible contracts attract the higher rate, making permanent employment meaningfully cheaper for the employer on this line.
• WKO (Werkhervattingkas), sick leave and re-integration fund. Rates are sector and size specific. Large employers may opt to self-insure.

Contract type affects the cost

A permanent contract (contract for indefinite duration) attracts the lower AWf rate. A temporary or zero-hours contract attracts the higher AWf rate. The difference can be several percentage points of gross salary per year. Structuring employment on permanent contracts where operationally possible lowers this line materially. Teamed uses permanent-equivalent contracts for EOR engagements by default, applying the lower contribution rate where applicable.

Occupational pension: an additional employer cost line

Most Dutch employees are enrolled in a mandatory sector pension fund (bedrijfstakpensioenfonds) under a collective agreement (CAO). Employer pension contributions are set by the fund or CAO, not by a single statutory rate. Rates typically fall between 10 and 20 percent of pension base salary, with the employer and employee each contributing a share. Verify the applicable fund and rate for your sector. This is a material cost line that sits on top of the social insurance contributions above.

Annual leave

The minimum is 20 days per year (20 days days for a 40-hour week, per Burgerlijk Wetboek art. 7:634). Many Dutch collective agreements (CAO) provide 25 to 30 days. Public holidays are separate and not bundled into the leave entitlement in the way UK law combines them. There are up to 11 official public holidays recognised by the Dutch government, though not all are guaranteed as paid days off without a CAO provision.

Holiday allowance (vakantiegeld)

Dutch law requires employers to pay a holiday allowance of at least 8 percent of gross annual salary. This is paid separately, typically in May, as a lump sum. It is a cash outlay on top of the salary. For a EUR 60,000 salary, the vakantiegeld is EUR 4,800 per year. This is often quoted as the reason Dutch salaries look lower than equivalent European salaries when compared gross-to-gross: part of the total compensation is deferred to the holiday pay period.

Sick pay: the two-year obligation

Dutch law requires you to pay at least 70% of salary during the first year of illness, and at least 70% during the second year, for a maximum of 24 months in total. This applies from the employee's first day of employment. There are no waiting days.

The practical exposure varies by employee. Most sick leave is short. But a serious illness means you are liable for up to 24 months of salary at 70%. For a EUR 60,000 salary, that is EUR 42,000 in potential sick-pay exposure over two years. Many Dutch employers take out sick-pay insurance (verzuimverzekering) to cap this risk.

Parental and maternity leave

Maternity leave (zwangerschaps- en bevallingsverlof) is 16 weeks in total, paid by the UWV (the employee insurance agency) at up to 100 percent of the daily wage, capped at the daily wage ceiling. The employer bears no direct cost for the UWV-funded portion but must maintain the employment relationship and continue any benefits during the absence.

Each parent has a right to 26 weeks of parental leave (ouderschapsverlof) until the child reaches 8 years of age. The first 1 week of birth leave for partners is paid by the UWV at 70 percent of the daily wage. The remaining optional parental leave weeks are unpaid unless a CAO provides otherwise. Parental leave is unpaid at the statutory floor and therefore adds no direct cash cost beyond administration, but it does mean managing cover for a long absence.

The transition payment accrues from day one of employment under Burgerlijk Wetboek art. 7:673. It is owed whenever the employer ends the employment contract (or the employee ends it because of seriously blameworthy employer conduct).

How the accrual works (illustrative examples)

The formula is one-third of the monthly salary per full year of service. All years count; there is no cap on service years. The only cap is the monetary ceiling of €102,000.

These are illustrative figures computed from the verified accrual rate. Actual transition payment depends on the exact salary and completed service years at the point of termination. The EUR 60,000 annual salary in these examples equals a monthly salary of EUR 5,000. Payments are computed on the gross monthly salary excluding the vakantiegeld.

When the cap bites

The €102,000 ceiling is reached when accumulated accruals hit that figure. For a high earner, this can be reached in fewer than 15 years. The cap does not reset and is indexed annually. For 2026, the cap is €102,000.

Mutual agreement settlements

Employment contracts can also be ended by mutual agreement via a settlement agreement (vaststellingsovereenkomst). The parties can agree a different amount, but the transition payment is typically the floor that the employee expects. Courts and the UWV will look at the transition payment figure as the baseline for what is reasonable.

The vakantiegeld (8% holiday allowance) is a mandatory cash payment, typically disbursed in May. It is not discretionary and must be accrued throughout the year. It is frequently the Dutch payroll line that surprises non-European buyers the most, because it is an outflow over and above the monthly salary.

The sick-pay reserve is an estimate based on average short-illness frequency. A serious illness can increase this line dramatically. Sick-pay insurance is common among Dutch employers to cap exposure.

The Teamed fee above is an approximation based on from $599 per month. The exact EUR equivalent varies with the prevailing exchange rate. Teamed applies zero FX mark-up, so the GBP or EUR equivalent passes through at the mid-market rate with no margin added.

Real HR and legal experts handle your Dutch hires, from the first offer letter through every loonaangifte submission, sick-leave administration, and year-end jaaropgaaf. An actual person, not a chatbot or a pooled queue. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice.

EOR payroll, contractor onboarding, and entity setup all live on one platform. A Dutch contractor who converts to a salaried role keeps their record. That same employee can graduate from EOR to your own Dutch entity without switching systems. Run the Crossover Calculator to see the month the model flips. EOR is the right model for a first Dutch hire, until it isn’t.

The Dutch employer cost picture has more moving parts than most European markets, because of the two-year sick-pay obligation and the sector-variable social insurance rates. Teamed models these at quote stage so you see the full cost before you make the offer. Key sources: Business.gov.nl: Sick pay, Business.gov.nl: Transition payment, and Business.gov.nl: Holiday entitlement.