Penalties for underpaying staff

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Netherlands Enterprise Agency, RVO
Netherlands Enterprise Agency, RVO

If you employ staff in the Netherlands, you must pay your employees sufficiently. This means you may not pay less than the statutory minimum wage.

Do you fail to pay the proper minimum wage or holiday allowance rate? Or do you provide your employees with payslips that contain incorrect data? Your employee may lodge a complaint with the Netherlands Labour Authority (Nederlandse Arbeidsinspectie, NLA). They may also apply to the subdistrict court. Employees are entitled to claim any arrears up to 5 years.

Netherlands Labour Authority (NLA) competences

The Netherlands Labour Authority monitors if you keep to the Minimum wage and holiday allowance Act (Wet minimumloon en minimumvakantiebijslag, WML). If they suspect underpayment, they may decide to:

Consequences of underpayment

If you fail to comply with the Minimum wage and holiday allowance Act (WML), the NLA may decide to impose fines, penalty payments, and other sanctions, such as:

  • A fine of up to €12.000 if you are not able to prove the sum total of paid wages and holiday allowances, as well as the total number of hours worked. Or if you fail to provide your employee with a correct payslip.
  • A fine of up to €10.000 per underpaid employee if you do not pay the proper minimum wage rate.
  • A fine of up to €1.250 per employee if you pay the minimum wage in cash.
  • A maximum fine of €2.000 per employee if you do not pay the holiday allowance, or if you pay too little holiday allowance.
  • A non-compliance penalty if you fail to pay what you owe within 4 weeks after the payment became due. You pay a maximum fine of €500 per day per employee, and a maximum of €40.000 in total per employee.

Outstanding wages and holiday allowance

Did you receive notice from the NLA that you pay one of your employees too little? You must pay this underpaid employee their outstanding wages and holiday allowance within 4 weeks. They may claim back payments of wages and/or holiday allowance for up to 5 years.

Repeat offenders

If an employer violates the minimum wage rules 2 or 3 times within a 5 year period, the fine will be 2 or 3 times higher as well. In case of serious violations, you may also have to suspend (part of) your activities (in Dutch).

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