In the Netherlands the statutory minimum wage applies to all employees and sets a minimum which no employee’s rate of pay may fall below. The collective labour agreement sets minimum rates by job function and years of experience in addition to the statutory minimum wage. The collective labour agreement can also demand certain raises.
The statutory minimum wage is reviewed twice a year, on 1 January and on 1 July. On those dates the wage scales are also moderated. The collective labour agreement makes a distinction in branches for the wage scales. There are different wage scales for:
- Fashion, Paint and Home Decoration Industries
- Living Industries
- Shoes & Sport Industries
Based on the Collective labour agreement the salary paid to an employee is coupled to the job family to which the employee’s job has been assigned. The employee receives a salary that is minimally equal to the sum assigned to his age or his experience years, according to the salary scales (see also Annex 1b of the CAO). The sums listed in the scales are gross and are listed both on the basis of one hour of work and per month with an average working time of 38 hours a week. The average working time per week for the living industries is 37 hours a week.
To calculate the hourly wage, the monthly salary is divided by 164.67. This does not apply for the living industries where the monthly wage is divided by 160.33.
All employees are also entitled to a statutory minimum holiday allowance over their usual pay. The statutory allowance amounts to 8% of annual pay. If the employee earns more than three times the national minimum wage, a lower amount may be payable provided that this is regulated by individual written agreement. Entitlement to the holiday allowance continues to be accrued during annual leave, sickness absence, long-term disability, maternity leave and short term care leave.
Based on the collective labour agreement the holiday allowance year runs from 1 June through 31 May. The employer may agree a different holiday allowance year in consultation with the Works Council.
An employee that has been in employment throughout the full holiday allowance year will receive an allowance of 8% over the salary earned in the holiday allowance year, paid out no later than in the month of June.
The wage table
The wage table has age and years of experience on the basis of which a staff member is classified in a scale. These are on the vertical axis of the wage table. Years of experience are the years that the employee has been working within the company when 21 years or older. When the employee makes a step, he therefore goes down in the wage table.
The function levels are shown on the horizontal axis (A to I). Employees are classified at the correct job level by means of the job evaluation system.
Basic and additional salary structure
The wage table has a basic and an additional wage structure. This distinction is important for the application of collective labour agreement wage increases and step increases.
The CLA wage increases are the increases in the current CLA as from 1 January and 1 July. The end of the scale is important for these increases. If an employee’s wage is above the new maximum of his scale, he is not entitled to the wage increase. This concerns the last amount in the extra wage structure.
Experience year increases
Experience year increases are applied when an employee reaches a year of experience. A distinction must be made here between the assessment system that is used. This is because it is possible to choose between a system of assessment-dependent and non-assessment-dependent increases. In this context, non-assessment-dependent remuneration is used as the standard unless the employer opts broadly for the system of assessment-dependent remuneration.
increases not dependent on assessment
Within the basic salary structure, employees are entitled to a step increase after each subsequent year of experience, regardless of the level of performance, up to the maximum of the basic steps. Employees are not entitled to a step increase in the extra wage structure.
Within the system of assessment-dependent remuneration, an employee who performs sufficiently is entitled to a wage increase within the basic wage structure. An employee who performs very well or excellently is entitled to 1 or 2 steps of 2% within the extra salary structure. In some cases, the employee is not entitled to an increase in the event of insufficient performance. For a further explanation of the system of assessment-based remuneration, we refer to article 6, appendix 1a and appendix 1d of the collective labour agreement. *