Employment in the Netherlands under the ABU CLA: What are the benefits?
Have you ever considered relocating to the Netherlands and do you have one of the following skill sets?
SAP SD Order to Cash
Data Engineering (AWS/GCP/Azure)
Then it is worth reading this blog!
According to the website investinholland.com, as Europe’s most wired country, the Netherlands is one of the best countries for tech companies. Businesses that invest in the Netherlands’ technology and IT sector thrive, thanks to the tech-savvy, multilingual Dutch workforce, the great digital infrastructure, an innovative and open culture, R&D incentives, and the strong focus of the Dutch government on developments in tech. As consumers, the Dutch are digital frontrunners who lead the way in embracing new digital applications.
Furthermore, with a high standard of living, cultural diversity, and a comprehensive social security system, it will come as no surprise that the Netherlands attracts a high number of foreign workers.
Investigo specialises in recruiting highly skilled IT contractors for the European market. For various reasons, the job market often attracts candidates who operate as independent contractors (in Dutch: ZZP’ers).
But have you ever considered an employed model? Retention wise it may not sound the most lucrative solution (approximately 58% retention), but for many people the long-term benefits of working as an employed consultant outweigh the short-term financial gains that are typically associated with independent contracting.
Investigo has a strategic partnership with the Dutch accountancy firm AAme which enables us to employ you under the Collective Labour Agreement ABU (also referred to as the ABU). We recently became NEN certified. NEN 4400-1 is a national standard that sets requirements for temporary work businesses and contractors of work, including subcontractors, that have their registered office in the Netherlands with respect to the payment of taxes, social insurance contributions and the legitimacy of employment in the Netherlands.
In this blog, our Head of European Compliance, David Korthals-Clarke has pointed out the benefits of working under the ABU.
If we employ you under the ABU, you will essentially sign an agency work employment contract with Investigo. Investigo places you at the disposal of our client (‘the end user’) to perform work under the supervision and direction of the end user. Whilst the end user is responsible for managing and supervising the work, Investigo will pay you a salary and act as your employer of record.
Benefit 1: Risk mitigation
You may have a better retention rate as an independent contractor but equally you face bigger financial and legal risks. The continuity of your assignments is never set in stone, and you do not enjoy employment rights. Furthermore, as a self-employed contractor you are liable for any professional errors or omissions. To cover these risks, you may have to pay for your own insurance. In addition, working as a self-employed consultant also means that you need to register as a sole trader or incorporate a legal entity. Most likely you need to instruct an accountant who will help you with your company formation and filing your annual accounts. This is not for everyone, and the employed model may therefore better suit your needs.
Benefit 2: Equal pay by virtue of the concept of the hirer’s remuneration
If you work under the ABU then in principle you are entitled to the so-called hirer’s remuneration (‘inlenersbeloning’) and employment conditions from day 1. The concept of the hirer’s remuneration refers to the idea that the worker receives the same remuneration as an employee of the user company working in the same or an equivalent position. The applicability and the level of the hirer’s remuneration is determined on a case-by-case basis. Investigo will assess the relevant remuneration package based on the information it receives from the user company.
Benefit 3: 30% ruling
The 30% ruling (also known as the 30% facility) is a tax advantage for highly skilled migrants moving to the Netherlands for a specific employed position. Provided that the necessary conditions are satisfied , Investigo will grant a tax-free allowance equivalent to 30% of the gross salary subject to Dutch payroll tax. This reimbursement is intended as compensation for the extra costs that employees are expected to incur when moving to a new country for work purposes. Will your assignment come to an end? Please note that it is possible to switch employers and continue the 30% ruling on your new employment. More information is outlined below:
Benefit 4: Holiday entitlement
The ABU has outlined different phases (A, B and C) under which you acquire more rights if you move to a different phase which we can explain to you in more detail. In phase A which covers the first 78 working weeks of your assignment, you will accrue so-called ‘reserves’ to cover payments for holiday, short-term absence, special leave and public holidays which is related to the number of hours worked on a monthly basis.
After 78 working weeks, phase B commences. Throughout the duration of phase B, you will be entitled to a fixed number of holiday days per year. For each full working month, you accrue entitlement equivalent to 16 2/3 hours of holiday leave, or a pro rata payment if you worked less than a full working month. You will also be entitled to paid public holidays.
In both phases, you will be receiving a generous 8.33% holiday allowance on top of your existing holiday entitlement. All the relevant payments are reflected on your monthly pay slip.
Benefit 5: Pension benefits
You may qualify for pension payments. The pension will be arranged via StiPP, the Pension Fund for Personnel Services. Depending on the number of weeks you will be on assignment for, you will qualify for the Basic Scheme or the Plus Scheme. Currently you are entitled to the Basic Scheme if you have been hired for at least 26 weeks unless an exception applies. However, from 1 January 2022, a temporary worker will accrue pension under the Basic Scheme after having worked for the same employer for 8 weeks. Temporary workers who reach the 8-week waiting period in 2022 will accrue pension from that moment onwards. These changes will not affect those workers who already participated in StiPP’s Basic or Plus Scheme prior to 1 January 2022.
Benefit 6: Guaranteed notice period after 26 weeks
Your agency work employment contract includes a so-called ‘agency clause’ which means that your contract automatically ends if the end client terminates the assignment. However, a fixed notice period of 10 calendar days needs to be observed if your assignment exceeds 26 weeks. The longer you will be on assignment with us, the longer your notice period will be in accordance with the ABU. This provides more certainty and is yet again another perk of working under the ABUas opposed to working as an independent contractor where in most cases your assignment can be terminated at any point in time without notice.
Benefit 7: No employment reclassification risk
If you work as an independent contractor, there is always a risk that the Dutch Tax Authorities
(Belastingdienst) may determine that the engagement needs to be considered as pseudo-self-employment, in which case they can enforce fines or claim unpaid taxes where they establish malicious intent regarding fictitious self-employment or (obvious or deliberate) false self-employment set ups. The good news is that if we employ you then you do not need to worry about the relationship being reclassified as you are already fully taxed as an employee. Investigo will provide you with a monthly payslip and declare all relevant taxes to the Dutch Tax Authorities.
In short, despite the relatively modest take-home pay, it is clear that working under an employed model in the Netherlands can still be an attractive solution for highly skilled IT workers. Should you be interested in an employed position in the Netherlands, please do not hesitate to contact our team of specialised European recruiters: Matthew Bewick and Terry Dawson.