Employees not only have a right to earn at least the gross minimum wages, they also have a right to at least the full net minimum wages. In any case, this means you must always pay them at least the statutory minimum in wages. But beware of the fact that you must also comply with various requirements regarding the method of payment.
The right to (at least) the net minimum wages applies to all employees. The ‘Wet minimumloon en minimumvakantiebijslag’ (Minimum Wages and Holiday Allowance Act) – abbreviated as WML – only mentions the gross statutory minimum wages: there are no statutory net minimum wages. You must therefore use the net equivalent of the gross minimum wages stated in the WML.
At your disposal
The government wants employees to always have at least the minimum wages at their disposal. This means that employers may not withhold part of or offset any amount against the net minimum wages. However, there are exceptions to this rule: payroll tax and insurance contribution may be subtracted, as well as pension premiums, contributions for supplementary insurance(s), attachment of earnings, a WGA premium and any advance payments. In addition, there are three specially designated exceptions. The first is housing costs. This includes rent as well as any utility costs based on a separate meter and service costs. This first exception is subject to the condition that the housing in question must meet several established quality requirements.
The second exception pertains to costs of health insurance, i.e. the premium of an employee’s health insurance as well as the premium of an insurance to cover deductibles. The third exception applies to employees with a disability. For them, in addition to the aforementioned two exceptions, an exception is also made for utility costs and (municipal) taxes.
The subtraction of housing costs is permitted up to a maximum of 25% and for health insurance costs a maximum applies equal to the average estimated nominal premium, i.e. € 1,473 per year (amount in 2021) and € 122.75 per month. If the housing or health insurance costs are in excess of these maxima, the employee must pay for the excess. Moreover, the maxima do not apply to employees with a disability.
You must pay the net minimum wages via giro – an EU payment method – into an account which is (also) in the employee’s name. This requirement does not apply to holiday allowance or wages in excess of the minimum. Make sure any advance payment of net minimum wages is also done via giro. The statutory minimum wage must be mention on the employee’s pay slip, in addition to a specification of the components of the wage provided. This means any amounts withheld or offset must be specified. It can then more easily be checked what makes up the employee’s wages – e.g. a reimbursement of expenses does not count as wages – and whether or not the employee is paid in accordance with the WML.
Minimum wages must be paid in time. This means an employee must receive his/her wages no later than by the end of the period over which the wages are calculated. This period may not be more than one month or less than one week. Monthly wages are paid by the end of each respective month. And if your organization use piece-rate pay, wages must be paid by the end of a period used in comparable job positions (in other organizations).
The period after which payment of wages is due can be extended through a written agreement – of course, after discussing so with the respective employee(s). However, such an extension is limited: a period of one week or shorter may not be extended more than one month and a period of one month cannot be extend more than three months.
Definition of wages in the WML
Overtime is also included in the definition of minimum wages as used in the ‘Wet minimumloon en minimumvakantiebijslag’ (Minimum Wages and Holiday Allowance Act), abbreviated as WML. This means that you may not withhold part of or offset any amount against the minimum wages paid for overtime. If employees earn more than the minimum wages, an employer may withhold from or offset against the excess. The same applies to holiday allowance.