Total Cost of Employment in the Netherlands: ICS Payroll for 1 Employee

How ICS Payroll Helps Founders Calculate the True Hiring Cost

A founder making a first Dutch hire usually starts with one number: what the candidate wants to earn. The number that matters to the business is different and always larger. The gap between the two is what this article walks through, using the worked example from ICS Payroll's calculator so that every figure below can be traced to a source.

The example uses a gross monthly salary of €5,000, calculated with sick-leave insurance. The calculator returns a total monthly cost of €8,271, which is about €99,256 a year, or €59.22 per hour, at a factor of 1.654. Your candidate's salary will differ, so treat the example as a template for the structure, not as a quote for your own case.

Reading the 1.654 Factor Before You Build Anything

The factor is the simplest tool in the example. It says that each euro of gross salary carries roughly sixty-five cents of additional cost around it once employer costs and related items are factored in. A founder can use it as a first-pass filter. If a candidate asks for a higher salary, multiplying by the factor gives an immediate sense of the true cost, and a quick check against your runway follows.

ICS Payroll confirms that the calculator's results are indicative and can deviate by plus or minus 5%, depending on the facts of the case, with a written quote confirming the exact figures. The factor is a planning aid, and the quote is the commitment.

The Annual Employer-Cost Table for One Employee

The table below sets out the rows for a single-employee year, with the source of each row. Where the evidence gives a total, the total is shown; where it gives a percentage or flat fee, the basis is shown so you can calculate it for your own salary.

One point about the table: it lists both the calculator total and the EOR fee. Confirm with ICS Payroll that the calculator total includes the management fee, so you neither omit nor double count it.

Where the EOR Fee Sits in a One-Person Budget

With one employee, the management fee is very visible. There is no headcount over which to spread it, and it appears on the bill every month. ICS Payroll charges a flat €299 per employee per month for its remote-hire EOR service, with employer burden and benefits invoiced at cost. Flat means the fee does not grow if you give the employee a raise, which makes it easier to forecast than the percentage costs beside it.

It helps to keep the fee in context. ICS Payroll notes that industry-wide EOR service fees in the Netherlands range from €175 to over €650 per month, on top of mandatory employer premiums that typically add 20 to 30 percent to gross salary. For a first hire, the ICS Payroll fee is a real cost but the smaller part of the total. The larger sums are salary and the statutory layer around it, which is where a careless estimate goes wrong.

Leave, Pension and Other Items That Need a Yes or No

Three items cannot be settled by arithmetic and each needs a decision on your side. The first is leave. Business.gov.nl describes statutory annual leave as at least four times the weekly working hours, with proportional treatment for part-time work, and notes that a collective agreement may add more. The second is pension. Supplementary pension is compulsory where a collective agreement includes a compulsory scheme, where a sectoral fund is compulsory for the industry, or for certain professions with an occupational scheme, and employers must tell employees which scheme applies. The third is any extra payment your offer promises.

For each, write down the answer and the source. If a pension scheme turns out to apply, the cost belongs on its own row; leaving it blank until you know is safer than writing zero. This kind of record is what allows a budget to survive a question from an investor or a board member.

Choosing the Right Route for a Single Dutch Hire

The table assumes you are hiring through an EOR provider, using the remote-hire model that carries the flat fee. If your candidate is relocating from abroad, the route can change, and best way to relocate sets out the options and where timing differs. If you expect to hire more people soon, read when EOR specialist fits to see where the single-employee model stops working.

For the complete method behind every row above, including how to extend the sheet to a full first year, use year-one worksheet for founders. It is the natural next step once the single-hire example makes sense. ICS Payroll's workbook guides you through the full calculation and helps you adapt the example to your own hiring plan.

A founder's sanity check is worth adding here. Take the annual total in the example and ask whether the role would still make sense at that price. If the answer is yes with room to spare, the hire is comfortably affordable. If the answer is only just, the stated tolerance matters: a swing of plus or minus 5% on a total of this size is a meaningful amount of money, and it is better to know that before an offer goes out than after the contract is signed. Founders who do this test early tend to negotiate salary and benefits with much more confidence.

Turning the Example Into Your Own Number

To adapt the example, replace the €5,000 with your candidate's gross monthly salary, apply the range for employer burden at both ends, add benefits at their actual cost, decide on insurance and add the flat fee for twelve months. Then present the result as a range, not a point, using the tolerance the calculator gives. Last, request the written quote from ICS Payroll and compare it with your sheet line by line. Where the two disagree, the disagreement will be in a specific row, and resolving it row by row is the fastest way to a budget you trust.