How much does an employer of record cost and what drives the price?

The employer of record cost for a hire in the Netherlands in 2026 has two layers. First comes the provider’s monthly fee per employee. On top sit Dutch employment costs: employer contributions, holiday allowance, sick pay, any sector pension and the exit. So compare both layers, not just the headline fee.

For US companies expanding into Europe, several of these costs have no American equivalent. This guide explains each one and what to ask. General information as at 21 October 2026, not legal or tax advice.

What does an employer of record fee cover?

An employer of record fee pays the provider to act as your legal employer in the Netherlands. In return, it signs the Dutch employment contract, runs payroll, files payroll taxes and handles HR administration. However, scope varies by provider, so EOR pricing is only comparable once you know what sits inside the fee.

Also ask whether the fee is fixed or a share of salary. The two grow differently as pay rises. Our complete employer of record guide explains the model itself.

Which costs come on top of the EOR fee?

On top of the employer of record fee, you fund the full cost of employing someone under Dutch law. That means gross salary, employer insurance premiums, an income-related healthcare levy, holiday allowance and pay during illness. In addition, a collective agreement or sector pension fund can add its own terms.

• Healthcare levy. Unlike in the US, Dutch employers do not have to buy staff health insurance. Instead, employees buy their own basic policy. For 2026, the Dutch Tax Administration sets the employer levy at 6.10% of wages up to €79,409.
• Holiday allowance. Dutch government guidance on Business.gov.nl (October 2026) puts holiday allowance at a minimum of 8% of gross annual salary. Paying it is mandatory.
• Sick pay. Business.gov.nl (October 2026) says employers must pay at least 70% of wages for up to two years of illness. In the first year, pay cannot fall below the minimum wage.
• Pension. A supplementary pension is only mandatory where a compulsory sector fund or collective labor agreement (CAO) covers the work.

Why do employer of record cost quotes differ for the same hire?

Employer of record cost quotes differ because providers bundle different things into the price. One quote may include statutory costs, sick-pay insurance and immigration support. Another may show a lower fee and pass those costs through later. Salary assumptions, the CAO and any pension fund also change the total.

Sick pay is the clearest example. The employer carries up to two years of pay, so ask whether the quote insures or recharges that risk. Immigration varies too. A highly skilled migrant permit needs an employer the IND recognizes as a sponsor. Octagon is an IND recognised sponsor. Use this checklist to compare employer of record pricing line by line.

Cost component	What drives it	Question to ask the provider
Employer of record fee	Scope of services; fixed or salary-based	Which services sit inside the fee?
Employer premiums and healthcare levy	Salary and annual statutory rates	Are statutory costs passed through at cost?
Holiday allowance	8% legal minimum, plus any CAO top-up	Does the monthly quote include the allowance?
Sick pay	Up to two years of continued pay	Is the risk insured or recharged to us?
Pension and CAO	The sector the work falls under	Does a sector fund or CAO apply to this role?
Exit	Notice, transfer terms and dismissal rules	What does it cost to transfer or end each contract?

What does it cost to leave an EOR?

The cost of leaving depends on the route. Moving staff to your own Dutch entity mainly involves notice and any transfer terms in your EOR contract. By contrast, ending employment brings Dutch dismissal rules into play. These usually mean a notice period and a statutory transition payment (transitievergoeding).

There is no at-will employment in the Netherlands. Unless the employee agrees in writing, dismissal needs approval from the UWV or a court. Our guide to dismissal rules for US employers in Europe explains each route. Meanwhile, a transfer has its own catch. Dutch law can treat your new entity as a successor employer. Earlier service may then count, and a new probation period is generally not allowed.

When is your own entity cheaper than an employer of record?

Your own entity usually becomes the cheaper route once headcount and time horizon can absorb its fixed costs. A Dutch BV brings incorporation, accounting, payroll and HR administration of its own, whatever the headcount. An employer of record avoids those fixed costs. However, its fee recurs for every employee, every month.

Cost is not the only test, though. An employer of record does not settle permanent establishment questions on its own, so involve a tax adviser early. For many US companies entering Europe, the practical answer is a sequence. First, employ through a provider. Then, transfer staff once your entity can run payroll.

Plan the full employer of record cost before you hire

A reliable employer of record cost estimate starts with the total cost of employment, not the fee alone. Therefore, ask every provider for the same breakdown. Then check sick pay, pension and exit terms before you sign. After all, moving people across borders only works when compliance comes first.

Octagon Professionals employs your people in the Netherlands while your own entity gets ready, then moves them across. You set salaries, benefits and working arrangements, and we carry the employment administration and its compliance risk. To request a quote for your hire, email sales@octagon.nl.

Employer of record cost: frequently asked questions

How much does an employer of record cost per employee?

It depends on the provider’s monthly fee and the employee’s total cost of employment. Dutch employment costs cover salary, employer premiums, a healthcare levy, at least 8% holiday allowance and sick-pay exposure. So ask each provider for an all-in monthly figure per employee, based on the same salary.

Is employer of record cheaper than a subsidiary?

For a small team or an uncertain timeline, an employer of record is often cheaper. There is no entity to set up, run and later close. For a larger, long-term team, however, a subsidiary’s fixed costs can work out lower. Headcount, duration and tax position decide it, so model both routes.

What is included in an EOR fee?

An EOR fee usually pays the provider to act as legal employer. That covers the employment contract, payroll, payroll tax filings and HR administration. Salary, employer premiums and holiday allowance are normally charged on top. Immigration, onboarding and exit work vary by provider, so confirm the scope in writing.