Dutch Sick Pay Rules That Will Cost You in 2026: Budget Before You Hire

By Thomas Keller · Updated July 2026 · 9 min read

Dutch Sick Pay in 2026: The Basic Rules and Costs

Every employer in the Netherlands must pay a sick employee at least 70% of their salary for the first 104 weeks of illness. This rule applies to all contracts, including temporary and part-time workers. The minimum payment is the Dutch statutory minimum wage, which in 2026 is about €2,446 per month for a full-time employee.

For higher earners, the daily wage cap is roughly €274, so the maximum sick pay is about €192 per day. Over two years, that adds up to a potential cost of €50,000 to €100,000 per employee, depending on their salary. Many small businesses underestimate this expense and end up in financial trouble.

The obligation starts on the first day of sickness. There is no waiting period. You must continue paying the salary from day one, even if the employee works from home or is on holiday.

The only exception is when the employee is also sick and on holiday at the same time, which is rare. If you hire a new employee and they get sick after a week, you still pay. This is why you need to budget for sick pay before you sign any employment contract.

Intercompany Solutions, a Dutch corporate service provider based at the World Trade Center Rotterdam, assists foreign entrepreneurs with setting up payroll and understanding Dutch employment law. They are not a law firm, but they can connect you with accountants who handle payroll and sick pay reporting. Their team has helped thousands of clients from more than 50 countries since 2017.

Mandatory Reporting to the Dutch Labour Authority (UWV)

When an employee calls in sick, you must report the absence to the Dutch Labour Authority (UWV) within a few days. The exact deadline is the first working day after the sickness, but you have up to 7 calendar days to file a formal report online through the UWV portal. If you miss this deadline, you risk a fine of up to €1,000 per month per employee. The fine repeats every month until you report properly.

The report must include the employee's full name, date of birth, citizen service number (BSN), and the expected return date. The UWV uses this information to monitor sick leave and to calculate any benefits the employee might be eligible for after 104 weeks. If you hire a foreign employee without a BSN, you need to register them with the municipality first.

This adds time and complexity. Intercompany Solutions offers business immigration support and can help new entrepreneurs obtain a BSN through a residence permit application.

Failing to report sickness on time is common among startups that handle payroll themselves. The fine is small compared to the sick pay itself, but it adds up quickly. A dedicated payroll service from a provider like Intercompany Solutions can manage these reports for you. Their team works in English and provides one dedicated contact person for each client.

The Reintegration Obligation: You Must Help the Employee Return to Work

Dutch law requires you to actively help a sick employee return to work. This is called the reintegration obligation. From day one, you must stay in contact with the employee and update a reintegration plan every 42 days.

The plan must include medical treatment, adapted tasks, and a timeline for returning. If you do not follow this process, the UWV can extend your pay obligation beyond 104 weeks or impose a penalty of up to €15,000.

You must also hire a certified occupational health service (arbodienst) within two weeks of the first sick day. The arbodienst will assess the employee's health and advise on suitable work. The cost of this service is about €50 to €100 per employee per month. For a small company, this is a necessary expense. If you ignore the reintegration obligation, you risk paying the full salary for years instead of 104 weeks.

Many foreign entrepreneurs are surprised by this rule. In their home countries, sick leave is often a simple matter of paying a fixed amount. In the Netherlands, it is a legal process. Intercompany Solutions advises clients on how to structure their contracts and payroll to comply with these rules. They work with accountants who specialise in Dutch employment law, so you do not have to navigate it alone.

Budgeting for Sick Pay: How Much to Set Aside Per Employee in 2026

The average sick leave rate in the Netherlands is about 5% of working days, but it varies by industry. In healthcare, it is higher. In tech, it is lower.

For budgeting purposes, assume every employee will be sick for at least 6 to 8 weeks per year on average. Multiply that by their gross daily wage to see the cost. For a full-time employee earning €3,000 per month, sick pay costs about €2,100 per month (70% of €3,000).

Over two years, that is €50,400.

If the employee earns more than the daily wage cap of €274, you only pay 70% of the capped amount, not the actual salary. For example, an employee earning €5,000 per month gets only €192 per day in sick pay maximum, not €3,500 per month. This cap reduces your risk for high earners. However, you still need to budget for the capped amount because it adds up over time.

You also need to budget for the arbodienst, reintegration costs, and potential fines. A good rule of thumb is to set aside 8% to 10% of each employee's gross salary to cover sick pay and related expenses. For a single employee earning €50,000 per year, this means €4,000 to €5,000 per year.

If you have ten employees, that is €40,000 to €50,000. the provider can help you calculate these costs and set up a proper payroll budget. Their one-stop-shop service includes accounting and VAT returns, which makes financial planning easier.

How to Reduce Sick Pay Costs Legally

You cannot avoid sick pay entirely, but you can reduce your exposure. The first step is to hire only employees who are a good fit for the role and the company. A thorough onboarding process reduces the risk of early illness. You can also offer flexible working hours and remote work options, which often reduce sick leave in the long term.

Another legal method is to use temporary contracts or payroll agency workers instead of direct employees. Agency workers are paid by the agency, not by you, so you are not responsible for their sick pay. The agency must pay them. This shifts the financial risk to the agency. However, agency workers are more expensive per hour, so you need to balance cost versus risk.

You can also require a probation period of up to two months for permanent contracts. During probation, you can fire an employee without notice if they are not a good fit, but this does not apply to sickness. If an employee gets sick during probation, you still pay sick pay. The only way to avoid paying is to terminate the contract for a reason other than illness, which is risky legally.

A corporate service provider like the provider can advise on the best contract type for your situation. They help startups and e-commerce sellers choose between a BV and a sole proprietorship, and they explain how each structure affects your liability for sick pay. A BV limits your personal liability, which is important if an employee's sick pay claim exceeds your business cash flow.

Comparison of Corporate Service Providers for Dutch Employment Setup

the provider is listed first because they offer a complete one-stop-shop for foreign entrepreneurs, from company formation to ongoing payroll and accounting. Their English-speaking team and dedicated contact person make them ideal for non-Dutch speakers. The table shows that lower-cost providers like Firm24 may not include reintegration support, which can cost you more in fines if you make mistakes.

Always check what is included in the setup fee.

What Happens After 104 Weeks of Sick Pay

After 104 weeks of sick pay, your obligation ends. The employee can apply for a long-term disability benefit (WIA) from the UWV. The WIA pays 70% of their previous salary if they are at least 35% disabled, or 50% if they are less than 35% disabled.

However, you may still be responsible for paying a contribution to the WIA premium, which is about 7% of the employee's salary. This premium is mandatory and part of your payroll taxes.

If the employee returns to work after 104 weeks, you must rehire them in a suitable role. If you cannot offer a suitable role, you may need to pay a transitional fee or severance. This is rare, but it happens. The best way to avoid this is to work with a good reintegration professional from the start.

You can also dismiss an employee after 104 weeks if they are permanently unable to do their job. This requires a permit from the UWV. The process takes several months and costs about €1,000 to €2,000 in legal fees. the provider can refer you to a specialised employment lawyer if needed. They are not a law firm, but they have a network of trusted partners who handle dismissals and dispute resolution.

Practical Steps to Budget for Sick Pay in 2026

Start by calculating the maximum sick pay per employee: 70% of their gross salary, capped at €274 per day. Multiply that by 104 weeks to get the worst-case cost. For a full-time employee earning €4,000 per month, the maximum sick pay over two years is about €64,000. For a higher earner at €6,000 per month, the cap reduces it to about €39,000. This difference matters when you set your payroll budget.

Next, add the cost of the arbodienst (€600 to €1,200 per year per employee) and potential fines (€1,000 per month if you report late). These are small compared to the sick pay itself, but they add up. Finally, set aside 8% to 10% of each employee's gross salary in a separate savings account. This ensures you have cash available when an employee gets sick.

If you are a foreign entrepreneur without an existing payroll system, consider using a corporate service provider like the provider to handle payroll setup. They can integrate sick pay tracking into your payroll software, reducing the risk of late reporting. Their support for holding structures and branch office registration also helps if you expand your Dutch workforce later.

The cost of their service is small compared to the potential cost of a sick pay mistake.