Salary deductions and settlements

What is the difference between deductions from wages and a settlement?

Settlements from wages

These are amounts that your employee has to pay to you. For example, for housing or fines.

Deductions from wages

These are amounts you pay for your employee through their salary. For instance, the premium for health insurance or a supplementary pension scheme.

As an employer, when can you settle amounts from wages?

You may settle amounts for housing or fines from wages. However, there are rules for this. For example, you may not deduct amounts from wages if this means your employee receives less than the minimum wage. Above the minimum wage, however, this is allowed.

Settlements over several periods

Do you want to deduct a fine from your employee's salary? But will this bring your employee below the minimum wage? Then you can deduct a part of the fine from the salary. You can later deduct the rest of the fine from the salary. You may also deduct amounts from the (minimum) holiday allowance your employee receives each year. As long as your employee's salary does not fall below the minimum wage.

As an employer, when can you deduct from wages?

You must have permission from your employee to deduct amounts from wages. Such as for housing or health insurance. This permission must be in writing. It is not enough to just make agreements about this in the employment contract. Again, you are not allowed to simply deduct amounts from the salary if this means your employee receives less than the minimum wage.

When are you allowed to deduct from wages without your employee's permission?

There are amounts you are allowed to withhold without your employee's consent. These are amounts that you must deduct by law. Such as:

• pension contributions
• payroll taxes
• social security contributions

For example, social security contributions are paid to the Tax Administration to provide an income when people reach state pension age (AOW).

More information on deductions and settlements

On Rijksoverheid.nl you will find a fact sheet (in Dutch) with more information on deductions from wages and settlements against wages. For example, whether you can recover traffic fines from your employee. And how attachment of earnings for an employee with debts works.