Salary setup for Dutch developers

Let’s now ignore the BigTech companies who are paying lots of money, as well as the employers trying to compete with them, and instead think a bit about the average local Dutch market. What might a reasonable salary expectation for a full-time job at an average local Dutch employer?

Permanent contract vs 1-year contract

Dutch employment law can get pretty complex, making the non-financial terms important when evaluating salary. One key factor is whether you’re looking at a permanent contract or not.

For more senior positions, permanent contracts are common. If you do your job well and the company is doing ok financially, your employer cannot easily fire you from a permanent contract, which makes these popular with risk-averse employees and unpopular with commitment-averse employers.

For more junior positions, 1-year contracts are common. 1-year contracts often get automatically extended, and then can convert into permanent contracts automatically after 3 years.

Getting a mortgage is harder without a permanent contract since banks are also risk-averse.

The base salaries for both contract types tend to be comparable, but permanent contracts usually have better non-base salary benefits leading to a better total benefits package.

Common benefits package components

A Dutch contract usually has a yearly salary listed for a full-time job. Usually full-time for developer jobs means 40 hours a week. If you work less hours you will be paid proportionally less, while if you structurally work more you typically do not get paid for that at all.

The base yearly salary includes 8% yearly holiday allowance, which is usually paid once a year in May. In May you receive 15.67% of your yearly salary, while in all other months you receive 7.67%.

Discretionary bonuses are now reasonably common in Dutch IT companies, paid out yearly, with 5%-20% of your yearly salary reasonably common, and 10% probably the most common percentage. Usually discretionary means that your manager informs you once a year if you get your bonus and how much you will get, i.e. your employer can decide for any reason not to pay you the bonus.

It is uncommon for Dutch employers to actually promise bonuses, or otherwise tie bonus payout to profits or performance targets in a transparent way. When that arrangement is written into your contract it is a performance bonus instead of the common discretionary bonus, which you may encounter for more commercial roles (i.e. a role as a presales engineer).

Stock options, shares, employee ownership plans, and profit sharing agreements are relatively uncommon for Dutch IT companies. Even when they are used, the “standard” approaches that exist in the US tech industry for stock options are not standard here, which means most US-centric advice on the internet about such things does not apply. The actual benefit of such programs relative to base salary can range from pretty neglible (more common) to pretty dominant (rare).

Cars in The Netherlands are expensive to own and drive, due to how taxes for them work as well as due to high taxes on gas. Lease cars are common, where your employer arranges a car for you (often of the type and with the options you choose) with a leasing company. Your employer pays for your car every month, including for any gas used. If you also use this car for non-work travel then you have to pay extra income tax based on the catalog value of the car. If you like driving a modern car this usually works out cheaper than other approaches. At some employers, lease cars are getting replaced with mobility budgets or public transport passes.

A full-time contract includes a mandatory minimum of 20 vacation days. These are a legal right; you might see them as a government-mandated benefit. Many employers include extra vacation days above 20, sometimes with various differing rules for exchanging days for cash, buying extra days, and so on. Besides vacation you also have rights to parental leave, sick days, and so on.

Paid overtime and standby shift compensation are rather uncommon for developers. If your contract does include paid overtime it is likely based on extra hours worked per week or month, which means tracking all hours. Night or weekend hours may be paid at 150% or 200%. Working a lot of overtime can mean quite significant additional income.

Most permanent contracts will include a pension, for which there are many different and confusing different setups that are hard to compare and value. It’s common these days that your employer pays some monthly amount into a fund on your behalf that is based on a combination of your base salary plus your age, with the amount being only a few percent for people under 30 and quite a lot for those close to retirement. The fine print around Dutch pensions is often more complex than for the rest of the employment contract combined.

Many employers also mention providing the things you need to do your job (like laptops, phones, and training budget) as benefits, or they point out lunch or snack arrangement or fun company events. While of course it’s nice if an employer provides such perks, when contrasting offers financially most of these are usually not significant. It’s also very rare for these perks to be promised contractually.

One aspect that is not considered a perk is what working from home arrangements have been made. Besides your own preferences around this, not having a daily commute may save you money & time, while not having your home office setup paid for may cost you money or health.

Salary ranges

Dutch developer salaries are perhaps €43k average, compared to €38k median salary across the country for all jobs. I’ve never heard of a developer making half that average, while double the average and more does happen. Most developers make close to and perhaps a bit less than the average, while a select few developers make a lot more. What’s going on?

  • Senior developers switch into different higher-paying jobs that have different titles, like architect, manager, or consultant.
  • Senior developers go freelance, so they write invoices instead of receive a salary.
  • Senior developers don’t do things to increase their salary, instead doing things they find more fun or interesting.
  • We have no idea what individual developers are worth, so there are few good arguments for employers to pay much higher than average.

Even for those salaried developers that do continue to hone their craft and gain the experience that clearly makes them more valuable, I believe the salary curve flattens out. A bit of this is simply due to how The Netherlands thinks about what’s a fair distribution of income. A bit of this is because developers don’t like salary negotiation so their employer ends up paying them what they can, instead of what they are worth.

Evaluating benefits packages

With all that basic understanding in place, you might now enjoy playing with this google sheet of example developer salaries that I invented to make the above graph:

The sheet might help as a baseline for evaluating different benefits packages and contrasting some different salary ladders against a simple baseline. The absolute values are probably less useful, though I did attempt to have them be reasonable based on my own experience and some general awareness of 2021 numbers at a couple different companies.

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