HIRING YOUR FIRST EMPLOYEE IS A KEY MILESTONE
HIRING YOUR FIRST EMPLOYEE IS A KEY MILESTONE
Hiring your first employee is an important moment. It signals growth and marks the transition from working independently to building an organisation. At the same time, in the Netherlands you will be operating within a labour law framework that is among the most regulated in Europe.
Employees in the Netherlands benefit from strong legal protection. This means that the choices you make early on, regarding contracts, the engagement of freelancers, or exit arrangements, can have a significant impact on your costs and risks later. Many issues do not arise at the start, but only when an employment relationship ends or when your organisation changes or grows faster than expected.
On this page, you will find the key considerations when hiring employees. We highlight common risks and explain how clear agreements help you build a future-proof organisation.
Empiq supports startups and scale-ups at every stage of employment, from the first hire to growth, change, and exit. Our legal advisors make Dutch employment law practical and easy to understand, so you can lead your team effectively, stay compliant, and protect your business interests.
Employee or Freelancer:Your first hiring decision
Employee or Freelancer:Your first hiring decision
Before hiring someone, you need to determine whether the role should be filled through an employment contract or by engaging a freelancer, referred to in the Netherlands as an independent contractor (ZZP’er). Startups often choose freelancers for perceived flexibility, but incorrectly classifying an employee as a freelancer can lead to significant legal and tax risks.
If, in practice, the working relationship shows characteristics of employment—such as fixed working hours, direct supervision, or clear integration into your organisation—regulators may reclassify the relationship as an employment contract.
Note: In this context, we use the term ‘self-employed person without staff’ (ZZP).
The term ‘freelancer’ is often used informally, but legally speaking, this refers to a self-employed person without staff.
Empleyee or ZZP'er
Note: In this context, we use the term ZZP’er (self-employed professional without employees). The term freelancer is often used informally, but from a legal perspective, a ZZP’er is the correct term.
Employee
ZZP'er
Is the person integrated into your organisation (use of company systems, company email/ID, included in organisational charts)?
Employee
Freelancer
Does the company exercise authority or supervision over how, when,
and where the work is performed (fixed hours, direct manager, structured
reporting)?
Employee
ZZP'er
Is payment processed as salary via payroll, including wage tax and employer contributions?
Employee
ZZP'er
Does the person have their own business structure, work for multiple clients, and arrange their own insurance and equipment?
Employee
ZZP'er
Does the person financially dependent on your organisation (single client)?
Employee
ZZP'er
* A ZZP’er invoices as a business, arranges their own insurance, and is responsible for their own tax filings.
This overview reflects common criteria used by the Dutch Tax Authorities when assessing working relationships. Answering these questions helps determine how the relationship should be legally classified and what risks need to be addressed.
Important: Since 1 January 2025, the Dutch Tax Authorities actively enforce the Deregulation of Assessment of Employment Relationships Act (DBA Act). The risk of reclassification is therefore no longer theoretical
Do the majority of the answers point to “Employee”?
For complex projects (such as M&A support, restructuring or in-depth risk assessments), we agree on clearly defined projects so that you know exactly where you stand from the outset.
You remain in control of the scope, budget and schedule — with no surprises later on.
Is the majority leaning towards ‘self-employed’ or 'freelancer'?
In that case, ensure you have:
- a written agreement that explicitly emphasises your self-employed status;
- multiple clients;
- a genuine right to be replaced;
- autonomy over working hours and working methods;
- and invoicing as a business.
In addition, clearly document the actual nature of the working relationship to minimise the risk of reclassification.
Please note: since 1 January 2025, HM Revenue & Customs has been actively enforcing the DBA (Deregulation of the Assessment of Employment Relationships Act). The risk of reclassification is therefore no longer theoretical.
Employee checklist
Hiring in the Netherlands is highly regulated, and small mistakes can have long-term consequences. This practical checklist provides a clear overview of the key legal, payroll, and onboarding steps you need to complete before your first employee starts.
From choosing the right contract structure to setting up payroll, insurance, and a compliant onboarding process, this checklist helps you avoid common pitfalls and costly surprises.
Download the checklist to ensure nothing essential is overlooked.
Empiq supports you at every stage of the hiring process, ensuring everything is set up correctly, compliantly, and with confidence.
Frequently asked questions
Fixed-term employment contract
Fixed-term employment contracts are often used by startups for first hires, for example a 12-month contract.
Under Dutch law, fixed-term employment contracts are limited by the statutory chain rule.
If one of these limits is exceeded, the employment contract is automatically converted into an indefinite-term employment contract.
Indefinite-term employment contract
An indefinite-term employment contract provides employment without a predetermined end date.
In most cases, yes.
- the applicability of a collective labour agreement;
- statutory exceptions;
- successive employment;
- upcoming legislative changes.
Yes, provided that the working relationship is genuinely independent.
Otherwise, the relationship may be reclassified as an employment contract.
- services and deliverables;
- independence and autonomy;
- no employment relationship;
- fees and liability.
- description of services;
- independence;
- right of substitution;
- no exclusivity;
- no-employment clause.
No. The actual working relationship remains decisive.
Only if a collective labour agreement applies.
- name and address of the employer and employee;
- place of work;
- job title or position;
- start date;
- duration of the agreement;
- salary and payment terms;
- working hours;
- holiday entitlement;
- notice periods;
- pension scheme;
- applicable collective labour agreement;
- probationary period;
- other employment conditions.
- job title;
- salary;
- working hours;
- holiday entitlement;
- notice periods;
- IP clauses;
- non-compete clauses;
- reference to any applicable collective labour agreement.
Not always. Many startups require additional clauses.
- confidentiality;
- IP provisions;
- non-compete clause;
- remote working policy.
Not all intellectual property rights automatically vest in the employer.
Non-compete clauses are assessed strictly and may be void.
- 1 month for contracts shorter than 2 years;
- 2 months for longer-term or indefinite-term contracts.
Employment law issues rarely arise at the start of employment, but usually later — during termination, disputes or organisational growth. Startups often underestimate these risks, which may lead to significant legal costs if they are not identified in time.
Dutch dismissal law provides employees with extensive protection. Employers cannot dismiss an employee “at will”, even in cases of underperformance or restructuring. Failure to follow the correct procedure may result in reinstatement or financial claims.
Depending on the situation, termination may require:
- prior permission from the UWV;
- dissolution by the subdistrict court; or
- termination by mutual consent through a settlement agreement.
By understanding employment law obligations at an early stage, startups can structure contracts correctly, manage expectations and reduce disputes. Investing in proper contracts and correct termination processes helps prevent significant legal and financial risks later on.
No. Gross salary is only part of the total employer costs. Dutch legislation creates additional mandatory and practical costs.
In addition to gross salary, employers should generally budget for:
- employer social security contributions;
- employer pension contributions, if applicable;
- statutory holiday allowance of 8% of the gross annual salary; and
- payroll administration and processing costs.
As a rule of thumb, total employer costs in the Netherlands are usually 20–30% higher than the gross salary. The exact percentage depends on factors such as salary level, pension arrangements and social security contributions.
Yes. The total cost structure varies depending on contract type, pension scheme, age-related contributions and sector-specific arrangements.
Insight into total employment costs enables startups to plan more accurately, manage cash flow and make informed hiring decisions. By taking these costs into account from the start, financial surprises can be avoided and sustainable growth can be supported.
Types of employment contracts & classification
-
Fixed-term employment contract
Fixed-term employment contracts are often used by startups for first hires, for example a 12-month contract.
Under Dutch law, fixed-term employment contracts are limited by the statutory chain rule.
If one of these limits is exceeded, the employment contract is automatically converted into an indefinite-term employment contract.
-
Indefinite-term employment contract
An indefinite-term employment contract provides employment without a predetermined end date.
-
In most cases, yes.
- the applicability of a collective labour agreement;
- statutory exceptions;
- successive employment;
- upcoming legislative changes.
-
Yes, provided that the working relationship is genuinely independent.
Otherwise, the relationship may be reclassified as an employment contract.
- services and deliverables;
- independence and autonomy;
- no employment relationship;
- fees and liability.
- description of services;
- independence;
- right of substitution;
- no exclusivity;
- no-employment clause.
-
No. The actual working relationship remains decisive.
-
Only if a collective labour agreement applies.
Content of the employmentcontract & legal protection
- name and address of the employer and employee;
- place of work;
- job title or position;
- start date;
- duration of the agreement;
- salary and payment terms;
- working hours;
- holiday entitlement;
- notice periods;
- pension scheme;
- applicable collective labour agreement;
- probationary period;
- other employment conditions.
- job titles
- salary;
- working hours;
- holiday entitlement;
- notice periods;
- IP clauses;
- non-compete clauses;
- reference to any applicable collective labour agreement
These provisions form the legal core of the employment relationship.
-
Not always. Many startups require additional clauses.
- confidentiality;
- IP provisions;
- non-compete clause;
- remote working policy.
-
Not all intellectual property rights automatically vest in the employer.
-
Non-compete clauses are assessed strictly and may be void.
- 1 month for contracts shorter than 2 years;
- 2 months for longer-term or indefinite-term contracts.
Employment law risks, termination & costs
-
Employment law issues rarely arise at the start of employment, but usually later — during termination, disputes or organisational growth. Startups often underestimate these risks, which may lead to significant legal costs if they are not identified in time.
- Dutch dismissal law provides employees with extensive protection. Employers cannot dismiss an employee “at will”, even in cases of underperformance or restructuring. Failure to follow the correct procedure may result in reinstatement or financial claims.
- Depending on the situation, termination may require:
- prior permission from the UWV;
- dissolution by the subdistrict court; or
- termination by mutual consent through a settlement agreement.
- By understanding employment law obligations at an early stage, startups can structure contracts correctly, manage expectations and reduce disputes. Investing in proper contracts and correct termination processes helps prevent significant legal and financial risks later on.
- No. Gross salary is only part of the total employer costs. Dutch legislation creates additional mandatory and practical costs.
- In addition to gross salary, employers should generally budget for:
- employer social security contributions;
- employer pension contributions, if applicable;
- statutory holiday allowance of 8% of the gross annual salary; and
- payroll administration and processing costs.
As a rule of thumb, total employer costs in the Netherlands are usually 20–30% higher than the gross salary. The exact percentage depends on factors such as salary level, pension arrangements and social security contributions.
- Yes. The total cost structure varies depending on contract type, pension scheme, age-related contributions and sector-specific arrangements.
- Insight into total employment costs enables startups to plan more accurately, manage cash flow and make informed hiring decisions. By taking these costs into account from the start, financial surprises can be avoided and sustainable growth can be supported.
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