Employment law for growing companies

An ESOP (Employee Stock Option Plan) for a Dutch startup involves a share option plan giving employees the right to purchase shares at a later point. You determine the option pool (typically 10–15% of shares), the vesting schedule (standard 4 years with 1-year cliff), the exercise price, and document this in an option plan and individual option agreements. Legalloyd guides you in setting up an ESOP that complies with Dutch tax and legal requirements.

An ESOP gives employees the right to actually purchase shares. A SAR (Stock Appreciation Right) gives the right to a cash payment equal to the increase in share value, without employees becoming actual shareholders. SARs are administratively simpler for employees but do not confer shareholder status. ESOPs do confer shareholder status but require a general meeting upon exercise. The right choice depends on your shareholder structure and tax situation.

In the Netherlands, you must offer an employee a permanent contract after three consecutive temporary contracts or after 3 years of continuous employment (the chain rule or ketenregeling). There are exceptions, such as for agency workers and certain sectors. As a startup, you can use probationary periods and specific contract forms. Ronny Zeilemaker advises founders daily on building legally solid teams.

False self-employment (schijnzelfstandigheid) is a growing compliance risk in the Netherlands. The Tax Authority (Belastingdienst) actively checks whether freelancers you engage should actually be classified as employees. The risks are significant: back payments of payroll tax, social security contributions, and fines. Legalloyd advises on how to structure your contracts and working methods to manage this risk.