Employee insurance contributions which are paid by the employer

Employee insurance protects salaried employees against loss of income. For example, if an employee retires, becomes unemployed, ill or disabled, he can fall back on these social insurances. Employee insurance is compulsory insurance. The employer pays the entire premium and may not deduct it from wages.

Employee insurance schemes

There are four employee insurance schemes:

• the Unemployment Insurance Act (WW),
• the Work and Income according to Labour Capacity Act (WIA),
• the Disability Insurance Act (WAO) and
• the Sickness Benefits Act (ZW).

Unemployment Act (WW)

Employees who become fully or partially unemployed can apply for unemployment benefits. This temporary benefit is designed to make up for the loss of income between jobs.

Work and Income according to Labour Capacity Act (WIA)

If an employee has been ill for more than two years, he may be entitled to benefits under the WIA. The condition is that he is at least 35% incapacitated for work.

The WIA has two variants:

• the WGA, for partially incapacitated workers
• and the IVA, for the fully incapacitated.

When an employee has been ill or unfit for work for two years, the UWV assesses in which group he falls.

Disability Insurance Act (WAO)

The WAO is the predecessor of the WIA. Only people who were already on the WAO before 1 January 2006 are entitled to WAO benefits.

Sickness Benefits Act (ZW)

An employer must continue to pay the wages of a sick employee until he or she recovers. In some special cases, this is not required. The employee then enters the Sickness Benefits Act.

What employee insurance contributions does the employer have to pay?

An employer pays the following premiums for these insurances:

• WW contribution / Awf contribution (General Unemployment Fund)
• Ufo premium (Government implementation fund)
• Differentiated premium Aof (Disability Fund)
• Differentiated premium Whk (Work resumption fund)

The Ministry of Social Affairs and Employment sets the level of the contribution rate twice a year (in January and July).

Since 2020, the employer pays a lower WW premium for employees with a permanent contract than for employees with a temporary or flex contract. A premium discount or premium exemption may be claimed for certain employees.

Higher WW contribution for overtime work

If an employee frequently works overtime, the employer may face a higher WW premium.

For example, an employee has a permanent contract for less than 35 hours. Normally, the employer then pays the low ww premium. The employer pays the employee for the overtime hours. At the end of the calendar year, it turns out that the hours worked exceed 30 per cent of the hours agreed in the employment contract. In this case, the employer still has to pay the high WW premium. As an employer, therefore, pay close attention if an employee works more hours for an extended period of time that are paid for in the payroll records.

Employer’s childcare contribution

Part of the differentiated Aof premium is the employer’s childcare contribution. This contribution is income-independent and is a fixed percentage. Here, it does not matter whether employees use childcare. Either way, the employer pays the compulsory employer’s childcare contribution on each employee’s wage bill. An employer therefore contributes to childcare for all employees in the Netherlands, even if they work somewhere else.

Employer healthcare insurance levy or healthcare insurance contribution

The Zvw contribution is intended as an extra contribution for health insurance, in addition to the premium the employee pays for health insurance on a personal basis. The contribution is income-related. This means that the more the employee earns, the higher the health insurance contribution is. However, there is a cap on the salary taken into account in the calculation. The maximum contribution income in 2023 is €66,956.

WGA and ZW: bear the risk yourself

Employers can choose to become self-insurer for the WGA or ZW. This means that the employer pays the benefits and reintegration costs of sick or incapacitated employees himself, or insures himself against this.

As a self-insurer for the WGA, the employer then only pays the basic premium. The risk-dependent, differentiated WGA premium will be abolished. As a self-insurer for the ZW, the employer will pay a lower differentiated Whk (Work resumption fund) premium.

Being self-insured also entails (administrative) costs. The employer should therefore carefully weigh up the costs and benefits before choosing to become self-insurer. The employer can transfer this risk to an insurer. This is possible with a Sickness Benefits Act excess insurance or a WGA excess insurance.

Premium percentages

The premium percentages for 2023 are:

The Whk premium consists of two components: the WGA premium and the ZW premium. These premiums are sector based and differ per employer.

The employee lives outside the Netherlands or has an A1 certificate

If the employee lives outside the Netherlands and works partly at home from his country of residence, this employee may not be insured for social insurance in the Netherlands but in the country of residence. This also applies if it concerns an employee who lives and works (temporarily) in the Netherlands and has an A1 certificate or Certificate of Coverage showing that he is insured in the country of origin. In that case, the employer does not have to pay employee insurance contributions either.

Difference national insurance

In addition to employee insurance contributions, the employer also pays national insurance contributions (AOW, Anw, Wlz). The employer may deduct these amounts from the wages paid to employees in the same way it does for wage tax.

Thus, the employee actually pays the premium, the employer only takes care of the monthly remittance.

Paying contributions to the tax authorities

Both employee insurance and national insurance premiums must be remitted by the employer to the tax authorities each month. The compulsory premiums for all these insurances are an important part of the total cost of staff.