WHY INVESTIN HOLLAND?Wages and Hours

IntroductionNetherlands Foreign Investment Agency (NFIA)The NFIA (Netherlands Foreign Investment Agency) is an operational unit of the Dutch Ministry of Economic Affairs.The NFIA helps and advises foreign companies on the establishment, rolling out and/or expansion of theirinternational activities in the Netherlands. The NFIA was established more than 35 years ago, and has since thensupported thousands of companies from all over the world in the establishment or expansion of their internationalactivities in the Netherlands. Besides its headquarters in The Hague, the NFIA has its own offices in the UnitedKingdom, Turkey, North America, Asia, the Middle East and Brazil. Additionally, the NFIA works together with Dutchembassies, consulates-general, and other organizations representing the Dutch government abroad, as well aswith a broad network of domestic partners.

Please be sure to stay in touch with your NFIA representative in order to keep up to date with any changes in theinformation which may occur over time and to visit your regional NFIA website for the latest news on business andinvestment opportunities in the Netherlands (all NFIA website addresses can be found on www.nfia.nl).

The inform ation containe d in the se fact she e ts has be e n com pile d with gre at care by the Ne the rlands Fore ign Inve stm e nt Age ncy and isaccurate to the be st of its knowle dge at the tim e of com pilation. Howe ve r, this docum e nt is provide d for inform ational purpose s only andno rights can be de rive d from it. Com pile d on 23 Apr 20 15.

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WHY INVEST IN HOLLAND?

Table of contents

WagesLabor cost in the NetherlandsWage Cost SubsidiesWassenaar Agreement

Minimum WagesHoliday allowance

Minimum wages (as of 1 January 2015)Holiday Allowance

Public holidaysAdditional leave

Holiday entitlements in EU countriesOvertime CompensationFringe Benefits

"13th month"Holiday allowanceMedical insurance allowance

Working HoursSimplification of the Working Hours Act

Adjustment of Working HoursLeave

Maternity LeaveParental leave

WagesLabor costs are determined by the wages paid effectively and the hours worked productively. To be more precise,labor costs depend on minimum wage regulations, on working time regulations (including shift work and overtimecompensation), on social security benefits, and on labor productivity. Not only do labor costs form a large part ofthe recurring operational costs, they are also easily affected. For many years the Netherlands has experiencedmoderate wage increases, achieved by collective bargaining and political stability. Because of high laborproductivity and moderate wage increases, Dutch unit labor costs have risen less than those in surroundingcountries. And it is surely this consideration which should be taken into account by the employer.

Labor cost in the Netherlands

The Netherlands scores well on labor costs because it offers value for money, costs per unit of output prove to belower than in most surrounding countries. Compared to the hourly rates of income in Northwestern Europe, theNetherlands belongs to the middle group of countries. However, when the hourly rate of income is considered inconjunction with productivity, the Netherlands scores very well. This is because workforce productivity and laborflexibility is high. The Dutch labor force preserves high worker productivity levels as the result of good workingattitudes and highly efficient processing. In the Netherlands, it is possible to have flexible working hours inemployment contracts. Dutch employees offer a high return at a reasonable cost so that final labor costs influencecompanies' performance favorably.

Wage Cost Subsidies

The Dutch government has set up special programs in an effort to increase job opportunities and workparticipation by offering financial benefits to employers. Under the WVAOW ('Wet vermindering afdracht onderwijs':law on tax reduction on education) employers can deduct a maximum of EUR 2,738 per employee, depending onthe qualifications of the employee. The WVAOW applies to employees earning less than EUR 23,943 per annum(2011).

Wassenaar Agreement

In 1982, unions and employers' organizations made an agreement, which has been a turning point for wagerestraints in the Netherlands. The agreement has indeed reduced government interference in this respect. Sincethen the unions and employers' organizations have the flexibility to make wage agreements which fit the specificcircumstances of businesses and their employees.

Over the years, the Wassenaar Agreement has reduced the increase of labor costs. Not only has it brought downthe rate of wage increase, it has also provided the foundation for the Netherlands' increase in employment andflexibility in the workplace. This agreement gives employers and employees the ability to agree upon flexibleworking hours and shorter working time instead of higher wage compensation. Another result of the shortenedworkweek has been the decrease in unemployment.

Besides good labor relations, the efficient organization of labor in the Netherlands also has a positive impact onthe labor costs. In essence, this efficiency has been reached through flexibility in wages, flexibility of workinghours, flexible contracts, job pools (several organizations sharing the same employees), and job rotation.

Page 1 of 9Wage s

Minimum WagesThe law on statutory minimum wages and holiday allowances ("Wet Minimumloon en Minimumvakantiebijslag")provides for a legal minimum wage for all employees (with exception of employees who have a labor contract onthe basis of civil law and who are working for a governmental organization). Effective 1 January 2015, the legalgross minimum wage for full-time employees of 23 years of age and over is EUR 1,501.80 per month, or EUR346.55 per week. In case of working weeks with less than regular hours (varying from 36 to 40 hours), minimumwages are reduced proportionately. The statutory minimum wage is normally adjusted every six months (onJanuary 1 and July 1) to reflect general wage changes in the preceding six months.

Holiday allowance

The law also provides for a minimum annual holiday allowance of 8% , paid in June. Payment in the month of Junecan be departed from, in pursuance of a regulation under public law or by written agreement stipulating, forexample, that the holiday allowance shall be paid in monthly installments. The holiday allowance should in any eventbe paid at least once a year.

Minimum wages (as of 1 January 2015)

Age Monthly gross earnings for the employee

>23 yr EUR 1,501.80

22 yr EUR 1,276.55

21 yr EUR 1,088.80

20 yr EUR 923.60

19 yr EUR 788.45

18 yr EUR 683.30

17 yr EUR 593.20

16 yr EUR 518.10

15 yr EUR 450.55

Source: Ministry of Social Affairs and Employment, January 2015

Page 2 of 9Minim um Wage s

Holiday AllowanceThe law provides for a minimum annual holiday allowance of 8% , paid usually in May. Payment in the month of Maycan be departed from, in pursuance of a regulation under public law or by written agreement stipulating, forexample, that the holiday allowance shall be paid in monthly installments. The holiday allowance should in any eventbe paid at least once a year and not later than the month of June.

The minimum amount of vacation days provided by law is 20 working days. In practice, employers generally allow anextra five days. Sometimes, employees are allowed to work 40 hours in stead of 38 hours a week to have additionalvacation days. In some collective labor agreements, the holiday periods are fixed and the production process stopsduring the holidays.

Public holidays

Trade and industry are normally closed on the following paid public holidays:

New Year's Day: January 1Easter Monday: March/April (varies)King's Birthday: April 27Ascension Day: May (varies)White Monday: May/June (varies)Christmas Day: December 25Boxing Day: December 26

Other holidays sometimes given are:

Good Friday: March/April (varies)Liberation Day: May 5 (if that day has been designated as a national public holiday by the authorities)

Additional leave

In addition to statutory leave entitlements, it is often agreed in collective labor agreements and individualcontracts of employment that in special cases such as marriage, death of partner, parent or child of the employee,or other important matters involving relatives, employees are entitled to days off on full payment.

In practice, Dutch workers rarely take all holidays to which they are entitled. The Dutch labor force thus maintainsone of the longest average working weeks on the European Continent.

Holiday entitlements in EU countries

Country Statutory Minimum Holidays (days) Public Holidays (days) Total (days)

The Netherlands 20 8 28

United Kingdom 20 8 28

Belgium 20 10 30

Italy 20 11 31

Germany 24 10 34

Spain 22 14 36

France 30 10 40

Source: Mercer

The figures are based on statutory entitlements for an employee working five days a week, with 10 years' service.

Page 3 of 9Holiday Allowance

Overtime CompensationFor most employees overtime compensation is set forth in the collective labor agreement (CAO) or individualemployment contracts. In general overtime is compensated in free hours or otherwise paid at a certainpercentage of the monthly salary per hour. The percentage depends upon the number of hours overtime andwhich day and time the overtime occurred. Overtime compensations differ according to the branch of industryconcerned. The percentages vary from 12.5% of basic rates for overtime from Monday to Friday between 6 a.m. to10 p.m. to 100% on Sundays and public holidays. Sometimes collective labor agreements have certain rules oncompensation for overtime. Also, individual employment contracts can hold a payment agreement for workingovertime.

In general, however, it is common that employees in management positions are not compensated for overtime.For these people, it is assumed that compensation for overtime is already included in their salaries. This mattershould be agreed upon explicitly in the individual employment contracts.

Working-shift premiums range from 12% to 37% depending on whether two, three, or more shifts are in operation.There is a rotation scheme for employees concerned.

In general, overtime is compensated by free hours or otherwise paid at 0.6% of the monthly wages per hour plus avariable allowance. The allowance depends on the number of hours overtime and day and time in which theovertime takes place. If the overtime is compensated with money, then in practice, the normal wage per hour isincreased with beforehand designated percentages. How this is calculated can be seen by the following table:

Overtime compensation in the Metalworking and Electrical Engineering Industry in the Netherlands

-First 2 hours directly preceding or following the normal working day 0.58 % + 0.14% of monthly wages =24,1% additional allowance per hour

-Additional hours on normal working day(Monday to Friday)

0.58 % + 0.24 % of monthlywages =41,3% additional allowance per hour

-Hours on Saturday up to 2:00 p.m. 0.58 % + 0.27 % of monthlywages =46,6% additional allowance per hour

-Hours on Saturday after 2:00 p.m. 0.58 % + 0.37 % of monthlywages =63,8% additional allowance per hour

-Hours on Sunday and Public Holidays 0.58 % + 0.48 % of monthlywages =82,8% additional allowance per hour

Source: Collective Agreements in the Metalworking and Electrical Engineering Industry (Metalektro), 2010/2011

Unless explicitly agreed with the employee or stipulated by a collective labor Agreement, an employer is legallyobliged to pay these percentages. As mentioned above, working overtime can also be compensated by free hours.

Page 4 of 9Ove rtim e Com pe nsation

Fringe BenefitsFringe benefits used by companies to attract and retain personnel may include:

subsidized canteens or social clubssaving plans and mortgagesprivate pension planscompany carexpense allowancechildren's day care center

"13th month"

Some employers also pay a bonus in the form of a "13th month," usually at Christmas time. (This amount isincluded in the annual total remuneration mentioned above)

Holiday allowance

Employees are entitled to an annual holiday allowance of 8% . However, if the wage agreed upon between employerand employee exceeds three times the minimum wage, it may be agreed in writing that the employee is notentitled to 8% holiday allowance over the wage that exceeds EUR 4,078 or that the amount of the holiday allowanceto which he is entitled is lower.

Medical insurance allowance

Employees who are privately insured have to pay an amount for medical expenses. The employer may reimburse allor part of the costs. For this reimbursement, no national insurance contribution is due.

Page 5 of 9Fringe Be ne fits

Working HoursSimplif ication of the Working Hours Act

The rules on the maximum number of hours that a person may work, and at night, were simplified as from 1 April,2007. Separate rules on overtime were abolished and agreements on breaks became a matter between employersand employees.

The old Working Hours Act applied what is known as a double standard: a standard scheme and a consultationscheme. In principle, the provisions of the standard scheme applied. It was possible to depart from thoseprovisions within the limits of the consultation scheme in a collective employment agreement. If there was nocollective employment agreement, or if it offered the means of doing so, the employer and the Works Council oremployee representatives could also consult on other agreements.

However, too many rules in the field of working hours and rest periods prevented employers and employees fromassuming responsibility and finding solutions that were tailor-made to fit the situation in the sector or company inquestion.

The new Working Hours Act has therefore been significantly simplified; a single, broader standard has beenchosen. This means that individual employers and employees can make agreements within the broader standardswithout any agreement having first been reached on that point at a collective level. The double standard hascontinued to apply only to the number of night shifts.

The standards were relaxed as follows in respect of the maximum number of working hours:

Old scheme New scheme

Maximum number of working hours pershift 10 hours 12 hours

Maximum number of working hours perweek 45 hours 60 hours

Maximum average number of workinghours per 4 weeks 50 hours per week 55 hours per week

Maximum average number of workinghours per 13 and 16 weeks

45 hours per week (per 13weeks) 48 hours per week (per 16 weeks)

The distinction between 'working hours' and 'work including overtime' has been dropped. The rules on night workhave also been relaxed. The maximum number of hours per night shift has been increased in the new scheme from9 to 10 and can be further increased to 12 hours subject to certain conditions (see Scheme Working Hours in theattachment). But the law will continue to protect employees, because limits will continue to apply to the maximumnumber of night shifts per period.

The rules on breaks remained largely the same, in that the total duration of the breaks per shift will not change.But individual breaks will last at least 15 minutes rather than 30 minutes under the new scheme (see SchemeWorking Hours). In future, employers and employees can also jointly agree on the practical details of breaks, suchas their number and the time(s) at which they are taken.

The principle that no work is performed on Sundays will continue to apply, unless it is inherent in the nature of thework and the parties have so agreed, or business circumstances necessitate work on Sundays. The minimumnumber of free Sundays per year will remain 13 (for more information see Scheme Working Hours). Although it willbe possible under the new scheme to agree on a lower number in a collective employment agreement, individualemployees may refuse.

The Working Hours Act also sets standards for on-call duty (consignment). Specific rules apply to on-call duty andthe number of times an employee can be scheduled for an on-call duty is limited (for more information seeScheme Working Hours).

Page 6 of 9Working Hours

Adjustment of Working HoursThe Act on Adjustment of Working Hours (Wet Aanpassing Arbeidsduur) provides an individual right of employeesto increase or decrease their working hours. An employer requested by one of his employees, must, in principle,honor that request. Exceptions are only possible if such a reduction or increase in working hours will lead toserious problems for the organization itself (objections in term of substantial operational or departmentalinterests).

It is a right, subject to conditions, that applies to all employees in the private and public sectors if employee hasworked for the employer for a year. The act does not apply to companies that employ fewer than ten employees.However, parties are obliged to make their own arrangements.

Collective agreements can set different rules on the right to adjust contractual working time, which then haveprecedence over those in the law. If there is no collective agreement, the works council or staff representationcan agree upon rules that are different from the legal rules. However, neither collective agreements, nor workscouncils or staff representations, can take the right to reduce the number of working hour away from employees.

An employee must notify the employer in writing of the request to change working hours at least four months inadvance. The request must contain the commencing date, the magnitude of the adaptation of labor-time and thewanted dispersion of the hours over the week. The application to change working hours can only be made onceevery two years. The employer has three months either to allow the change in hours or to reject the application. Ifthe employer fails to make a decision in writing within one month prior to the commencement of the proposedadjustment, the employee's application will be granted "automatically" pursuant to the employee's request.

The employer is not obliged to comply with the request of the employee, in case of important business interests.

Examples:

the employer can not get someone else to work the hours that would no longer be worked by theemployee;if the adjustment of working hours leads to serious roster or safety problems;extension of working hours can be refused in case of serious financial or organizational problems, becausethe formation is insufficient or when there is not enough work to be performed

Page 7 of 9Adjustm e nt of Working Hours

LeaveMaternity Leave

Pregnant workers are granted at least 16 weeks of paid maternity leave at the rate of 100% of wages, commencingsix weeks before the expected confinement date. If confinement is overdue, the longer benefit period precedingchildbirth is not deducted from the duration of the benefit after the confinement.

Employees determine the commencement of the pregnancy leave in consultation with the employer. However,pregnant workers are not allowed to work from 4 weeks before the expected date of confinement up to 42 daysafter they gave birth to their child. After the confinement employees are granted at least 10 weeks of leave.

Should the female employee remain ill after the period of maternity leave, she has the right of sickness benefitsfor a year. If the employee is sick preceding the maternity leave due to the pregnancy, she is also entitled to thesickness benefit of 100% of the daily wage.

Employees can not be discharged during pregnancy or during the first twelve weeks after the confinement.

Parental leave

Parents are entitled to unpaid leave on a part-time basis for a continuous period of up to six months to care for achild under the age of 8 years. In order to be entitled to this leave, the employee must have worked for the sameemployer for at least one year. Both parents are entitled to parental leave, on the same conditions and may takesuch leave either simultaneously or successively. Requests for parental leave by either men or women cannot berefused by the employer.

The leave entitlement is based on the individual's working hours per week calculated over thirteen weeks. Forexample, an employee who works 32 hours is entitled to 16 hours leave per week.

The leave entitlement is normally taken on a part-time basis over the six months but can be can be taken moreflexibly, such as taking more hours per week (for example full-time leave) over a shorter period until theentitlement is used up. The employer must agree to these more flexible arrangements however, and may refuseto agree if there are compelling reasons for doing so.

Page 8 of 9Le ave

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