In the Netherlands, the minimum wage is regulated by the Minimum Wage and Minimum Holiday Allowance Act (“WML”). This does not cover employees working outside the Netherlands, unless they live in the Netherlands and their employer is also based here. Workers under 21 years of age are eligible for a percentage of the adult minimum wage and no minimum wage applies to workers under 18 years of age.
Until 1 January 2024, a monthly minimum wage applied (based on a maximum of 40 hours per week). As a result, the minimum wage per hour varied per sector because in different sectors varying weekly work hours apply. From 1 January 2024, minimum wage is calculated by the hour. This makes abuse of authority and underpayment more apparent. The new minimum hourly wage is based on a 36-hour work week. Employees who work(ed) 40 hours a week therefore saw an additional increase in their minimum wage on a monthly basis, although it remains possible to compensate extra work hours with paid time off, provided this is covered in the collective bargaining agreement and agreed to in writing.
The minimum wage is a gross sum adjusted on 1 January and 1 July each year, usually according to the percentage change in contract wages in different sectors. After sharp increases in 2023, the minimum wage was increased with another 3.75% on 1 January 2024.
Many employees will see their wages rise again per 1 July 2024. Collective bargaining agreements usually provide for such increases, and not just for employees earning the minimum wage. But also for employees without a collective bargaining agreement, the legal minimum wage will increase by 3.08%.
Employers will therefore need to adjust their payroll where necessary to meet the new statutory minimum wages. In doing so, they must take into account the correct calculation of the minimum wage. Only certain (purely financial) wage components count toward the calculation of the minimum wage; income in kind and certain financial income components, such as vacation allowances and year-end bonuses, do not count. Furthermore, necessary expenses related to the employment may not be charged to the employee if this brings the wage below the minimum.
Employees that work more than the stipulated amount of hours (for example, 40 hours while the collective bargaining agreement requires 36 hours), will have to be compensated by their employers.
Improper payment of (minimum) wages can have financial consequences for employers. If an employee has received too little wages, he can claim the difference for up to five years after the fact. That includes salary payments below minimum wage. Such late salary payments may also be subject to a statutory increase, which can amount to 50% of the original salary amount. Furthermore, the Dutch Labor Inspectorate (Nederlandse Arbeidsinspectie) can impose administrative fines for non-compliance and in certain cases even shut down operations for three months in case of non-compliance with the WML.
Do you have a question about (minimum) wage payment in the Netherlands? Are you confronted with a wage claim? Do you have a different question? Expertise in 18 legal fields enables La Gro to offer broad legal assistance. Feel free to contact Gerard Zuidgeest or one of my specialist colleagues.
Attorney at Law & Partner