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Secondment to the Netherlands – what does that involve?

Obligations for secondment to the Netherlands - what does that involve?

In addition to potential financial consequences relating to payroll taxes and compulsory social security premiums in the Netherlands, conditions apply concerning employee benefits in respect of secondment of foreign employees in the Netherlands. Even if the employment contract with the relevant worker is governed by foreign law! This is also due to international agreements that the European member states concluded to protect seconded employees. In the Netherlands, these were implemented in the Terms of Employment Posted Workers in the European Union Act (WagwEU).

In which situations do these obligations apply?

The WagwEU is applicable to the following three forms of secondment of foreign employees in the Netherlands:
  • Pure service provision (a foreign service provider executes an order with its own foreign personnel for a client in the Netherlands, under the service provider’s direct management and supervision and at its own risk and expense).
  • Secondment within multinational concerns (an employee of a subsidiary in one member state is seconded to an employee of a Dutch subsidiary within the same group).
  • Temporary agency work (deployment of temporary agency workers of a foreign temporary work agency for work in the Netherlands).

Minimum employment conditions for posted workers

In order to prevent significant gaps between employee benefits of foreign and local employees, an employer seconding employees to the Netherlands should grant certain minimum employment conditions to these employees, such as concerning:
  • minimum wage
  • maximum work times and minimum rest times
  • health, safety and hygiene at work
  • gender equality
  • minimum holiday time in days
  • provisions of the collective labour agreement (cla) that have been declared generally binding

Changes as from 31 July 2020

Because of amendments to the European Posting of Workers Directive, the Netherlands has amended the Employment Conditions of Seconded Employees in the European Union Act (WagwEU) as from 31 July 2020. Seconded European employees will be entitled to additional employment and working conditions, and new obligations will apply for employers.

These are the most important changes:
The right to ‘minimum wage’ has been changed to “remuneration”. The concept of remuneration is determined in accordance with national law of the member state in whose territory the employee has been seconded. This means that several remuneration components could apply, the minimum wage as well as the negotiated wage (that has been declared generally binding) could be regarded as wage. This concerns a remuneration within the meaning of equal pay for equal work at the same work location. Another difference with minimum wage is that the term ‘remuneration’ may also include other wage components such as bonuses, pay rises because of length of service, etc.

New conditions for housing will apply if the employer makes housing available to employees who are not at their usual work location. There is in itself no obligation to compensate the housing costs of employees who are seconded abroad. If this happens, however, for example because provisions on this topic have been included in a cla, the foreign employer will have to compensate these costs as well.

There are also new rules for the compensation of expenses for travel, meals and accommodation for employees who are away from home in their professional capacity. The foreign employer has to compensate the costs actually incurred in connection with the secondment, such as travel expenses, meal costs and accommodation expenses, in accordance with national law and/or the practices applicable in the home country to the employment relationship between the employer and its seconded employees. This may, for example, be the law or the relevant cla applicable in the home country. The foreign employer has to make clear whether – and if so, which – parts of a surcharge are paid for these expenses incurred in connection with the secondment. If this is not clear, it is assumed that the entire surcharge was paid as a compensation for these expenses, and this entire surcharge cannot be considered part of the minimum wage pursuant to the law or the applicable cla.

Entitlement to additional employment conditions after 12 or 18 months

After 12 months, seconded employees are entitled to all Dutch employment and working conditions under Dutch labour laws and provisions of collective labour agreements that have been declared generally binding. Payments, procedures, formalities and conditions for entering into and terminating the employment contract, as well as non-competition clauses and additional company pension schemes, have been excluded from this rule.

If the secondment initially has a duration of 12 months or less, and due to circumstances is extended to a maximum of 18 months, the foreign employer will be allowed to apply the ‘hard core’ of employment conditions for six months. This extension to 18 months automatically applies for secondments that started before 30 July 2020. For secondments that started on or after 30 July 2020, a notice of extension can be given in the online reporting portal.

Please note: If a seconded employee is replaced by another seconded employee who carries out the same work at the same location, this will be regarded as one secondment. This means that the period of 12 months (or the extension to 18 months) will not start again when the replacement starts. This serves to prevent the appearance of temporary work from being created, while in reality it concerns work that is carried out in the Netherlands for a longer period of time.

Additional employment conditions and obligations regarding seconded temporary agency workers

From the very first day, foreign temporary employment agencies or other business that make temporary agency workers available in the Netherlands have to offer all provisions from the applicable cla that have been declared generally binding, except for provisions about additional pension schemes and provisions on entering into and terminating the employment contract. The terms of 12 or 18 months do therefore not apply for this group.

In addition, the foreign temporary employment agency remains responsible for ensuring that the seconded temporary agency worker receives the proper employment and working conditions, even if this worker is assigned to a third party by the client. The client is obliged to inform the foreign employer in advance about assigning the seconded temporary worker.

Exception for the transport sector

These changes do not yet apply for seconded employees in the transport sector. They are, however, entitled to the ‘hard core’ of employment conditions under Dutch labour law and provisions from the cla that have been declared generally binding.

Read more about the obligations of transport companies not established in the Netherlands with foreign drivers.

What administrative obligations apply for secondment?

In addition to the minimum employment conditions that you are required to grant to posted workers, you also have certain administrative obligations you need to comply with, on penalty of high fines.
You are required to provide information to the authorities at their first request (the Inspectorate SZW (of the Ministry of Social affairs and Employment) is responsible for enforcement of the WagwEU). Please note, this information duty also applies to sole traders and self-employed persons that work in the Netherlands on a temporary basis!

A file should be available in the workplace, containing at least the following:

Per employee:

  1. Employment agreement
  2. Pay slip
  3. Number of hours worked
  4. Evidence of the wage paid out to the employee
  5. Evidence for social security contributions (A1)
  6. Other issues in the context of the legal information duty of an employer. This refers to issues such as the name of the parties, the place of work, the job title, holiday, wage, contractual working hours, pension, CLA, etc.)

Proof of identity of:

  1. Employee
  2. Employer
  3. Client in the Netherlands (the person/entity where the seconded employees are working on site)
  4. The person responsible for payment of wages

The file may also be available from the workplace in a digital format.
Also a sole trader or self-employed person subject to the reporting requirement set out below should have documents available in the workplace that prove his/her identity, the identity of the client in the Netherlands, and the identity of the person in charge of wage payment.

You are required to designate a contact person that serves as your point of contact for the authorities, representing your company. This may be one of your employees or it may be an external party such as Interfisc. This contact should have direct access to the afore-mentioned digital case file.

From 1 March 2020, cross-border activities have to be reported to the WagwEu reporting portal (“Meldloket WagwEU”), an online system of the Dutch government. The obligation to report only applies for secondments to the Netherlands that start on or after 1 March 2020.

A foreign employer always has to report the following details:

  1. the identity of the person who makes the report
  2. the company details
  3. the contact person as referred to in Article 7 of the WagwEU
  4. the identity of the client/commissioning party
  5. the sector in which the activities are carried out in the Netherlands
  6. the address of the work location
  7. the expected duration of the activities
  8. the identity of the person who is responsible for paying the wage
  9. the identity of the employees who come to work in the Netherlands
  10. the presence of an A1 certificate or other proof demonstrating where the social
  11. contributions are paid for the employee(s), because of the contribution for the social security scheme

Click here to go to the online reporting portal.

Note: In some cases, an (partial) exemption may specifically apply for the obligation to report secondment!

A single annual report for some smaller businesses, transport companies & self-employed contractors
In certain situations, only a single annual notification is required. For example, this applies to service providers with at least 1 and a maximum of 9 employees or self-employed contractors registered in the Trade Register (or a similar register in a neighbouring country) with its registered office within 100 kilometres of the Dutch border. An additional condition is that the service provider or self-employed contractor has provided a transnational service three times in the previous calender year, or has completed a WagwEU annual registration and is not active in the construction sector. The official website of the Dutch government provides an extensive overview:

No notification for some incidental activities
Some incidental activities are not subject to notification. For example, this applies to employees conducting commercial negotiations in the Netherlands and need to stay in the Netherlands for that purpose for a relatively short time; or to employees who are posted in the Netherlands to install or repair equipment or machines during a short period of time. The official website of the Dutch government provides an extensive overview:

In principle, the above-mentioned exemptions do not apply if it concerns work in the construction sector, as this is one of the high-risk sectors where the government applies stricter enforcement.

Avoid fines

Fines may run up to a high amount, up to € 20,250 per non-compliance, increased by up to a maximum of 200% for repeated or excessive non-compliance. Inspectorates in various EU member states may also exchange information. Please remember to avoid surprises if you are inspected. This also applies to sole traders and self-employed persons!

We are happy to help you with your obligations for foreign employees who have been seconded to the Netherlands

Inventory of consequences

Before seconding employees to the Netherlands, we would like to outline the consequences for you. We will make a list of the obligations that apply to you in the Netherlands relating to:

  • social insurance
  • labour law and minimum employee benefits
  • corporate income tax, profit tax and VAT
  • other issues such as registration, including in the Trade Register.

Registration, administrative system and documents

We take charge of completing your registration and reporting obligation with the authorities and the associated accounting system and documents (A1 declaration, tax returns etc.).
Subsequently, we will ensure that you comply with the administrative requirements set out in the top section of this page. We do this with the following at the start and during the project:

  • by helping you compile and update the required case file
  • by representing you to the authorities as your contact person

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Since 1972, Interfisc has offered international HR & Payroll solutions in the Netherlands, Belgium, Germany, France, the United Kingdom, and Italy. We do this from our offices in the Netherlands and Belgium, and with an international team of around 45 committed and caring employees. 

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