Netherlands: Introduction Of Uniform Minimum Hourly Wage As Of 1 January 2024

On 1 January 2024, the Minimum Wage and Minimum Holiday Allowance Act (in Dutch: "Wet minimumloon en minimumvakantiebijslag" and hereinafter "the Act") will change. From then on, a uniform minimum hourly wage will apply to employees aged 21 and older in all sectors. A youth minimum hourly wage will apply to employees aged between 15 and 20. The applicable minimum hourly wage will be indexed on 1 January and 1 July each calendar year.

Background information

The extent of full-time employment can vary depending on the sector (e.g. 36, 38 or 40 hours per week). Under the old system, the same minimum monthly wage applied in these cases. In practice, this means that an employee with a 40-hour employment contract actually has a lower minimum hourly wage than an employee with a 36-hour employment contract.

Consequences in practice

For employees earning the minimum wage who have a full-time employment contract of more than 36 hours per week (i.e. 38 or 40 hours), the introduction of the statutory uniform minimum hourly wage results in a wage increase. This is because the level of the statutory minimum hourly wage will be derived from the current minimum monthly wage for full-time employment of 36 hours.

In many cases, the introduction of the statutory uniform minimum hourly wage means that collective bargaining agreements and employment contracts will have to be adapted to the new legal system. In many cases, payroll systems will also need to be adapted.

Key Action Points for Human Resources and In-house Counsel

• Review and update employment contracts and collective bargaining agreements;
• Adapt payroll systems to reflect the new minimum hourly wage rates;
• Communicate changes to employees effectively;