Frequently Asked Questions | Employor Payroll Services

What is an Employer of Record (EOR), and how does it differ from traditional hiring?

An Employer of Record (EOR) is a third-party organization that legally employs people on behalf of another business and takes on the responsibilities of the official employer. This differs from traditional hiring where you employ workers directly and manage all legal, tax, and HR responsibilities.

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What are the primary benefits of using an Employer of Record service for global expansion?

Using an Employer of Record service (EOR) offers several benefits for companies looking to expand globally:

Speed: EORs can quickly hire employees in new markets without the need to establish a local entity.
Compliance: EORs ensure compliance with local employment laws.
Cost Efficiency: It can be more cost-effective to use an EOR than to set up a legal presence in every country where a company wishes to operate.
Flexibility: EOR services provide flexibility to scale operations up or down without the long-term commitments associated with direct hiring.

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Can I use an EOR service for short-term or project-based hires, or is it primarily for long-term employment?

EOR services are versatile and can be used for both short-term and project-based hires as well as for long-term employment. They are particularly useful for companies needing to quickly deploy workers for temporary projects or to test new markets without the long-term commitment of setting up a local entity.

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What role does the Employer of Record play in managing payroll, taxes, and other HR-related functions for my international employees?

The EOR handles employment tasks such as payroll, benefits, taxes, HR, and compliance with local labor laws.

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What benefits can my company gain from partnering with a PEO for HR and employee management?

Partnering with a PEO offers several benefits:

Cost Savings: Leveraging the scale of a PEO can lead to lower costs for benefits and workers’ compensation insurance.
Compliance and Risk Management: PEOs handle compliance with state and federal regulations, reducing legal risks.
HR Management: They manage tedious HR tasks, allowing you to focus on core business activities.
Employee Benefits: Better benefits packages due to pooled resources, which helps attract and retain talent.

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What role does the PEO play in managing employee benefits, such as health insurance, retirement plans, and other perks?

PEO’s ensure that employee benefits are distributed correctly, applying the appropriate tax rates. PEO’s can connect clients with specialists in the pension sector to help establish the setup of pensions and health insurance. By doing this, they facilitate access to expert advice.

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How can an Employer of Record assist in the hiring for my highly skilled migrant?

What role does the EOR play in ensuring compliance with local immigration laws and regulations when hiring foreign talent?

When hiring highly skilled migrants, an Employer of Record can significantly simplify the process by:

Handling Visa and Work Permits: Sponsoring the application and renewal of visas and work permits as required by local immigration laws.
Ensuring Regulatory Compliance: Making sure that the employment practices meet local standards and regulations.
Navigating Legal Requirements: Helping with the legal requirements for employing foreign nationals, including compliance with employment laws and regulations.

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What kind of payrolling does Employor provide?

We offer payroll solutions to international companies that want to set up a business in the Netherlands, but do not have the legal structure to run a payroll for the employees.
We offer payroll solutions to Dutch based companies that want to employ international employees but do not yet have the required registration with the Dutch immigration services to do so.

We offer a temporary employment solution for our client and for the employee. The employee will be employed by Employor directly and seconded to our client. During this secondment, our clients have time to set up a structure that allows them to employ the employee directly without our mediation.

Employor is registered as a sponsor with the Dutch immigration office (IND) and is therefore able to support in the application for the necessary residency and work permits. Once the client is able to have the employee directly on their payroll, we can assist in the transition.

We do not, however, offer immigration services: as an extra quality check, all applications we handle must go through an immigration lawyer.

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What does Employor charge for the services?

Employor stands for transparency when it comes to the costs. This is why we do not work with commissions constituting a percentage of the employee’s salary. We cross charge the total cost for the employee, equal to the cost the client would have had in case the employee was on the client’s payroll.

One-off fees, paid once only include: Set up fee for setting up the contracts and payroll of € 2000. In case we need to conduct additional analyses, such as Collective Labour Agreement (if applicable) or 30% ruling conditions, additional fees apply. Please note all our fees are ex VAT.

The regular monthly fees, paid each month, include the following components:

Salary
Holiday payment
Obligatory Employer’s contribution
Monthly fee
Pension (if applicable)
Any other remuneration if agreed, e.g. relocation remuneration, travel allowance etc.

We invoice the cost of salary and our fees for two months in advance.

Is there a minimum / maximum duration of the contract?

Yes, the minimum duration of our payrolling contract is 3 months and the maximum duration is 1 year (with extension possibilities). We draw up 2 contracts (service contract between Employor and Client and a payroll agreement between Employor and employee, which are linked to each other). Please note that due to Dutch Labour Law, an employee is entitled to an open-ended contract after 3 temporary contracts at the same employer.

How can the contract be terminated?

The contract can be terminated in one of the following ways:

Mutual agreement
Employee terminates the contract
During the probationary period
Contract ends by operation of law
Through a request at the UWV (lengthy)
Court proceedings (lengthy)
Instant dismissal (employee has committed a serious violation).

What is an employer’s contribution?

These are costs which the employer must pay the Dutch government for hiring the employee. The percentages of each component change on an annual basis and are therefore not specified below.

The components of the employer’s contribution are:

Premie WHK bijdrage werknemer (Return to work fund-contribution of the employee)
Premie WAO/IVA/WGA basis (basic contributions under the Occupational Disability Insurance Act(WAO)/ Income provision (fully disabled workers) Regulation (IVA)/Partially Disabled Workers Act (WGA)).
Premie WHK gedifferentieerd (differentiated contributions under the Return to Work Fund (Whk)
Premie WW-Awf (contributions under the Unemployment Insurance Act/General Unemployment Fund (WW-Awf))
Zvw werkgeversheffing(employer's Zvw (Dutch Health Insurance Act) health insurance contribution)

Do you charge a deposit? How does the invoicing work?

A deposit is required in the extraordinary occasion that the contract to be entered is indefinite. The Client will pay Employor a deposit equal to four times the total amount of the Client Rate (as mentioned in the service agreement under Clause 4.1). The Client will pay this deposit before the start of the contract. In the event that the Payroll agreement is terminated by mutual consent or the Employee terminates the Payroll agreement, Employor will refund the deposit to the Client after settlement of any outstanding expenses. Employor invoices in advance per two months; in January, March, May, July, September and November.

Do you offer occupational health care insurance?

Due to the nature of Employor as a payrolling company, we do not offer occupational insurance. This has to do with the fact that Employor has clients from divergent sectors.

Is the employee entitled to pension?

This is dependent on various factors. As this is a topic which has undergone recent legislation changes, we have underlined the criteria and the main changes in the following article.

Can the employee/company undertake voluntary pension, even in circumstances where they do not fall under the mandatory adequate pension of 15%?

In short, this is possible. However, it is necessary to consult with a pension provider/consultant to check what consequences this will have for the company and the other employees.

What is successive term of employment?

Successive term of employment refers to the situation in which the employee enters into a new employment contract with an employer, but the activities, skills, and the job they perform remain the same. In this case, the new employment can be considered successive. There are important legal consequences, when a situation is considered as successive term of employment. This is why it is necessary to always discuss your employment history with Employor.

What is a Professional Employer Organization (PEO)?

A Professional Employer Organization (PEO) is a firm that partners with companies to provide HR services under a co-employment model. This includes managing payroll, employee benefits, HR tasks, and ensuring compliance with employment laws.

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How much does a PEO cost?

PEO costs vary depending on the services provided and the size of the company. Often, PEOs charge a percentage of total payroll (usually between 3% to 15%). In contrast to other PEO service providers, Employor only works with fixed fees. That way companies know what to expect, instead of receiving an unwelcome surprise halfway through the process.

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What's the difference between a PEO vs. EOR?

The main difference between a PEO and an Employer of Record (EOR) is the relationship structure. A PEO is responsible for administrative tasks regarding the day-to-day HR activities and payroll, while an EOR becomes the legal employer of record for tax purposes and compliance but does not engage in the day-to-day operations of the client's business. Essentially, a PEO provides services, focusing on administrative tasks, under a co-employment arrangement. An EOR, on the other hand, assumes only the legal responsibilities for employment. Read our article about PEO vs EOR explained.

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Still have a question?

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General

What does payrolling mean?

Payroll is a remuneration construction, where the client (company) concludes an employment contract with two parties: the employee and the payroll company. From a legal point of view, the payroll company acts as the employer and as such takes care of all obligatory technical tasks associated with being an employer (drawing up contract, paying salary etc.). However, the recruitment and selection of the employee, negotiation of the labour conditions remains the responsibility of the hirer. The hirer selects the employee and once there is a mutual agreement between the two, a payroll company can employ this employee and second it to the hirer.

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Who will be my employer?

Employor will be your legal employer. You will be exclusively seconded to the company (the Client) that has hired you. You will work under the Client’s management and supervision.

What is the 30% ruling?

The 30% ruling is a tax advantage for highly skilled migrants moving to the Netherlands for work. Under this rule, employers can offer up to 30% of a migrant's salary tax-free, depending on the salary. The remaining 70% is subject to normal tax rates. This benefit is designed to cover the extra costs associated with relocating to the Netherlands. This benefit applies to the salary above €46.000. Under this threshold, the salary is taxed normally.

There are strict requirements to apply for the 30% Ruling which Employor can inform you of. More information is available on the website of the Dutch Tax Authority, accessible via this link.

Who will apply for the visa?

As an extra quality check, all applications we handle must go through an immigration lawyer. In case you do not have an immigration lawyer yet, we can recommend you a list of specialist with whom we work.

What are the requirements for qualifying for the 30% ruling?

To qualify, the employee must meet specific criteria set by the Dutch tax authorities. The salary must be high enough to surpass the threshold of €46.000, and they must have lived more than 150 kilometers from the Dutch border before employment.

The ruling can be granted for a maximum of five years, providing substantial tax relief and making the Netherlands an attractive destination for international talent. Read more about further limitations on the 30% ruling.

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Will my partner and kids also be sponsored?

As holder of a highly skilled migrant permit, you are the sponsor for your family members. Therefore, their applications do not need a recognized sponsor as the IND considers the holder of the highly skilled migrant permit a sponsor for the family members.

What is severance/transition payment?

According to Dutch Labor Law, you are entitled for a severance payment in case you are fired or in case your temporary contract is not extended. Further information can be found on this website.

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Are there any recent changes or updates regarding the 30% ruling that I should be aware of?

Yes, there have been recent changes to the 30% ruling in the Netherlands that came into effect on January 1, 2024:

Gradual Reduction in Tax-Free Allowance: The allowance will now decrease over time. For the first 20 months, the allowance remains at 30%. It then drops to 20% for the next 20 months, and further reduces to 10% for the final 20 months. This step-by-step reduction spreads across a total duration of 60 months (5 years). This only applies to new benefactors of the ruling. It doesn’t apply to employees that already received the 30% allowance before December 2023.
Cap on High Incomes: The 30% ruling now applies only up to a maximum salary limit which is aligned with the "Standard for Remuneration Act" (Wet Normering Topinkomens). For 2024, this cap is set at €233,000.
Abolition of Partial Foreign Tax Liability: Starting from January 1, 2025, the partial foreign tax liability will be abolished. This currently allows expats to opt for a status that exempts them from tax on foreign investments, substantial interest and savings (Box 2 and Box 3 income). A transitional law will permit those already using the ruling to continue applying this partial foreign tax status until January 1st, 2027.
Increased Salary Requirement: The minimum salary requirement to qualify for the 30% ruling has also increased significantly, up by 9.9% from 2023 to 2024, reflecting the inflation rate and changes in the job market conditions for skilled migrants.

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During the onboarding

Who will draw up my contract?

Employor will draw up the agreement. The employment conditions, salary, working hours etc., are determined by the Client and/or by the applicable Collective Labor Agreement.

Who determines my salary?

The Client determines your salary. If you are going to work as a High Skilled Migrant (HSM) , the salary has to meet the minimum salary required for HSM employees. Also, your salary has to meet all other Dutch Labour Law requirements, about which we will inform the Client.

During the secondment

Who will pay my salary?

The salary will be transferred to your account by Employor. Employor will charge the Client the agreed salary and upon receipt of payment, will transfer your salary. You will be provided access to a digital platform where you can find all your salary slips.

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Will I receive 8% holiday allowance?

Holiday allowance is mandatory in the Netherlands. The percentage of holiday allowance is statutorily determined. The Government has set the holiday allowance at 8%. It is not possible to pay less than the 8%.

How many vacation days will I receive?

In hours, the statutorily required minimum is 4 times the working hours you work per week. Therefore, if you work 40 hours a week, calculated in days, you are entitled to 20 vacation days.

How can I take vacation?

As you will be working under the Client’s supervision, vacation days are consulted directly with the Client. Once the days have been confirmed, these must be communicated to Employor. Employor maintains an overview that must be updated for compliance purposes on a quarterly basis. Please do make sure to communicate the taken vacation days, as this information will be needed to pay out the outstanding holiday balance at the end of your contract/ assignment.

Sick leave

What happens when I am sick?

In principle, the statutory regulations on incapacity for work apply. These state that your salary will be paid out to a maximum of 70% for a maximum of 2 years of illness. In the meantime strict regulations for getting back to work (depending on the situation) apply. This can be different when a Collective Labour Agreement is applicable.

To whom do I have to report that I am sick?

You need to report to Employor (as your legal employer) and to the Client. You need to do this at least one hour before the start of work but not later than 9 a.m.

FAQ’s

Still have a question?

General

During the onboarding

During the secondment

Sick leave