[Netherlands] Advice for expats to consider before signing labour or rental contracts

If you are fortunate enough to have found a job in the Netherlands, one of the top 10 happiest countries in the world, you are to be congratulated on the boost to your career and bank account. But before you sign your labour and rental contracts on the dotted line, IAMEXPAT has some valuable advice to consider.

Labour contract

There are various things you should bear in mind when reading your new labour contract:

Sick pay

What will happen if you fall ill? How much money will you receive while you are sick? 

In the Netherlands, almost all employees receive 100 per cent of their income in the first 52 weeks of illness and 70 per cent in the subsequent 52 weeks. However, some employers employing a number of expatriates have found that they can get away with providing less comfortable conditions for expats.

You may find a clause which states that, for the first 52 weeks, you will receive 70 per cent of your gross salary insofar as the gross salary equals or exceeds the minimum wage applicable to the Employee, and does not amount to more than the maximum daily wage, while for the subsequent 52 weeks you would receive 70 per cent of your gross salary with the same maximum.

This is a trap! According to IAMEXPAT such wording is frequently used in case your gross monthly income exceeds 4.859 euros (in 2021). Whatever your real income, under these terms you would receive only 3.401 euros gross per month. If, for example, your income is 9.000 per month and you fall ill you will receive only 38 per cent of your normal income.

Non-compete clause

A second trap to be conscious of; beware the non-compete clause. In many countries, employees are used to receiving compensation for the time that they are not allowed to work in their line of business due to a non-competition clause. It is not so in the Netherlands.

Bonuses and other VR-schemes

Variable remuneration is another problematic topic in many expat contracts. If the scheme offered contains the provision that the granting of your bonus is at the company’s discretion (and that entitlement in any year does not constitute any entitlement for succeeding years), what are you actually going to get? 

Many companies treat such bonuses as arbitrary (which is worse than discretionary). How are KPI’s established? What will happen with your bonus in the year you leave the company? Do you believe your company will still pay out a bonus for that year?

Negotiate

Now you know what to look for in the job offer you receive what can you do? Negotiate. Once an offer has been made, the company has invested a lot in your hiring. They will not risk having to write off the hiring costs simply because you have reasonable requests like normal pay (100 per cent for the first year and 70 per cent for the second year) if you fall sick. Such a request is considered reasonable in the Netherlands because it is something the majority of employees have.

If applicable, discuss your non-compete clause. Try to limit the duration and geographical and substantial scopes (what exactly can’t you do after you leave). Make a distinction between voluntary and involuntary redundancy; why should your options be limited if your employer takes the decision to terminate your employment? If you do not feel comfortable negotiating your labour contract, hire an employment lawyer. The investment could be the best you will ever make.

Your housing contract

The best-case scenario for your housing contract is that your company arranges everything for you. If you do sign a lease yourself, remember that tenants of residences are very well-protected under Dutch law. 

The reason for this is that planning limitations have resulted in a chronic shortage of housing for generations. Without stringent protection, tenants could fall victim to abusive real estate owners, which would lead to uncontrollable gentrification of some neighbourhoods and dilapidation of residences in other neighbourhoods.

Here are the key things to consider when concluding a lease contract:

Duration

Beware of minimum duration contracts which limit your ability to cancel the lease within the first year or so. And beware of a temporary lease; this can either be a minimum duration contract (which by force of law is considered to be a lease for an indefinite period of time) or a lease for a limited time only (which the tenant may cancel at any time if a one-calendar-month notice is observed).

All-in price

Beware of “all-in” prices. The lease should specify what you pay solely for use of the real estate. It may also specify what you pay for the use of other stuff, like inventory, the use of services or goods, etc. If you have an all-in price you are in luck; you may request a separation between the one and the other and the law contains a hefty penalty for the landlord in your favour.

Rental check

Finally, always do a rental price check within the first six months to see if your residence qualifies for rent control. The government has a web application for the calculation of the maximum reasonable rent for independent living space in English.

If you are fortunate enough to have found a job in the Netherlands, one of the top 10 happiest countries in the world, you are to be congratulated on the boost to your career and bank account. But before you sign your labour and rental contracts on the dotted line, IAMEXPAT has some valuable advice to consider.

Labour contract

There are various things you should bear in mind when reading your new labour contract:

Sick pay

What will happen if you fall ill? How much money will you receive while you are sick? 

In the Netherlands, almost all employees receive 100 per cent of their income in the first 52 weeks of illness and 70 per cent in the subsequent 52 weeks. However, some employers employing a number of expatriates have found that they can get away with providing less comfortable conditions for expats.

You may find a clause which states that, for the first 52 weeks, you will receive 70 per cent of your gross salary insofar as the gross salary equals or exceeds the minimum wage applicable to the Employee, and does not amount to more than the maximum daily wage, while for the subsequent 52 weeks you would receive 70 per cent of your gross salary with the same maximum.

This is a trap! According to IAMEXPAT such wording is frequently used in case your gross monthly income exceeds 4.859 euros (in 2021). Whatever your real income, under these terms you would receive only 3.401 euros gross per month. If, for example, your income is 9.000 per month and you fall ill you will receive only 38 per cent of your normal income.

Non-compete clause

A second trap to be conscious of; beware the non-compete clause. In many countries, employees are used to receiving compensation for the time that they are not allowed to work in their line of business due to a non-competition clause. It is not so in the Netherlands.

Bonuses and other VR-schemes

Variable remuneration is another problematic topic in many expat contracts. If the scheme offered contains the provision that the granting of your bonus is at the company’s discretion (and that entitlement in any year does not constitute any entitlement for succeeding years), what are you actually going to get? 

Many companies treat such bonuses as arbitrary (which is worse than discretionary). How are KPI’s established? What will happen with your bonus in the year you leave the company? Do you believe your company will still pay out a bonus for that year?

Negotiate

Now you know what to look for in the job offer you receive what can you do? Negotiate. Once an offer has been made, the company has invested a lot in your hiring. They will not risk having to write off the hiring costs simply because you have reasonable requests like normal pay (100 per cent for the first year and 70 per cent for the second year) if you fall sick. Such a request is considered reasonable in the Netherlands because it is something the majority of employees have.

If applicable, discuss your non-compete clause. Try to limit the duration and geographical and substantial scopes (what exactly can’t you do after you leave). Make a distinction between voluntary and involuntary redundancy; why should your options be limited if your employer takes the decision to terminate your employment? If you do not feel comfortable negotiating your labour contract, hire an employment lawyer. The investment could be the best you will ever make.

Your housing contract

The best-case scenario for your housing contract is that your company arranges everything for you. If you do sign a lease yourself, remember that tenants of residences are very well-protected under Dutch law. 

The reason for this is that planning limitations have resulted in a chronic shortage of housing for generations. Without stringent protection, tenants could fall victim to abusive real estate owners, which would lead to uncontrollable gentrification of some neighbourhoods and dilapidation of residences in other neighbourhoods.

Here are the key things to consider when concluding a lease contract:

Duration

Beware of minimum duration contracts which limit your ability to cancel the lease within the first year or so. And beware of a temporary lease; this can either be a minimum duration contract (which by force of law is considered to be a lease for an indefinite period of time) or a lease for a limited time only (which the tenant may cancel at any time if a one-calendar-month notice is observed).

All-in price

Beware of “all-in” prices. The lease should specify what you pay solely for use of the real estate. It may also specify what you pay for the use of other stuff, like inventory, the use of services or goods, etc. If you have an all-in price you are in luck; you may request a separation between the one and the other and the law contains a hefty penalty for the landlord in your favour.

Rental check

Finally, always do a rental price check within the first six months to see if your residence qualifies for rent control. The government has a web application for the calculation of the maximum reasonable rent for independent living space in English.