Salary deductions and settlements

What is the difference between deductions from wages and a settlement?

Settlements

These involve amounts that your employee has to pay to you. For example, for housing or fines. You may settle these amounts against wages. Note that you may only settle amounts until the minimum wage.

Deductions from wages

These are amounts you pay for your employee through their salary. For instance, the premium for health insurance or a supplementary pension scheme. You must have written authorisation from your employee to deduct these amounts. It is not enough to make agreements about this in the employment contract.

As an employer, can you just settle amounts from wages?

You may settle amounts for housing or fines from wages. However, there are rules for this. For example, you may not deduct amounts from wages if this means your employee receives less than the minimum wage. Above the minimum wage, however, this is allowed.

Settlements over several periods

Do you want to deduct a fine from your employee's salary? But will this bring your employee below the minimum wage? Then you can deduct a part of the fine from the salary. You can later deduct the rest of the fine from the salary. You may also deduct amounts from the (minimum) holiday allowance your employee receives each year. As long as your employee's salary does not fall below the minimum wage.

As an employer, can you just deduct from wages?

You must have permission from your employee to deduct amounts from wages. Such as for housing or health insurance. This permission must be in writing. It is not enough to make agreements about this in the employment contract. Again, you are not allowed to simply deduct amounts from the salary if this means your employee receives less than the minimum wage.

When are you allowed to deduct wages without your employee's permission?

There are amounts you are allowed to withhold without your employee's consent. These are amounts that you must deduct by law. Such as pension contributions, payroll taxes, and social security contributions. For example, you pay the pension (AOW) premium for your employee to the Tax Administration. You deduct part of the premium from the salary for this purpose.

More information on deductions and settlements

On Rijksoverheid.nl you will find a fact sheet (in Dutch) with more information on deductions from wages and settlements against wages. For example, whether you can recover traffic fines from your employee. And how attachment of earnings works.