Your Guide to Employer of Record (EOR) in the Netherlands

Growing your team internationally can be challenging, but it doesn’t have to be. With an Employer of Record (EOR), you can hire employees in the Netherlands without the need to establish a Dutch legal entity. In this FAQ, we outline how EOR services work, when they’re the right solution, and what to expect when hiring in the Netherlands through an EOR like Parakar.

How EOR works: Key questions answered

1. What is an Employer of Record (EOR)?
An Employer of Record is a third-party organization that legally employs staff on behalf of your company in a specific country. While your business manages the employee’s daily tasks and performance, the EOR handles all employment-related responsibilities, such as contracts, payroll, taxes, and compliance with local labor laws. This allows you to hire in countries where you don’t have a legal entity.

2. When should a company consider using an EOR?
An EOR is especially useful when:

• You want to hire talent in a country where you don’t have a local entity.
• You need to hire quickly without going through a long and complex company registration process.
• You want to ensure compliance with local employment laws and tax regulations.
• You’re testing a new market before making a long-term investment.
• You need temporary or project-based hires abroad.

3. What are the benefits of using an EOR?

• Full compliance with local labor laws and tax requirements.
• Faster hiring timelines compared to setting up your own entity.
• Reduced administrative workload for HR and payroll.
• Lower costs and risks compared to establishing a company abroad.
• Access to local HR expertise and guidance.

4. What is the difference between an EOR and a staffing agency / PEO / payroll provider?

• Staffing agency: Focuses on recruiting and placing candidates, often for short-term or temporary roles, but usually does not act as the legal employer.
• PEO (Professional Employer Organization): Offers HR outsourcing services but typically requires you to have your own legal entity in the country.
• Payroll provider: Manages salary payments and related administration but does not take on the legal employer role.
• EOR: Legally employs the worker on your behalf, handling all compliance, contracts, and payroll, so you don’t need a local entity.

5. Who is the legal employer when using an EOR?
The EOR is the legal employer on paper and is responsible for contracts, payroll, and compliance. However, you remain in control of the employee’s day-to-day work, goals, and performance.

6. Is the employee on our payroll or the EOR’s payroll?
The employee is on the EOR’s payroll. The EOR processes salary payments, handles tax deductions, and ensures all statutory contributions are made according to local laws.

7. Can we hire both local nationals and foreign employees through EOR?
Yes. EOR services can cover both local nationals and foreign employees. For foreign hires, additional visa or work permit requirements apply, and the EOR can often support with the application process.

Hiring in the Netherlands through an EOR

1. Can a foreign company hire employees in the Netherlands without setting up a legal entity?

Yes, you can hire without setting up a Dutch entity, but you must either register as a foreign employer for payroll purposes or use an EOR service. The EOR is the legal employer of the staff, handling payroll, taxes, and compliance, while the foreign company manages the employee’s day-to-day work. This avoids the need to directly register with Dutch authorities.

2. What type of employment contracts do you offer under EOR in the Netherlands?

Type of contract

Parakar Netherlands B.V. both offers fixed-term and indefinite (permanent) contract to meet Dutch legal requirements and client needs. These are always drafted to align with Dutch labor legislation and according to client’s/employee’s wishes. For each case we will reflect on and advise what is required or recommended. If it’s a new employee, a fixed term contract is possible, while if there’s more than 3 years of prior employment, a permanent contract is required under Dutch law.

Probation

Fixed-term contracts:

• No probation period allowed if contract is 6 months or less.
• Up to 1 month probation if contract exceeds 6 months.

Indefinite contracts:

• Probation is allowed up to 2 months

Since it’s hard to terminate an employee in the Netherlands (after probation), we always recommend to apply a probationary period.

Language requirements

All contracts are in English, even when there’s a Dutch native onboarder involved, given the international involvement in almost all cases.

3. What are the standard working hours and overtime rules in the Netherlands?

A standard working week in the Netherlands is 40 hours per week, over 5 days (of 8 hours), Monday to Friday.

In some cases, the position of Employee and the business of Employer’s Client will require a certain flexibility of Employee and it may be necessary from time to time to exceed the agreed upon working hours (overtime). Furthermore, it may be required to perform the activities on irregular hours. A compensation for this would be included in Employee’s base remuneration.

4. What is the minimum wage in the Netherlands?

For 2025 the following applies:

• In general, applicable to anyone above 21 years in the Netherlands: EUR 14,40 gross/hour

• For Highly Skilled Migrants under 30 years old: EUR 4.171,00/month

• For Highly Skilled Migrants 30 years and older: EUR 5.688,00/month

• EU Blue Card: EUR 5.688,00/month

• Search year: EUR 2.989,00/month

Please note the rates above exclude a mandatory 8% holiday pay, paid out monthly or each year in May. In addition, note that the HSM/Blue Card salary requirements change each year.

5. How is paid time off (PTO) handled under EOR in the Netherlands?

In the Netherlands, there are 11 public holidays.

Public holidays

• Nieuwjaarsdag (New Year’s Day): Wednesday 1 January 2025
• Goede vrijdag (Good Friday): Friday 18 April 2025
• Eerste en tweede paasdag (Easter Sunday and Easter Monday): Sunday 20 April and Monday 21 April 2025
• Koningsdag (King’s Day): Saturday 26 April 2025 (In 2025, King’s Day will be celebrated a day earlier on 26 April, because 27 April falls on a Sunday.)
• Bevrijdingsdag (Liberation Day): Monday 5 May 2025
• Hemelvaartsdag (Ascension Day): Thursday 29 May 2025
• Eerste en tweede pinksterdag (Whit Sunday and Whit Monday): Sunday 8 and Monday 9 June 2025
• Eerste en tweede kerstdag (Christmas Day and Boxing Day): Thursday 25 and Friday 26 December 2025

PTO

In the Netherlands, there is two kinds of annual leave. Both kinds of leave also have different rules on validity, but both will be carried over to the next year:

• Statutory annual leave: The statutory minimum in the Netherlands is 20 days (based on fulltime work). Therefore, the first 20 days that an employee is offered in annual leave is statutory annual leave. Part time workers are eligible to at least 4x their weekly hours in holidays.

Statutory leave days are valid until July of the year following the year they were accrued. For instance,

• Extra-statutory annual leave: This is all the leave a company offers on top of the statutory annual leave. For instance, if an employee is offered 25 days of annual leave, 20 of those are statutory and 5 are extra-statutory.

Extra-statutory leave days are valid for 5 years. So if someone accrued 5 extra-statutory leave days in 2023, they will expire at the end of 2027.

Sick leave

In the Netherlands, sick employees are covered by a system that includes mandatory continued payment of wages and reintegration by the employer for a maximum of two years. Employers must continue paying at least 70% of the salary, and for lower amounts, up to the minimum wage, although it is possible for the employer/client to offer 100% compensation in the first years or even beyond. The employer is also required to have a contract with a certified occupational health physician, who assists with the guidance and reintegration of the sick employee.

6. What are the rules around termination and notice periods in the Netherlands?

In the Netherlands, it can be ‘difficult’ to terminate an employment contract. A worker with a permanent contract has a very strong and protected position regarding termination. It is not possible to simply communicate the termination to the worker, the termination should be approved by Court, the Labour Authorities or via a Mutual Termination Agreement. The employee is not obligated to sign the Mutual Termination Agreement, so this is only if the Employee is willing to mutually terminate the employment.

Transitievergoeding

If the employer decides not to continue an assignment, whether it’s due to a non extension of a fixed term contract, or whether it’s due to a termination case, the employer has to pay a transition payment to the employee.

In the Netherlands, the transition payment is calculated by adding one-third of your gross monthly salary for each full year of service, along with a proportionate amount for remaining months and days

Notice periods

In the Netherlands, the statutory notice period for an employee is one calendar month, starting from the first day of the month following the notification of termination. However, this period can be longer if agreed upon in the employment contract, but it cannot exceed six months. An employer can stipulate a longer notice period for an employee, but if it is more than one month, the employer’s notice period must be at least twice as long. 

Termination in probation

In the Netherlands, during a valid probationary period, either the employer or the employee can terminate the employment contract with immediate effect and without a mandatory notice period or justification. However, the probationary clause must be agreed upon in writing, apply to the specific contract, and adhere to maximum durations (one month for contracts under two years, two months for those over two years or indefinite).

Chain ruling

In the Netherlands, the “chain rule” converts a chain of successive fixed-term employment contracts into an open-ended (permanent) contract when a worker has signed three or more temporary contracts or the total duration of these contracts exceeds three years, provided the interval between contracts is no more than six months.

7. Can you hire contractors or freelancers through EOR in the Netherlands?

Yes, you can engage an Employer of Record in the Netherlands to legally hire and manage freelancers, often referred to as zzp’ers or zelfstandige zonder personeel (self-employed without staff). An EOR handles employment-related administrative and legal tasks, like payroll, taxes, and compliance with Dutch Labor laws, ensuring that your engagement with the freelancer is fully compliant and avoids issues of false self-employment. This arrangement provides peace of mind for your company by outsourcing these complex responsibilities and offers benefits to the freelancer, such as access to employee-like benefits that would otherwise be unavailable. 

For contractors, Parakar as an employee will facilitate the payment of employer’s social security contributions. For freelancers we do not facilitate this payment and payout the employee directly.

8. Are there any country-specific compliance requirements for onboarding?

For Highly Skilled Migrants and EU Blue Card holders the most important requirement is the salary requirement as described in question 4. Besides that, for Highly Skilled Migrants the employees must have an Employment Contract with a recognized sponsor to be allowed to work.

The employee’s salary must be in line with market conditions. If an employee earns an exceptionally high salary for a position, compared to other employees in the Netherlands who perform the same or similar work, the Immigration Service may conduct an investigation in conjunction with the labor authorities. In such a case, the client and employer will be given the opportunity to further explain the high salary.

Pre-employment screening is a service that Parakar provides at request of the client, but this is not mandatory.

9. How long does onboarding typically take via EOR in the Netherlands?

Timeline for process (Entry visa (MVV) required)

• First, the Employment Contract and Letter of Assignment need to be signed.

• If the Employee has a nationality where an entry visa is required, we must file an application for an MVV. Since we are a recognized sponsor, we can apply for a fast-track application, which means that the IND strives to process the application within 2 weeks.
• Once the IND has approved the application the worker needs to make an appointment at the Dutch embassy in their home country, or country of permanent residence for the MVV visa. Roughly, the timeline for the appointment at the Dutch embassy is 2 weeks, but the actual timeline of this depends on the availability at the applicable embassy.
• Once this is arranged the worker can travel to the Netherlands and work immediately in the Netherlands.

Timeline (NO entry visa (MVV)required)

To give you a view on the process

• First, the Employment Contract and Letter of Assignment need to be signed.
• If the Employee has a nationality where an MVV is not required; once the IND has approved the application, he can travel to the Netherlands and start working immediately.

The IND aims to process the application through us within 2 weeks – if everything goes smoothly. In principle, the IND has up to 90 days to decide on HSM’s. In practice we often see this is much shorter. We do see that recently, additional information has been requested slightly more often from the IND, given the international developments regarding immigration. This can delay the process by a few weeks. This does refer to specific countries, of which England is not one.

Timeline (Change of sponsorship in-country, or Dutch/EU passport holder)

• First the EC and LOA need to be signed
• The employee can formally start working the first day after signing the contract
• If the data collection sheet is filled in correctly, and the follow up/approvals are done quickly, without any special requests, it should be easily possible to onboard someone within a week from the first contract draft until the actual onboarding.

In conclusion: The total timeline depends on how fast the document are signed, and when IND approves the application.

10. Are there limitations on what roles or industries can be hired via EOR in the Netherlands?

As of 2025, there are no restrictions by law based on roles and/or industries. Within EOR, it should be possible, in principle, to hire people in every branch.

In the event of high-risk work (such as working with machinery or in working sites locations), we at Parakar, as the employer, are responsible for the safety of our employees. In such cases, the client must be able to reasonably demonstrate and confirm that safety measures are being complied with in the workplace.

11. How is pension facilitated?

Parakar facilitates retirement through an adequate pension plan, which applies to every employee. This is a fixed percentage paid by the employer and deposited by the employer into the employee’s pension fund. Once the employee reaches retirement age, they become eligible for the money.

12. What about reimbursements and allowances?

It is possible to enable expense claims via Parakar’s system, and it is also possible to offer all kinds of allowances. We are happy to advise you on what is most advantageous from a tax perspective and what is and is not permitted under Dutch tax law.

Why Choose Parakar?

We take care of immigration support from start to finish. We guide you through the entire process, from your application to your residence, and we also assist you with applying for the 30% ruling. As a recognized sponsor with the Dutch Immigration Authorities (IND), we maintain a close working relationship with them, ensuring smooth communication and transparent procedures.

Compliance is at the heart of what we do. Parakar is certified by the Stichting Normering Arbeid (SNA), which safeguards both contractors and employers against fraud and illegality. In addition, we are a registered and certified member of the Algemene Bond Uitzendondernemingen (ABU), the largest federation for employment agencies in the Netherlands. These accreditations guarantee that we meet the highest quality standards in payroll, administration, and employment practices.

What makes Parakar unique is not only our compliance and expertise, but also our story. The company was founded over 20 years ago by Johan in collaboration with the Dutch authorities, with the purpose of making international employment easier, safer, and more transparent. Ever since, we have been dedicated to guiding professionals like you through every step of their journey.

30% tax benefit

The Expat Ruling is a Dutch tax exemption for employees who were hired from abroad. Under the ‘Tax Ruling’, certain categories of international staff can receive maximum 30% (per 1-1-2027 27%) of their gross salary tax-free. This is to compensate the extra costs incurred to live in the Netherlands.

Need EOR support in the Netherlands?
Whether you’re hiring your first employee in the Netherlands or expanding your existing team, Parakar is ready to support you. As your local Employer of Record, we handle employment contracts, payroll, compliance, and day-to-day HR administration—allowing you to focus on growing your business in the Dutch market.

Contact us to find out how we can help you achieve your hiring goals in the Netherlands.