Expanding in Europe: France vs Netherlands vs Germany
A compliance-led comparison on employment contracts, probation norms, and payroll practices across three key European markets
The question often asked is Why Europe? And Why NOW?
For global companies seeking skilled talent and stable growth environments, Europe continues to be a reliable launchpad. While each country has its own economic appeal, what binds the region is its emphasis on employee protection, labour compliance, and structured HR governance.
France, the Netherlands, and Germany are often at the top of the list for international expansion. They offer strategic market access, highly educated workforces, and robust digital infrastructure. But entering these markets requires more than hiring good people. It means aligning your contracts, payroll systems, and HR policies with local law.
This article compares the compliance realities of France, the Netherlands, and Germany, covering key employer obligations that shape the employment lifecycle.
1. Employment Contracts: Format, Flexibility, and Function
France
France mandates written employment contracts. Permanent (CDI) and fixed-term (CDD) contracts are clearly defined in French labour law. A CDI is considered the default and offers strong protection against dismissal.
Contracts must be written in French, and any accompanying documents or handbooks that relate to core conditions should be translated too. Common clauses include job title, location, working hours, probation period, notice terms, and salary structure. It is also standard to reference the applicable collective bargaining agreement (CBA), which can override employer-drafted policies in many sectors.
Netherlands
Written contracts are standard in the Netherlands and must include role specifics, salary, start date, working hours, and holiday entitlement. Dutch employment law offers a clear distinction between fixed-term and open-ended contracts, with limitations on how many fixed-term extensions are allowed.
Language requirements are more flexible. Contracts may be in English provided both parties are fluent. However, some sectors (especially public-facing ones) may require Dutch-language documents.
Germany
In Germany, an employment relationship is legally binding even without a written contract, but written confirmation of key terms is still required by law and widely practised. Employers typically issue a written employment agreement within the first month.
Contracts must align with Germany’s extensive labour code and often cite collective agreements or internal works council arrangements. The contract outlines wages, probation, working time, notice period, and applicable benefits. It is also common to reference confidentiality and data protection clauses explicitly.
2. Probation Periods and Notice Rules
France
Probation periods in France are strictly regulated and must be included in writing. For standard employees, the maximum probation is two months, extendable once if agreed at the outset. For managerial roles, it can go up to four months.
Termination during probation requires fewer formalities but must still respect notice obligations, which range from 48 hours to one month, depending on the duration of service.
Netherlands
Probation is permitted in most employment contracts but cannot exceed one month for fixed-term contracts under two years and two months for permanent roles. Dismissal during probation does not require reason, but anti-discrimination and privacy laws still apply.
Notice during probation is immediate, but documentation of performance issues is advisable to protect against disputes.
Germany
Probationary periods are typically six months, during which either party can terminate the contract with two weeks’ notice. Beyond the probation period, Germany’s dismissal protection laws become significantly more stringent.
Terminations must be justified and often require employer consultation with a works council if one is present. This makes setting clear expectations and feedback mechanisms during probation especially important.
3.Tax and Social Security Obligations
France
France’s payroll system is among the most complex in Europe. Employers must account for high social contribution rates, which can exceed 40 percent of gross salary. This includes health insurance, unemployment contributions, pension, and family benefits.
Payslips are highly detailed and must follow a standardised format. Payroll reporting is managed through the DSN system, which integrates data submissions to various government agencies.
Netherlands
Dutch payroll contributions are relatively moderate. Employers are responsible for social security premiums, including unemployment insurance, health insurance contributions, and pension (if applicable).
Wage tax and national insurance contributions are withheld monthly. The Netherlands operates under a real-time reporting model to its tax authority. Payslips must include clear breakdowns of gross salary, deductions, and accrued leave.
Germany
Germany’s payroll system is tightly regulated and shared between employers and the state. Employers must contribute to health insurance, long-term care, unemployment insurance, and pensions. Total contributions range between 20 to 25 percent of gross salary.
Payroll calculations must be precise. Mistakes in wage tax, church tax, or social contributions can lead to audits. Employers must also register employees with health insurance providers and manage regular filings with tax and labour authorities.
4. Termination and Employee Protection
France
Dismissal in France requires procedural rigour. Employers must follow formal steps including a preliminary interview, a dismissal letter, and a statutory notice period. Severance is usually owed and can be calculated based on tenure and collective agreement terms.
Netherlands
The Netherlands has adopted the Balanced Labour Market Act, which simplified some exit procedures but still enforces strict guidelines. Dismissal must be approved by either the Employee Insurance Agency (UWV) or the court, depending on the reason.
Severance pay, known as the transition fee, is typically mandatory for employees who have worked more than two years.
Germany
Once an employee has completed six months, they are protected under the Dismissal Protection Act if the company has more than ten employees. Employers must provide written notice and a valid reason for termination.
Consultation with the works council, if one exists, is usually required. Severance is not automatic but may be negotiated or court-ordered during litigation.
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To help you navigate the complex HR landscape of Europe, here’s a quick-reference glossary of key terms and concepts from this article:
CDI / CDD (France)
Contrat à Durée Indéterminée (permanent) and Contrat à Durée Déterminée (fixed-term). France defaults to permanent contracts unless otherwise justified.
Collective Bargaining Agreement (CBA)
Binding agreements between employers and trade unions that set additional terms and conditions beyond national labour laws.
DSN (France)
Déclaration Sociale Nominative – the monthly unified digital payroll and HR reporting system in France.
Social Security Contributions
- France: Employer contributions can exceed 40%.
- Germany: Typically around 20–25%.
- Netherlands: Moderate, but depends on collective schemes.
Transition Fee (Netherlands)
Statutory severance owed to employees upon dismissal, usually after two years of continuous service.
Works Council (Germany)
Elected employee body that must be consulted on various HR decisions. Can influence hiring, termination, and workplace policy.
UWV (Netherlands)
The Employee Insurance Agency that must authorise dismissals for certain reasons such as redundancy or long-term illness. Employers must apply and receive approval before terminating on these grounds.
Unfair Dismissal Protection
Laws that protect employees from unjust termination. Strongest in Germany (after six months), structured in France, and procedural in the Netherlands.
How Beyond Borders HR Can Help You Expand In Europe
Whether you are hiring one person or scaling an entire team, Beyond Borders HR simplifies global HR so you can focus on growth.
- Employee Benefits Consulting: We benchmark packages across markets, work with local providers, and design cost-effective, compliant benefits tailored to each country. Read more about our Benefits Management services ->
- Global HR Compliance & Policies: From employment law advisory to works council negotiations, we handle documentation, contracts, and policy localisation. Read more about our HR Compliance & Policy services ->
- Global Mobility Services: Need to move leadership or staff? We manage visas, immigration, and cross-border assignments smoothly and legally. Read more about our Global Mobility services ->
Contact us today to learn more about how we can assist you with expanding your company in Europe.
