New year, new rules! 2024 brings a wave of HR changes. In this article, we delve into what you can expect. From general increases and allowances to adjustments in Dutch labour law, we will cover the key points to ensure you are well-prepared for another successful business year in the Netherlands.
General Increases and Allowances for 2024 in the Netherlands
It’s important for your HR department to keep an eye on the general increases and adjusted allowances for 2024. We’ve gathered all the changes in the minimum wage, travel expense reimbursement, and remote work allowances.
Introduction of Uniform Hourly Wage & Minimum Wage Increase 2024
From January 1, 2024, a significant change will take place: the introduction of the uniform hourly wage, replacing the legally prescribed minimum daily, weekly, and monthly wages. The statutory gross minimum hourly wage for employees aged 21 and older will be increased by 3.75% to €13.27 per hour. On the Government website, you can find the hourly rates for minimum youth wages for employees under 21.
The introduction of the minimum hourly wage may also require adjustments in your salary administration, employment contracts, and collective bargaining agreements. The government has compiled all essential information for employers in the knowledge document Wettelijk Minimum Uurloon 2024.
Adjustment of Travel Expense Allowance 2024
Another significant adjustment concerns the travel expense allowance. In 2023, the tax-free travel expense allowance was already increased from 19 cents to 21 cents per kilometre. Another increase is planned for 2024, raising the tax-free rate to 23 cents per kilometre.
Remote Work Allowance 2024
From 2024, the tax-free remote work allowance will also increase. According to the law, the amount of the tax-free remote work allowance is annually indexed using the table correction factor and then rounded to the nearest multiple of 5 cents. The table correction factor for 2024 is expected to be published at the end of December in the Staatscourant and is estimated to be 9.9%. This means that the tax-free remote work allowance is expected to increase from €2.15 to €2.35 per remote workday in 2024.
Dutch Labor Law Changes for 2024
In addition to general increases and adjustments to allowances, several changes in Dutch labor law will come into effect in 2024. We have summarized the key changes for you.
Expansion of Exemption for Public Transport Card
The government plans to make it easier for employers to reimburse or provide employees with a public transport card without withholding payroll taxes. Until now, employers had to keep a lot of administrative records and withhold and remit payroll taxes if the employee did not use the card sufficiently for business purposes.
From January 1, 2024, it no longer matters how employers provide a public transport card to an employee. The tax consequences are the same for all methods. If the employee also uses the public transport card for business purposes, the employer is not required to withhold and remit payroll taxes. The employer also no longer has to verify that the reimbursement does not exceed the actual costs of business use. The government provides a table on the website showing the tax differences between providing, allocating, and reimbursing a public transport card.
Back to Square One: WKR (Work Costs Scheme) in 2024
In 2023, we saw a temporary expansion of the free space in the Work Costs Scheme (WKR) to 3% over the first €400,000 of the fiscal wage bill, which was a welcome change for employers. But as is customary with temporary measures, from January 1, 2024, the standard rate of the WKR returns to 1.92%. For the part of the fiscal wage bill above the first €400,000, the free space remains unchanged at 1.18%.
In other words, the temporary benefits of 2023 give way to the usual scheme in 2024. Employers need to be aware of this change and adjust their budgets and expenditure plans accordingly to avoid unpleasant fiscal surprises.
Mandatory CO2 Reporting
From 2024, organizations with 100 employees or more are required to submit a CO2 report. This report must include the CO2 emissions caused by business travel and commuting of their employees. Employers must collect data for the year 2024 and submit it to the Rijksdienst voor Ondernemend Nederland (RVO) by June 30, 2025, where the CO2 emissions will be calculated.
There is an exception for employers who do not offer mobility arrangements. If they do not provide reimbursements or make transportation options available, they are exempt from the reporting obligation as they have no administration to submit. This obligation applies only to organizations that actually influence CO2 emissions through their mobility policy. It is crucial to understand and comply with these rules to meet the new regulations in 2024.
Capping of 30% Ruling for Expats in 2024
In 2024, the ‘capping measure’ of the 30% ruling comes into effect for foreign workers. Under strict conditions, foreign workers are allowed to receive 30% of their income tax-free for a maximum of five years. But from 2024, there is an important change: this tax benefit will be limited to the maximum limit of the Top Income Standardisation Act, namely €233,000.
This adjustment has consequences for foreign workers in the Netherlands using this scheme. It is crucial to be aware of this change in tax legislation, as it not only affects their financial situation but also how companies attract and retain highly qualified foreign workers. It is highly recommended to understand the exact conditions and implications of this change.
Personnel Retention Crisis Scheme
The labour market package aims for more flexibility for employers, including the Personnel Retention Crisis Scheme. This scheme allows employers to internally redeploy their employees during a business crisis or emergency. Employers can also request employees to temporarily work fewer hours.
These measures enable employers to adjust their workforce to the challenges they face while trying to retain valuable employees. It is an essential tool for companies that need to respond quickly during crisis situations.
Termination of Income Benefit, Improvement for Disabled Workers
As part of the adjustments to labour market policy, various income benefits are changing. The youth-LIV disappears as of January 1, 2024, and from 2025, the government will completely abolish the Low-Income Benefit (LIV). The wage cost advantage for older workers will be terminated by 2026. However, there is good news for disabled workers in the form of an improved wage cost advantage for redeployment.
These changes impact different groups of workers and employers. It is essential to be aware of the influence these changes will have on the labour market in the coming years. The goal of these adjustments is to find a balance between promoting employment and supporting specific groups within the labour market.
You are now ready to implement all essential changes within your HR department for 2024. Don’t forget to fill up your employees’ holiday balances and inform them of the number of holidays they can carry over to the new year. We wish you success in 2024!