Minimum wage & indexation in the Netherlands and its neighbouring countries

In this article you will read how the minimum wage and indexation of wages in the Netherlands are regulated and how they compare to some neighbouring countries.

As an employer, it is important to keep abreast of obligations in terms of annual increases in employees’ wages. This includes both the increase in the minimum wage and a possible mandatory indexation of salary.

Minimum wage & indexation of wages in the Netherlands and neighbouring countries

In this article you will read how the minimum wage and indexation are regulated in the Netherlands and what differences there are compared to some neighbouring countries.

Wages in the Netherlands

On 1 January 2025, the Dutch legal minimum wage increased by 2.78% from € 13.68 to € 14.06 gross per hour. This legal minimum hourly wage applies to workers aged 21 and older. Good to know is that employees are sometimes entitled to a higher minimum wage. That is, if a collective labour agreement (CAO) applies to the working relationship between employer and employee in the Netherlands, the wages from that CAO are leading, if that CAO has been declared generally binding (see below in this article).

Do wages in the Netherlands have to be indexed annually?

No, unlike in Belgium, for example, indexation of wages is not legally required in the Netherlands. However, a mandatory increase may result from a collective labour agreement, as far as your company is subject to its scope of application. Also, although not compulsory, it is common practice to adjust wages annually in line with the development of inflation, to compensate for the price increase that everyone faces. On our website, we keep track of inflation developments in the Netherlands for you: https://www.interfisc.co.uk/the-netherlands/#inflation

How do you know whether a collective labour agreement (CAO) applies?

Many sectors in the Netherlands have a CAO. Each CAO determines its own scope of application, which may include various factors: the company’s activities, activities of the employees, materials used, location in the Netherlands and so on.

And to make things even trickier: an employer is not directly obliged to apply the industry’s CAO but if if has been declared generally binding and the employer falls within its scope, then the employer is obliged to apply the terms and conditions of employment resulting from it. A declaration of universal applicability is not requested for every CAO and may also be issued for a specific duration, so a CAO may sometimes be compulsorily applicable and sometimes not.

Conclusion: it cannot be stated in general that a CAO does or does not apply to companies not established in the Netherlands. Stating in the individual employment contract at the start of the employment contract that no CAO applies is not a solution either, as it may still apply at any time through a declaration of universal applicability. It is therefore important that employers with staff in the Netherlands periodically check whether a CAO applies.

More information on collective labour agreements in the Netherlands can be found on the official website of the Ministry of Social Affairs & Employment: www.uitvoeringarbeidsvoorwaardenwetgeving.nl (in Dutch)
Some information is also available in English: https://www.uitvoeringarbeidsvoorwaardenwetgeving.nl/mozard/!suite86.scherm0325?mPag=156

What about our neighbouring countries?

For both wage indexation and the minimum wage, there are many differences and exceptions in neighbouring countries. Below, we listed some notable differences.

Belgium: mandatory wage indexation

In Belgium, there is no freedom of choice when it comes to wage indexation. Indeed, there is a principle of automatic indexation, whereby per business activity or ‘joint committee’ the percentage increase (or decrease!) to be applied is determined on the basis of inflation in the previous period. At the time of skyrocketing inflation, this obligation entailed a huge increase in wage costs for employers. Partly for this reason, consideration is being given to change this system in the future.

The minimum wage is also set in Belgium by business activity or ‘joint committee’. More information on this can be found at https://www.minimumlonen.be/index.html.

Anyway, the wage may never be lower than the ‘guaranteed average minimum monthly income’ (GMMMI), which was set at € 2,070.48 as of 1 May 2024. More information on the GMMMI can be found here: https://cnt-nar.be/nl/documents/cao-bedragen

Germany: mini-jobs

Germany, like the Netherlands, also has a statutory minimum hourly wage. This rose from € 12.41 to € 12.82 gross on 1 January 2025. And like in the Netherlands, Germany may also have a collective bargaining agreement, or Tarifvertrag, with specific minimum wages for certain jobs, which are strictly enforced in practice. However, in Germany, Tarifverträge only apply to employers affiliated to an organization that has co-signed the Tarifvertrag.

Indexation of wages is not legally regulated in Germany as it is in Belgium. Only when a Tarifvertrag applies (see above) may the employer be obliged to increase wages.

Specifically in Germany, we still have, as a derivative of the minimum wage, an income limit for a so-called ‘Mini-job’. This is a side job where an employee is allowed to earn a maximum amount per month without owing taxes and/or contributions on it. This income limit will be € 556 per month in 2025 (€ 538 in 2024).

France: No statutory wage indexation, but strong influence of collective agreements

Also in France, there is no general obligation to index wages. However, there is a statutory minimum wage, the SMIC or Salaire minimum interprofessionnel de croissance. The SMIC will be € 1,801.80 gross per month in 2025.

There are about 600 collective agreements in France and, unlike Germany, they are binding, regardless of whether the employer has an establishment in France. CLAs result in minimum wages for certain jobs in certain sectors. These minimum wages are sometimes adjusted several times a year in times of high inflation.

UK: Minimum wage adjustment in April instead of January

In the UK, there is also no general wage indexation. However, there is a national minimum wage. From April 2025 (beginning of the fiscal year in the UK), the national minimum wage rises significantly (+6.7%) to £ 12.21.

Want to know more on this topic?

All in all, when it comes to minimum wages and wage increases, Europe is a tangle of different regulations, organized differently in each country. If you want to know more about a specific country, consult our country information on:

Can’t find it yourself? Then please contact us so we can help you further. Ourselves or via one of our partners.

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