Expanding your business overseas comes with a ton of perks and benefits. It opens up new and better business opportunities, brings diversity to your workforce, and sets your business on a path of sustained growth. Foreign employees inject more skillsets, creativity & innovation, and a deep understanding of foreign markets.

However, the international business expansion also comes with its own basket of complications and challenges. Among the most complicated and consequential hindrances to success in foreign markets is employment law. Any businessman will tell you how complicated employment law can be, and the heavy legal burden that comes with non-compliance. It gets a lot more complicated when you need to adjust employment law for your foreign workers.

Adjusting Employment Laws for Employees in the Netherlands

Before we get to the meat and potatoes of this topic, it is important to mention that in every foreign market you expand to, you should have a local attorney on retainer. The attorney will help you navigate the murky waters of international employment law. That said, if you’re expanding to the Netherlands, there are essential HR changes that you have to make in order to accommodate employees in this market. These include:

i. Employment contracting

In the Netherlands, contracts can either be definite or indefinite. Definite (fixed-term) contracts run for a specified period of time, after which they expire. In the absence of an agreed specific period, the contract is deemed to be indefinite and cannot be terminated without a mutual agreement between the employer and the employee. Terminating an indefinite contract in most cases come with compensations to the aggrieved party, if any.

Apart from definite and indefinite contracts, employers can also hire employees on a trial basis. The duration of the trial period depends on the type of contract the employer offers at the end of the trial period. The valid trial period for fixed-term contracts of between 6 months and 2 years is 1 month, while the valid trial time for permanent/indefinite jobs is 2 months. There is no trial period for contracts lasting 6 months or less. Either the employer or the employee can decide to terminate the contract at any time during the trial period by the issuance of a termination notice.

Another notable fact about Dutch employment laws is that an employer cannot offer more than three consecutive fixed-term contracts to the same employee. If the employee has to stay for longer than 3 contracts, the contract automatically becomes indefinite. Terminating the agreement means the employer has to go through all the laid down steps to fire permanent staff. Also, the cumulative period of consecutive fixed-term contracts must not exceed 36 months and when it does, the contract converts into permanent employment.

ii. What’s in an employment contract?

As an employer, you must give your employees clear information on the most important employment conditions. The information in the employment contract must include, among other things:

- The employee's job description.

- Working hours on a weekly or daily basis.

- Terms for overtime assignments.

- Training entitlement.

- Salary and other compensations.

- Terms and procedures for leave.

- Pension terms (if applicable)

- The Collective Labour Agreement (CAO), if applicable.

iii. Work permits

If you intend to bring workers from your country to work in your Dutch office, you must obtain a work permit for each one of them. That includes citizens of the European Union Nations, Norway, Iceland, and Liechtenstein. Nowadays, Bulgarian and Romanian citizens are also allowed to be employed without a work permit. The authority responsible for issuing work permits in the Netherlands is the UWV Werkbedrijf (Uitvoeringsinstituut Werknemers Verzekeringen). However, employers first should submit the needed documents to the Immigration and Naturalisation Service (IND), then a request for advice is submitted from IND to UWV. This signifies that people who want to have a work permit do not need to forward an application to UWV.

It’s important to note that the UWV only issues work permits to foreigners when the employer proves that there are no qualified Dutch or EU nationals to take the job. Work permits in the Netherlands run for a maximum of three years upon which they must be renewed.

iv. Trade unions

Trade unions don’t have much significance in most countries. If you open a company in Hong Kong, for example, you won’t have to worry about any trade unions interfering with your HR issues. But things are different in the Dutch labor market. They involve themselves in issues of employee protection, ranging from safe working conditions, social security, employee benefits, and termination cases.

v. Ancillary activities

As an employer in the Netherlands, it is illegal to deny a worker the freedom to simultaneously work for another employer. This provision is defined as ‘nevenwerkzaamheden’ in Dutch, which translates to “ancillary activities”. You can only prohibit ‘nevenwerkzaamheden’ if you have an objective justification, for example when there is a clear conflict of interest.

vi. Leave

Employees in the Netherlands are entitled to special leaves, including paternity leave, compassionate leave (both long and short term), pregnancy & maternity leave, emergency leave, and adoption leave, among others. The employees are also entitled to a minimum of 20 paid leave days. Parental leaves run for up to 26 times an employee’s weekly working hours.

vii. Employment termination

You cannot terminate an employment contract in the Netherlands without the prior approval of the court or the governmental Employment Insurance Agency ‘UWV’. You have to provide the agency with valid grounds for termination (incompetence, fraud, theft, etc.) for your request to be approved.

Conclusion

International employment laws are designed to provide employees with a high degree of protection. To prevent your business from unwanted lawsuits and hefty fines, it is essential to be aware of these laws as an employer.

About the Author:

Emily Martin is a Corporate Recruiter with more than 5 years of recruiting and HR experience. Currently supports full life-cycle recruiting, including proactive candidate searches, and interviewing. In her role, Emily assists in developing sourcing strategies for both short and long-term purposes, coordinates interviews and conducts candidate screening calls, and places candidates in positions across a wide range of functional areas and compensation levels. Emily is passionate about traveling and writing.