Doing business in the Netherlands with foreign workers
Now that the economy is doing well, many businesses are seeking new opportunities. You obviously want your business to profit from these opportunities as well. If you have been awarded a new project in the Netherlands, you may consider staffing it with workers from your country of origin. An alternative would be to insource workers from your country of origin through a temporary staffing agency. Any detachment of foreign workers to the Netherlands is subject to Dutch tax and employment law.
We would be happy to tell you all about the employment law obligations you will have to meet if you temporarily detach foreign workers to the Netherlands. The rules also apply to staff on foreign contracts and to insourced staff.
Detaching Workers in the European Union (Working Conditions) Act
The Detaching Workers in the European Union (Working Conditions) Act has recently come into effect in the Netherlands.
This Act has two objectives:
- It regulates the terms and conditions of employment of workers in the Netherlands on a contract governed by the law of another EU Member State, e.g. an employment contract under German or French law.
- It stipulates a number of accounting requirements that you are expected to meet if you plan to detach workers to the Netherlands (or plan to insource detached workers).
The Detaching Workers in the European Union (Working Conditions) Act applies when:
- A foreign company detaches its own workers to the Netherlands under its own supervision and direction.
- A foreign company hires out workers to a parent company, subsidiary or fellow subsidiary to work in the Netherlands.
- A foreign company detaches workers to the Netherlands under the direction and supervision of other companies or persons.
Employment law requirements
The key requirements of Dutch employment law must be met in any of the three situations described above. This obligation applies without exception, even if no tax is due for the worker in the Netherlands. Workers can go to court to demand that you comply with these terms and conditions of employment. If you do not meet your obligations with regard to working hours, working conditions and minimum wage, the Dutch Labour Inspectorate may even impose a major fine.
You can be held liable for having to pay the minimum wage if you work with foreign insourced workers and the temporary staffing agency you have engaged does not pay them the minimum wage. There is no onus of proof on the worker demanding that you pay minimum wage; he or she does not have to demonstrate that you are to blame for not receiving enough wages. What rights the worker has exactly depends on the sector in which you operate. Some sectors have collective labour agreements that dictate a higher minimum wage than laid down by law, while others do not have such agreements.
In addition to employment law requirements, you will also be subject to accounting requirements. First of all, you are expected to make sure that you have a number of details on file if the Dutch Labour Inspectorate should decide to perform an on-site audit. These include payslips, employment agreements and time records, whether in hardcopy or electronic format. accon■avm can help you keep these details at your fingertips via an app that has been integrated into our payroll accounting system. The app allows the worker to access the relevant details via his or her computer or mobile phone, so that they are available in the event of an audit. You are also required to appoint a designated contact person in the Netherlands for the authorities. This contact person could actually be the detached worker. If you detach multiple workers, you may designate multiple contact persons.
Reporting requirement for cross-border postings
In addition to these two requirements, a reporting requirement for cross-border detachments will probably come into force on 1 January 2019. A company detaching foreign workers to the Netherlands will be required to make a report of the detachment prior to it taking effect. This report must also be submitted if the worker is not liable to tax in the Netherlands. Your principal must be provided with a copy of this report. Everyone insourcing foreign workers is required to register and check the report and to notify the Inspectorate SZW (of the Dutch Ministry of Social Affairs and Employment) of any inaccuracies. The Inspectorate SZW will be competent to impose fines if the accounting requirements are not met. It goes without saying that we will inform our clients as soon as we learn more about the introduction of this reporting requirement and of course we would be pleased to assist you in meeting the relevant obligations.
Thanks to the reporting requirement, the Dutch authorities will become aware of the detachment. As a result, it will become even more crucial than it already was to look into all relevant employment law and tax aspects as soon as the posting takes effect.
Clearly, detaching foreign workers to the Netherlands is not without obligation. There are a lot of aspects involved and we would be happy to help you explore your options. For more information, please contact your accon■avm adviser or send an email to firstname.lastname@example.org.Need advice on this subject?
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