Expats: Before you sign, look over your labour or rental contracts carefully

You are lucky, because you found a job in the Netherlands, one of the top 10 happiest countries in the world. Congratulations. Your career got a boost and so did your bank account (you may even qualify for the 30% ruling!) Before you go ahead and sign your labour and rental contracts, let Mr. Berendsen give you some valuable advice.

Your labour contract

There are various things you should look for when reading your labour contract:

Sick pay

What happens if you get sick? How much money will you receive while you are sick? In the Netherlands, almost all employees receive 100 percent of their income in the first 52 weeks of illness and 70 percent in the subsequent 52 weeks. Unfortunately, some employers who employ many expats have found that they can get away with far worse conditions for expats.

You may find a clause in which it says that, for the first 52 weeks, you will receive 70 percent of your gross salary insofar as the gross salary equals or exceeds the minimum wage applicable to Employee, and does not amount to more than the maximum daily wage, while for the subsequent 52 weeks you would receive 70 percent of your gross salary with the same maximum.

This is a trap! This wording is used a lot in case your gross monthly income is more than 4.859 euros (in 2021). Whatever your real income, you would receive only 3.401 euros gross per month. Imagine your income is 9.000 per month. If you fall ill, you will receive only 38 percent of your normal income.

Non-compete clause

A second trap: beware of the non-compete clause. In many countries, employees are used to receiving compensation for the time that they are not allowed to work in their line of business due to a non-competition clause. Not so in this country.

Bonuses and other VR-schemes

Variable remuneration is another problematic topic in many expat contracts. If the scheme offered contains the provision that the granting of your bonus is at the company’s discretion (and that entitlement in any year does not constitute any entitlement for succeeding years), what are you actually getting? Many companies treat such bonuses arbitrary (which is worse than discretionary). How are KPI’s established? What will happen with your bonus in the year you leave the company? Do you really think your company will still pay out a bonus in that year?

Negotiate

Now you know what to look for in the job offer you received. What can you do about it? Simple: negotiate. Once the offer has been made, the company has invested a lot in your hiring. They will not risk having to write off the hiring costs, just because you have reasonable requests, like normal pay (100 percent first year and 70 percent second year) in case you fall sick. Such a request is considered reasonable in the Netherlands, since nearly all employees have that.

If applicable, talk about your non-compete clause. Try to limit the duration and geographical and substantial scopes (what exactly can’t I do after I leave)? Make a distinction between voluntary and involuntary redundancy: why should you be limited in your possibilities if your employer takes the initiative to terminate your employment? In case you don’t feel comfortable negotiating your labour contract: hire an employment lawyer. The investment might turn out the best you will ever make.

Your housing contract

OK. Labour contract solved. Now, your housing contract. Best is of course that your company arranges everything for you. In case you sign a lease yourself, please remember that tenants of residences are very well-protected under Dutch law. Why? Because our planning limitations have resulted in a chronic shortage of housing for generations. Without stringent tenants’ protection, they would massively fall victim to abusive real estate owners, which would lead to uncontrollable gentrification of some neighbourhoods and dilapidation of residences in other neighbourhoods.

So, here are the most important things to look out for when concluding a lease contract:

Duration

Beware of minimum duration contracts which limit your ability to cancel the lease within the first year or so. Also, beware of a temporary lease: it can either be a minimum duration contract (which by force of law is considered to be a lease for an indefinite period of time!) or a lease for a limited time only (which the tenant may cancel at any moment, provided a one-calendar-month notice is observed).

All-in price

Beware of “all-in” prices. The lease should specify what you pay for the mere use of the real estate. It may also specify what you pay for the use of other stuff, like inventory, the use of services or goods, etc. In case you have an all-in price you are in luck: you may request a separation between the one and the other and the law contains a hefty penalty for the landlord in your favour.

Rental check

And finally, always do a rental price check within the first six months to see if your residence qualifies for rent control. The government has a web application for the calculation of the maximum reasonable rent for independent living space in English.

Welcome to the Netherlands. We hope you will be as happy as its citizens. Contact Mr. Berendsen for more information on labour or rental contracts here or here.