Unlocking secure futures: how robust pension schemes for EOR employees drive global talent satisfaction and compliance.
A comprehensive remuneration scheme is crucial for companies using Employer of Record (EOR) services, especially when hiring international talent. The remuneration scheme must not only cover base salary but also include statutory and supplementary pension contributions, bonuses, and other benefits tailored to the companies standards.
For companies expanding into the Netherlands, aligning the remuneration package (including pension provisions) with both local market expectations and legal requirements is essential. This ensures attraction and retention of top talent, while reducing compliance risks and fostering employee satisfaction.
The Balanced Labour Market Act (WAB), effective as from the 1st of January 2020, aims to reduce the distinction between direct employees and outsourced employees (e.g. via EOR services). In the Act it is arranged that outsourced employees receive at least the same remuneration scheme as direct employees, such as vacation days, leave arrangements, increases and other employment conditions.
As of the 1st of January 2021 pursuant to the Balanced Labour Market Act (WAB), outsourced employees are also entitled to participation in a pension scheme. This should be an equal pension scheme as direct employees of the hirer. Ideally, outsourced employees should contribute in the pension scheme of the hirer to create full equality, but in practice this is often diffificult, since participation in most pension schemes are available to own employees of the hirer. Also some hirers don't have a pension scheme.
For this reason an EOR provider can alternatively also offer a socalled 'adequate pension scheme'. The adequate pension scheme:
must include both an old-age pension and a survivor’s pension and participation,
should take effect immediately upon commencement of the employment, without a waiting period,
needs to meet specific standards, such as a minimum employer contribution which is determined annually by the Ministry of Social Affairs and Employment (SZW). The minimum employer contribution is based on the average employer's part of the pension contribution in the Netherlands. And,
this minimum contribution is for the account of the employer and can not be recovered from the employee.
Pension schemes are a cornerstone of long-term financial security, offering employees confidence in their future regardless of geographic location. For international employees engaged through an EOR service, an adequate pension scheme demonstrates an employer’s commitment to their well-being and career longevity. Moreover, not many companies are aware that when using an EOR-service provider the participation in a pension scheme in the Netherlands, either through the hirers scheme or an EOR provided adequate pension scheme, is mandatory and that non-participation can result on compliance issues.
With the increasing mobility of talent and competition in global hiring, offering a compliant and robust pension scheme sets employers apart and can be a deciding factor for top-tier candidates considering opportunities abroad. It also ensures that employees do not face gaps in their retirement savings when working across borders.
EOR providers play a pivotal role in managing pension compliance and administration for international teams. They ensure all statutory pension requirements are met, handle documentation, and facilitate communication with employees regarding retirement benefits.
By leveraging their expertise in local regulations and cross-border employment, EOR providers like Exterus help mitigate compliance risks and streamline pension management. Our support enables companies to focus on core business activities while ensuring that employees’ retirement security is prioritised.