Employees of Foreign EU Companies in the Netherlands: What Are the Conditions?

Introduction

The free movement of workers within the European Union enables employees of foreign EU companies to perform work in the Netherlands. Whether it concerns a Polish construction company, a German technology firm, or a French consulting agency – the possibilities exist. But what exactly are the conditions? And which rules apply to posting? In this comprehensive blog, we discuss all legal aspects of employing workers from foreign EU companies in the Netherlands.

Free Movement of Workers: A Fundamental EU Right

The free movement of workers is one of the four freedoms on which the European Union is built. This means that workers from all EU member states have the right to work in the Netherlands without discrimination based on nationality. This right is enshrined in EU Regulation 492/2011 and forms the legal basis for cross-border employment within Europe.

For employees of, for example, a Polish, Romanian, or Bulgarian company, this means they can work in the Netherlands without an employment permit. This is an important difference from workers from countries outside the EU, who do need a work permit.

Posting: When Does It Apply?

Posting means that an employee is temporarily sent by their foreign employer to the Netherlands to perform work there, while the employment contract with the foreign employer remains in effect. This is common in sectors such as construction, transport, technology, and consultancy.

Posting occurs when:

• The employee has an employment contract with a foreign company
• The employee temporarily performs work in the Netherlands
• The foreign employer continues to exercise supervision and management over the employee
• There is genuine economic activity in the country of origin

It is important to distinguish posting from other forms of cross-border employment, such as hiring self-employed persons or establishing a Dutch branch.

The Notification Requirement: A Crucial Obligation

One of the most important obligations for foreign employers who post workers to the Netherlands is the notification requirement. This obligation is laid down in the Working Conditions for Posted Workers in the European Union Act (WagwEU).

What Does the Notification Requirement Entail?

The foreign employer must submit a notification to the Dutch authorities before the work commences. This notification must contain the following information:

• Identity of the employer and any contact person in the Netherlands
• Expected duration of the posting
• Identity of the posted workers
• Location where the work will be performed
• Nature of the services to be provided
• Proof that the workers are legally employed

The notification can be made digitally via the Posted Workers Notification Portal. It is essential that this notification is made correctly and in a timely manner, as non-compliance can lead to substantial fines.

Sanctions for Non-Compliance

In case of non-compliance with the notification requirement, a foreign company risks an administrative fine. The maximum fine is €23,750 per violation. For repeated violations within five years, the fine can be doubled or even tripled. The Dutch Inspectorate SZW (Social Affairs and Employment) actively enforces this regulation.

Case law has confirmed that these fines are actually imposed. In one case, a fine of €240,000 was imposed for 30 violations, which was later reduced to €237,500 due to exceeding reasonable time limits. This shows that the Dutch authorities take the notification requirement seriously.

Which Employment Conditions Apply?

A frequently asked question is: which employment conditions apply to posted workers? Dutch law or the law of the country of origin?

Core Employment Conditions

Under the Posting Directive (96/71/EC, amended by Directive 2018/957), Dutch core employment conditions apply to posted workers from the first day of posting. These core employment conditions include:

• Minimum wage and minimum holiday allowance
• Maximum working hours and minimum rest periods
• Minimum number of holiday days (at least 20 per year for full-time employment)
• Working conditions and occupational safety
• Equal treatment of men and women
• Protection of pregnant workers and mothers
• Protection of children and young people

This means that a Polish worker posted to the Netherlands is entitled to at least the Dutch minimum wage, even if the Polish wage would be lower.

Collective Labor Agreement (CLA) Provisions

If a universally applicable collective labor agreement (CLA) applies in the sector in which work is performed, the provisions of this CLA also apply to posted workers. This applies from the first day of posting. Examples of sectors with universally applicable CLAs include:

• Construction and infrastructure
• Temporary employment sector
• Metal and technology
• Cleaning
• Transport

CLA provisions may relate to higher wages than the statutory minimum wage, additional allowances (such as overtime, irregular hours allowance, travel allowance), and other employment conditions.

Long-Term Posting: More Obligations

If the posting lasts longer than 12 months (or 18 months with justified extension), almost all employment conditions applicable in the Netherlands for comparable workers apply. This means that after this period, conditions such as pension schemes and termination procedures may also apply.

Social Security: Which System Applies?

Another important aspect is the question of which social security system applies: the Dutch system or that of the country of origin?

The General Rule

For posting up to 12 months, the social security system of the country of origin generally continues to apply. This means that the worker pays social security contributions in, for example, Poland and is also entitled to social benefits there, such as sickness benefit and unemployment benefit.

To prove this, the employer must request an A1 certificate (formerly E101 certificate) from the social security institution in the country of origin. This certificate proves that the employee is covered by the social security system of the home country and therefore not by the Dutch system.

Extension

If the posting lasts longer than 12 months, an extension can be requested for a maximum of 24 months. After this period, the worker is usually subjected to the Dutch social security system.

Exceptions

There are situations in which the Dutch system applies directly, for example when:

• The worker works simultaneously in multiple countries
• There is no genuine posting
• The employer has no substantial activities in the country of origin

Tax Aspects: Payroll Tax and Income Tax

In addition to social security, the tax position also plays an important role.

Payroll Tax

If a posted worker works in the Netherlands, the employer is in many cases obliged to withhold and remit Dutch payroll tax (wage tax and national insurance premiums). This particularly applies if:

• The worker works in the Netherlands for more than 183 days per year
• The employer has a permanent establishment in the Netherlands
• The costs are borne by a Dutch entity

Tax Treaties

For shorter postings, tax treaties between the Netherlands and the country of origin may determine that no Dutch payroll tax is due. These treaties often have a 183-day rule: if the employee is in the Netherlands for less than 183 days and the costs are not borne by a Dutch employer, no Dutch payroll tax needs to be withheld.

It is important to assess the tax obligations on a case-by-case basis, as incorrect remittance can lead to back taxes and fines.

The Risk of False Self-Employment

An important point of attention when deploying foreign workers is the risk of false self-employment. False self-employment occurs when someone formally works as a self-employed person but actually performs work in an employment relationship that qualifies as an employment contract.

When Is There False Self-Employment?

The Dutch court applies the following criteria to assess whether there is an employment contract:

• Personal work obligation: must the worker do the work themselves?
• Authority relationship: does the client give instructions and exercise supervision?
• Wage payment: does the worker receive regular payment?

If these three criteria are met, then according to Dutch law there is an employment contract, even if the parties have called it something else.

Consequences of False Self-Employment

If it turns out afterwards that there was false self-employment instead of genuine posting or self-employed work, the consequences can be far-reaching:

1. Back payment of payroll tax and premiums: The Tax Authority can impose back taxes on payroll tax and premiums up to five years back, including fines and interest.
2. Employment law consequences: The worker receives all rights of an employee, such as dismissal protection, right to continued payment during illness, and notice periods.
3. Chain liability: Not only the formal employer but also the client can be held liable for outstanding wages and premiums (chain liability).
4. Fines for violation of the DBA Act: Fines can be imposed for violation of the Deregulation Assessment of Employment Relationships Act.

How to Prevent False Self-Employment?

To prevent false self-employment when deploying foreign workers:

• Ensure clear written employment contracts
• Carefully document the posting
• Have the foreign employer actually give direction
• Avoid direct instructions to posted workers
• Arrange for an A1 certificate
• Comply with the notification requirement
• Have an analysis made of the employment relationship in case of doubt

Inspection and Enforcement

The Dutch Inspectorate SZW actively enforces the regulations regarding posted workers. Inspectors can visit workplaces and request documents at any time.

What Does the Inspectorate Check?

During an inspection, the following matters are checked, among others:

• Has the notification requirement been complied with?
• Are the Dutch core employment conditions being complied with?
• Is there a valid A1 certificate?
• Are the CLA provisions being complied with?
• Is there genuine posting or sham constructions?
• Are identity documents and employment contracts available?

Documents That Must Be Available

During the posting, the employer and employee must be able to present the following documents:

• Employment contract
• Payslips
• A1 certificate
• Proof of payment of social security contributions in the country of origin
• Proof of notification requirement
• Copy of identity document

It is advisable to always have these documents at hand at the workplace, as a fine can be imposed immediately if they cannot be presented.

Practical Tips for Employers

If you, as a foreign employer, want to post workers to the Netherlands, consider the following practical tips:

1. Prepare the posting carefully: Ensure that all documentation is in order before work begins.
2. Make the notification in time: Always report the posting before work commences via the Notification Portal.
3. Check which CLA applies: Determine whether a universally applicable CLA applies in the sector and ensure compliance with all provisions.
4. Request an A1 certificate: This prevents discussions about applicable social security.
5. Pay at least the Dutch minimum wage: Ensure that wages are at least equal to the Dutch statutory minimum wage or CLA wage.
6. Document everything: Keep good records of hours, wages, and payments.
7. Inform your employees: Ensure that workers know what rights they have in the Netherlands.
8. Engage legal expertise: Have a specialist advise on the legal structure in case of doubt.

Practical Tips for Employees

If you, as an employee of a foreign EU company, are going to work in the Netherlands, consider the following:

1. Check your employment contract: Ensure you have a written employment contract with clear agreements.
2. Request an A1 certificate: This proves under which social security system you fall.
3. Check your wages: You are entitled to at least the Dutch minimum wage or the applicable CLA wage.
4. Keep payslips: Keep all proof of payment well.
5. Know your rights: Inform yourself about the Dutch employment conditions that apply to you.
6. Report abuses: If your employer does not comply with the rules, you can report this to the Inspectorate SZW.
7. Seek legal advice: In case of ambiguities or problems, you can consult a specialized employment law attorney.

Common Situations and Solutions

Situation 1: Construction Company from Poland Posts Workers

A Polish construction company wants to send workers to the Netherlands for a construction project lasting six months.

Solution:

• Make a notification in advance via the Notification Portal
• Request A1 certificates for all workers
• Check whether the Construction CLA applies
• Pay at least the CLA wage (higher than statutory minimum wage)
• Ensure all workers have correct identity documents
• Maintain supervision from Poland (for example via a project manager)

Situation 2: IT Company from Germany Posts Specialist

A German IT company wants to send a specialist to a Dutch client for one year.

Solution:

• Make a notification via the Notification Portal
• Request an A1 certificate for 12 months
• Ensure the specialist has an employment contract with the German company
• Pay at least the Dutch minimum wage
• Maintain direction from Germany (for example via regular evaluations)
• After 12 months: consider extending A1 or transition to Dutch system

Situation 3: Transport Company from Romania

A Romanian transport company regularly drives to the Netherlands for deliveries.

Solution:

• Determine whether posting or cabotage transport applies
• Make a notification for drivers if necessary
• Arrange for A1 certificates for drivers
• Comply with employment conditions from the Professional Goods Transport CLA if applicable
• Keep tachograph data for compliance with driving and rest times

When Legal Assistance Is Needed

It is advisable to engage legal assistance when:

• You are posting workers to the Netherlands for the first time
• There is uncertainty about applicable regulations
• An inspection or fine has been imposed by the Inspectorate SZW
• There is a discussion about false self-employment
• Back taxes have been imposed by the Tax Authority
• Labor conflicts arise with posted workers
• You are planning a long-term posting (longer than 12 months)

A specialized employment law attorney can help you with:

• Drafting correct employment contracts
• Assessing the posting situation
• Complying with all notification requirements
• Defending against fines or back taxes
• Advising on tax and social security aspects
• Preventing false self-employment

Conclusion

Employing workers from foreign EU companies in the Netherlands is indeed possible thanks to the free movement of workers within the EU. However, strict conditions and obligations apply, particularly for posting.

The most important points of attention are:

• Notification requirement: Report all posted workers in a timely manner
• Employment conditions: Comply at least with Dutch core employment conditions and applicable CLAs
• Social security: Arrange for an A1 certificate
• Documentation: Keep all documents and make them available
• False self-employment: Avoid constructions that may lead to reclassification

In case of doubt or uncertainty, it is advisable to seek legal advice in a timely manner. This can prevent future problems, fines, and back taxes.

Do You Have Questions?

Do you have questions about posting workers to the Netherlands or about your rights as a posted worker? Please contact Law & More. Our specialized employment law attorneys have extensive experience with international employment situations and can advise you on all legal aspects.

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Frequently Asked Questions about Foreign EU Workers in the Netherlands

1. Do workers from Poland need a work permit to work in the Netherlands?

No, Polish workers do not need a work permit. Due to the free movement of workers within the EU, they may work in the Netherlands without an employment permit. This applies to all EU citizens.

2. What is the difference between posting and regular employment?

With posting, the worker remains employed by the foreign company and is temporarily sent to the Netherlands. With regular employment, the worker is directly employed by a Dutch company. The main differences are in social security (A1 certificate) and the notification requirement.

3. As a foreign employer, must I always submit a notification?

Yes, if you post workers to the Netherlands for more than a few days, you are required to notify this in advance via the Posted Workers Notification Portal. This must be done before work begins.

4. What happens if I forget the notification requirement?

In case of non-compliance with the notification requirement, a fine of up to €23,750 per violation can be imposed. For repeated violations, this fine can be doubled or even tripled. The Inspectorate SZW actively enforces this.

5. What minimum wage must I pay posted workers?

You must pay at least the Dutch statutory minimum wage. If a universally applicable collective labor agreement (CLA) applies in the sector, you must pay the (often higher) CLA wage. The minimum wage is adjusted annually on January 1 and July 1.

6. What is an A1 certificate and why do I need it?

An A1 certificate (formerly E101) proves that the worker is covered by the social security system of the country of origin and not by the Dutch system. This prevents double premium payment. You request this from the social security institution in your country.

7. How long can I post workers to the Netherlands?

In principle, you can post workers for up to 12 months under the social security system of your country. This can be extended once to 24 months. After that, the Dutch system usually applies.

8. Do Dutch CLAs also apply to my posted workers?

Yes, if a universally applicable CLA applies in the sector, the main provisions are mandatory for your posted workers from day one. This includes wages, allowances, and working hours, among other things.

9. Must I withhold and remit Dutch payroll tax?

This depends on the duration of the posting and the tax treaties between the Netherlands and your country. For shorter postings (under 183 days), Dutch payroll tax is often not due. For longer postings or if you have a permanent establishment in the Netherlands, it is.

10. What is false self-employment and why is it a problem?

False self-employment means that someone formally works as a self-employed person but actually has an employment contract. This can lead to back payment of taxes and premiums, fines, and employment law claims. The Tax Authority can impose back taxes up to five years.

11. Which documents must I have available at the workplace?

You must always be able to present: employment contract, payslips, A1 certificate, proof of notification requirement, identity documents, and proof of payment of social security contributions in the country of origin. The Inspectorate SZW can request these at any time.

12. Can I also hire temporary workers from abroad?

Yes, but then specific rules for temporary employment apply. The foreign employment agency must comply with Dutch regulations, including the ABU or NBBU CLA, and the temporary worker has the same rights as Dutch temporary workers.

13. What are the consequences if my worker works in the Netherlands for longer than 12 months?

After 12 months (or 18 months with extension), all Dutch employment conditions apply, not just the core conditions. Social security can also transfer to the Dutch system if no extension of the A1 certificate has been obtained.

14. May I dismiss a posted worker during the posting?

That depends on the applicable law. In principle, the dismissal law of your country applies. But after long-term posting, Dutch dismissal rules may become applicable. Legal advice is advisable in case of doubt.

15. What should I do if I receive a fine from the Inspectorate SZW?

You can object to the fine within six weeks. In the objection letter, you must explain why you believe the fine is unjustified or too high. It is advisable to engage legal assistance for this.

16. Are my workers entitled to Dutch vacation days?

Yes, posted workers are entitled to at least the Dutch minimum of 20 vacation days per year (for full-time employment). If the CLA prescribes more days, that number applies.

17. As a client, must I arrange anything or is that the responsibility of the foreign employer?

As a client, you have no direct notification obligation, but you are jointly responsible. You can be held liable if the foreign employer violates the rules (chain liability). Therefore, always check that the employer complies with all obligations.

18. Can a posted worker claim a Dutch unemployment benefit?

No, if the worker is covered by the social security system of the country of origin (A1 certificate), they are entitled to unemployment benefit there. Only if the worker is covered by the Dutch system can they claim Dutch unemployment benefit.

19. What if my worker becomes ill in the Netherlands?

In case of illness, the wage payment obligation continues according to the rules of your country. If your worker is covered by the Dutch system, Dutch rules apply: two years of continued wage payment during illness. With an A1 certificate, the rules of your country apply.

20. How do I prevent problems with Dutch authorities?

Ensure: timely notification, A1 certificates, correct employment contracts, payment of at least the Dutch minimum wage/CLA wage, good documentation, compliance with working hours and safety regulations, and engage legal expertise in case of doubt.