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IHRM

Compensation & Benefits


A comparison between Romania and the Netherlands

Martin Doornhein, Linda Evertsen


en Marita Bos
Klas 3HRM dhr. Kor van der Helm
IHRM
Introduction

We are three students from the Christian University at Ede and are in our third year of the study
Human Resource Management. The subject we chose for this paper is Compensation and benefits.

Chapter one will explain the terms compensation and benefits. Although these words are generally
accepted terms, its good to define these terms, and to make the difference between compensation
and benefits clear, so there will be no misunderstanding.

The second chapter will give a view about the compensation and benefit system in the Netherlands.
This chapter of this paper lays out a range of themes in Compensations & Benefits in the
Netherlands. This chapter begins with a set of knowledge about the structure of salaries in the
Netherlands and non-wage benefits the employers offer their employees.

Chapter three talks about compensation and benefit in the context of an expat. What does an expat
need to know before he leaves the Netherlands.

At last we will talk about how things are regulated in Romania around the same topic; compensation
and benefits. This chapter is included so we have a better few on the Romanian situation. Maybe we
can talk, or discuss about the subject when we are staying in Romania.

We hope you, as a reader of this paper, learned as much of reading it as we did making it and hope it
gives you an image of our situation. Besides that, we also hope that we gave a good view of the
Romanian situation.

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Index

Introduction............................................................................................................................................. 2
Definition of Compensation & Benefits .................................................................................................. 4
1. Compensation and benefits in the Netherlands ............................................................................. 5
1.1 Compensation ............................................................................................................................... 5
1.2 Benefits.......................................................................................................................................... 6
2. Compensation and benefits for expatriates .................................................................................... 9
2.1 Total reward system ...................................................................................................................... 9
2.2 Compensation for expatriates ..................................................................................................... 10
2.3 Benefits for expatriates ............................................................................................................... 13
3. Compensation and benefits in Romania ....................................................................................... 15
2.1 Compensation ............................................................................................................................. 15
2.2 Benefits........................................................................................................................................ 17
Summary ............................................................................................................................................... 20
List of sources ........................................................................................................................................ 22

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Definition of Compensation & Benefits
Compensation
Compensation" refers to money received for work, such as wages, salaries and tips.
Some types of compensation depend on the employee's work performance while other
compensation is a flat rate Jobs that require an advanced skill set or a college degree often have
higher compensation than jobs that require little or no skills and education..
Compensation programs need to seem fair to employees. Workers in the same position should
receive similar pay. The formula for salaries and wages should be uncomplicated. Most employees
are paid by the hour, by the piece of work or on a weekly, biweekly or monthly schedule.

Benefits
The word "benefits" describes job extras provided by the employer and might include for example
health and life insurance or paid vacation time. Some workplace benefits are required by law and
others are offered as a job perk.

Benefits are the additional non-cash items or service that nonetheless have financial value and
therefore are sometimes referred to as indirect pay. Examples include pension contributions, health
insurance, crche facilities, subsidized meals, company housing or paying for relocation.
These serve to make the employees salary go further. Sick pay and holiday pay are often legally
mandated, whereas other benefits are discretionary. (Crawshaw, Budhwar & Davis, 2014)

Benefit plans focus on employees' needs and the organization's overall objectives. Goals of benefit
plans include improving employee satisfaction, keeping employees healthy, attracting new
employees and motivating existing employees. Many different kinds of benefits exist, and employers
choose which benefits to include in the package that they offer to employees.

Types of Benefits
Some benefits such as unemployment compensation, workers' compensation and family medical
leave are required by law in most countries. Other benefits offer payment for time not worked.
Although many employers offer unpaid time off, paid time off is an extra benefit. Paid time off can
include holidays, sick leave and vacation.
Many benefits center on health. Medical benefits include medical and dental insurance, vision care
and life insurance. Retirement benefits include pension plans, stocks and retirement bonuses. Other
benefits include severance pay, employee discounts, child care and payment for educational
expenses.

Both elements, competitive compensation and appealing benefits as well, attract employees to
companies and positions.

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1. Compensation and benefits in the Netherlands
1.1 Compensation
1.1.1 Basic Salary
Compensation is the monetary reward given to an employee for the service he or she provides, as we
read in the previous part. It is also called Basic Salary. It is the compensation which an employer
pays to an employee for work performed in accordance with the employment agreement. The
employer must pay salary to an employee once a month. In the Netherlands, calculating an
employees base salary depends on the number of worked days. Some employees get paid with an
hourly rate.

1.1.2 Minimum Wage


In the Netherlands, employers must pay their employees at least minimum wage. The minimum
wage depends on the age of the employee. The amounts in the table below are gross amounts and
based on a full working week (36, 38 or 40 hours per week). In case of a part time contract, the below
amounts need to be reduced pro rate. How much the net salary is depends on the tax and premiums
social security which are withheld (by the employer) or have to be paid.

Chart 1: Gross minimum wage as of 1 July 2014


Age Per month Per week Per day
23 and older 1,495.20 345.05 69.01
22 1,270.90 293.30 58.66
21 1,084.00 250.15 50.03
20 919.55 212.20 42.44
19 785.00 181.15 36.23
18 680.30 157.00 31.40
17 590.60 136.30 27.26
16 515.85 119.05 23.81
15 448.55 103.50 20.70
The wages in the Netherlands are average compared to the rest of Europe. They are higher than in
Spain and Italy, but lower than in England and Germany. The average monthly salary in the
Netherlands is EUR 2.136.

1.1.3 Calculation of taxes


The calculation depends on the amount of the employees salary. Income from employment is
taxable on a cash basis at progressive rates, ranging (in 2014) from 36,25% for a gross income of less
than EUR 19.645 to 52% for a gross income over EUR 56.532.
You can find a table on the next page with the progressive tax on wages in the Netherlands at 2014.

Scale Annual wage Taxes (%)


1 EUR 0 to EUR 19.645 36,25%
2 EUR 19.646 to EUR 33.363 42,00%
3 EUR 33.364 to EUR 56.531 42,00%
4 EUR 56.532 > 52,00%

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The employer will withhold taxes and social insurance contributions from the gross wage. The net
amount an employee receives will depend on how much is withheld.
The tax contribution is deducted from the salary of the employee every month, and this is important
for expats to keep in mind when they are discussing the contract terms. There is a very important
difference between a gross salary and an actual net after tax income.

1.2 Benefits
1.2.1 Social Security
There is a difference between National Insurance Scheme (NI) and an Employee Insurance scheme
(EI) and the Dutch Health Care Act (in Dutch also called ZVW). NI is taxed together with the tax on
wages. The El contributions are fully paid by the employer. The contributions for the health insurance
act are paid by the employee, but employers are obliged to compensate this to the employee.

1.2.2 Employee benefits under Dutch Labour Law:


In the Netherlands the relationship between an employee and employer is arranged under Labour
Law. Also have most work sectors a Collective Bargaining Agreement (CAO) and this CAO is
applicable to employment contracts. We will first take a look at the benefits which are legally
mandated and after that we will discuss the other discretionary benefits.

1.2.3 The legally mandated benefits

Sick Pay
Under Dutch law, employees must receive at least 70% of their regular salary, up to 104 weeks, if
they are sick. In some industry branches, it is common to pay an additional amount up to 100%.
Employers are obliged to do this for a maximum of two years. The employer does not have to pay out
the first two days of sickness so there can be a waiting period (in Dutch called wachtdagen).
If an employee gets sick during a holiday, the vacation days can be transferred over as sickness days
and they are not deducted from the employees vacation days.
Illness due to maternity: If an employee becomes ill due to maternity, she is paid her regular salary.
If employees are absent due to an organ donation, they are paid their regular salary during the time
that they are out of office. The maximum duration for this type of absence is one year.

Holiday and public holidays


Every employee is entitled to have a vacation around a minimum of 4 weeks of paid holiday days a
year.
In the Netherlands we have 8 public holidays which are:
- New Year (2 days)
- Easter
- Kingsday (April 27th)
- Ascension Day
- Pentecost
- Christmas
- Boxing Day
- Some companies also close on Good Friday and Liberation Day (May 5th).

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Holiday pay
Holiday pay is salary due during holidays. The employer is responsible for payment of holiday pay by
Article 8 of the Minimum Wage Act. In principle, this is 8% of the employees gross annual salary.
Most of times, holiday allowance is paid out in the month May or June each year. It is possible that
an employer and an employee agree something else. For example, a monthly payment of holiday
allowances.

Maternity leave
All pregnant women are entitled to 16 weeks of paid maternity leave. A pregnant woman should
inform her employer about her pregnancy at least 3 months before the due date.

Health insurance
Everyone living in the Netherlands is obliged to participate in the health insurance. When you are an
employee your employer will pay a part of the insurance. The other part is to be paid by the
employee. You can expect to pay around EUR 100 a month, depending on which insurance packages
you choose. Many employers have an agreement with an insurance company to provide a good value
policy for staff members.

Pension scheme
Most employers have included a collective pension scheme in their CAO for the employees. The
employee contributes monthly an amount deducted from their salary. Also the employer may make
a contribution. If your contract finishes with the employer, there are ways to transfer the funds you
built up to another pension fund.

Crche facilities
In the Netherlands it is common for working parents to leave their children during the working day in
a crche or Childcare Centre. Employers are not legally obliged to contribute the costs of childcare,
but employers are encouraged to contribute the cost of childcare.

CAO
The examples above are some benefits which are arranged in the Dutch Labour Law (and the CAOs).
A Collective Labour Agreement (CAO) is a written agreement covering working conditions and
benefits that is drawn up by employers, employers organisations and employee organisations.
A CAO operates at company or industry sector level and the provisions (for example, number of
holidays) are often more generous than statutory requirements.
There are more benefits arranged between employee and employer, for example: Calamity leave,
Additional leave, Part-time work, working from home and a note on Unemployment.
You can find more information about these topics in the Dutch Labour Law or in the Collective
Labour Agreement (CAO) of the specific sector. We will not discuss these topics in this paper.

Benefits in kind
Benefits in kind are a form of compensation provided to employees, which are granted in the form of
goods and services. The most common benefits in kind are: company cars, housing allowance, mobile
phones and insurance that is not otherwise provided by any applicable collective agreement.

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Company cars
Some Dutch companies, supplies a company car to employees as part of their compensation. If an
employee has a normal car at his disposal, which is provided by his employer and the car is also
used for private travel, 25% of the catalogue value of the car is added to his or her annual taxable
income. If the employee uses a car with low CO2 emissions a reduced rate of 20% will apply.
A reduced rate of 14% could be applicable for certain cars with very low CO2 emissions.
Use of ac car provided by an employer for private travel of less than 500 kilometers is not added to
the employees taxable income.

Travelling expenses
The maximum tax-free compensation for (business related, including commuting) mileage that an
employer can pay his employees is EUR 0.19 per kilometer. Should an employee choose to travel by
public transport, the employer has the choice of either compensating at EUR 0.19 per kilometer tax
free or compensating the actual travel costs.

13th month
In the Netherlands, it is very common for companies to pay their employees a 13th month allowance.
This is an extra full month salary and this 13th month allowance is most of times paid in the month
November or December each year.

Bonus
In the Netherlands are bonuses quite common for commercial positions. Some employers pay their
employees an annual performance bonus as part of their compensation. Bonuses can be both team
bases an individual. The highest average bonuses were paid in the sectors mineral extraction and
financial services. Bonuses paid in the (semi-)public sector were far below the average of 2000 Euros.

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2. Compensation and benefits for expatriates

2.1 Total reward system


Lately the amount of people working abroad on international assignments of their own company has
increased. These people of course get paid for their job. But how are they rewarded for their effort
abroad? Moving your family to another country do to work there is something very complicated and
asks a lot of the employees and their family. Therefore we want to reward them properly. We will
explain you how multinational companies in general do so and explain some of the arrangements
they have to make.

Having employees going abroad sends signals to employees that it can improve their career
opportunities and assure many benefits. It is important that multinationals choose a HR-policy that is
consistent with their business strategy. For example: a multinational organization that has a low-cost
strategy moves his production-component to India because of the cheap labor. Having employees
working abroad means the incentives are decentralisated too. The decision-making is moved closer
to the employees.

Multinational organizations prefer to hire Parent Country Nationals (PCNs), employees from the
country the company is from, because they are familiar with the system of compensation and
benefits of the organization. On the other side its also very preferable to hire Third Country
Nationals (TCNs), employees from another country beside the host or home country, because they
already are used to the different reward systems.

There are very different ways to reward an employee. For HR-departments it can be profitable to
outsource this project of adding different compensation-components together. A disadvantage of
this is that these contractors dont know anything about the culture of the company or have any
firm-specific knowledge.
Total rewards refers to a mechanism through which organisations HR-managers can perform a
number of critical activities:
1. Combining local and global data of MNC to develop appropriate compensation packages.
2. Using centralized total reward systems, to have financial control over multiple geographic
locations were employees are working.
3. Linking global outcomes with geographically costs.

2.1.1 Packages
There are a few different methods to compose an acceptable expat package. We will explain to of
them.
- Home-net-method: An expatriate receive his normal salary. Point is that his buying power
doesnt decrease. This method is used to expats which are send out for the maximum of 5
years.
- Local-going-rate-method: An expatriate receives the same income as a local person in the
same function. Beside his salary, he receives a compensation for getting things done like a
house, education, language-school, etc. We will explain more of these extra compensations
in the coming chapter.

The package of compensation and benefits for expatriates consists of different parts: base salary,
foreign service inducements and benefits.

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2.2 Compensation for expatriates
2.2.1 The base salary
The base salary is the building block of the employees compensation package, but base salary get a
whole other meaning when you are working abroad. It is not only the money you get for the work
you do, but it has to be worth everything an employee has to endure. It has to be enough to convince
an employee to accept the assignment abroad and cover all the difficulties you have to go through.
The level of the base salary depends on the headquarter of the company. This depends on where the
company is headquartered and if the expatriate is on management- or professional level.

2.2.2 Foreign service inducements


There are 4 types of foreign service inducements. These payments are to encourage the expatriate to
accept the assignment and to help him during his assignment abroad to have a comfortable life, even
though he has moved away from his home country.
1. Foreign service premium: given to expatriates in order to encourage them to accept
assignments abroad. This is about 10 to 30 percent of the base pay
2. Mobility premiums: cash bonus to employees for their willingness to move.
3. Hardship premiums: cash bonus for the fact that they can face difficult conditions. Mostly
paid to employees that work in countries where living conditions are tough or unhealthy.
This premium can be between 5 and 35 percent of the base salary. In the USA the maximum
amount employees can receive as combined a base salary and hardship premium is 186000
dollar.
4. Imminent danger pay: given to expatriates that live in dangerous places. This can also vary
between 5 and 35 percent of the base pay.

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Chart 2: Hardship differentials and danger pay, January 2008

An example: an expatriate that accepts an assignment in Pakistan receives a hardship pay of 30


percent and a danger pay of 35 percent. This means he gets 65 percent of his base pay as a bonus.
These payments are meant for people that move to areas where the circumstances are worse than in
their own country. But of course there are also employees that move to a country where the cost of
living is higher than in their own country. These people receive a cost-of-living-allowance. One of
the requirements is that the cost of living exceeds 108 percent of the cost-of-living of the employees
home-country.

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Chart 3: International average cost-of-living country comparison (US = 1.000)

Beside the four main premium payments we just explained there are some more payments for goods
and service, exchange rate protection, housing and utilities, home leave, rest and relaxation leave
and allowance and payment for education of your children. It is difficult to find data about this,
because it differs per company and country which of the allowance are applied and which are not.

The 30% rule


The 30%-rule is a few year ago introduced in the Dutch system. This rule decide that 30% of the
income of an expat is tax free. This is because an expat makes extra costs when he lives abroad.
These cost are also called: extraterritorial costs. This rule is working for expats, but also for inpats.

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The 30% rule can be applied for the maximum of 10 years. The government made this rule to
stimulate expats and inpats.

The 183 rule


When an expat goes abroad, he is faced with two tax-systems. This could lead to double tax-pay. The
Dutch government made with lots of country a tax treaty. This is to prevent that people pay double
taxes. When an expat goes to a country who didnt have this tax treaty, he can appeal to decision
avoidance of double taxation. One of the conditions in this case, is that the expat lived and worked
abroad for at least 183 days in the period of twelve months.

2.3 Benefits for expatriates

As shown in the previous paragraph there are a lot of different types of compensation, but the
benefits-part is even more complicated. This has to do with the rules and regulations in different
countries concerning pension plans and saving and investment plans. Different questions companies
using expatriates have to answer are:
1. Should we maintain the benefits programme the expat had in his home country or
2. Should we enroll the expatriate in the benefits programme of the host country?
3. Should we enroll the expatriate in the social security programme of the host country or the
home country?

2.3.1 Types of benefits


Benefits are just a small part of the compensation mix. In general the benefits are 20 per cent of the
compensation mix and in Finland it is only 2-3 per cent. But this also depends on the function an
expatriate has. Because this differs so much between countries and companies, we will just mention
the different benefits.
Benefits for expatriates consists of:
- Social security plans (medical care and retirement)
- Paid time off: as you can see in the chart below, the amount of vacation days varies a lot
between different countries. This is one of the elements of benefits that have to be discussed
by the expatriate and his employer.
- Vacation bonuses
- Pension contributions
- Saving and investment plans

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Chart 4: Vacation days

2.3.1 Repatriation and total reward


For a company the repatriation is just as important as the departure. It is important that the
employee is content with his compensation, because when he gets back into his home country and
working environment, and discovers an inequity in his in and outputs and the in and output of his
colleagues, he can develop a negative attitude towards the company.

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3. Compensation and benefits in Romania
3.1 Compensation
3.1.1. Minimum wage
Although it is generally considered that countries that are members of the European Union all have
the same level of prosperity, there is much difference in regulations concerning salary between the
countries. In 2014, 21 out of the 28 EU Member States (Denmark, Germany, Italy, Cyprus, Austria,
Finland and Sweden were the exceptions) had a national minimum wage (see Chart 1). On 1 July
2014, monthly minimum wages varied widely, from a low of EUR 174 in Bulgaria to EUR 1 921 in
Luxembourg.

Chart 5: Minimum wages in Europe

The minimum monthly gross base salary guaranteed to all full-time employees (based on a workweek
of 168 hours) has increased a lot in the past 6 years. In 2008 the minimum wage was
500RON(137(on current exchange rates)). In 2013 the minimum wage was 800RON(182), and by
July 1 2014 this has risen to 900RON (204). This increase took place in two steps. On January 1 2014
the minimum wage was 850RON. The minimum salary in Romania is the second-lowest one in the
region, after that in Bulgaria (158), by approximately 50% lower than in other emerging countries of
the European Union, such as Croatia, Poland and Slovakia, sais an article on the website of the
National Romanian Press Agency Agerpres.

According to Agerpres, the increases in the minimum salary in Romania unfortunately have a
limited influence on the salaries nationwide. Even though the minimum salary has increased with
more than 10%, the average salaries have changed only 3,3%.

3.1.2 Average wage


The average gross salary in Romania is 2430 Romanian lei (550). The average net wage is measured
in all European countries between 2011 and September 2014. According to this data, lined up from
lowest to highest, Romania is number six. We will explain later what the difference between gross
and net salary consists of.

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It should be mentioned that, comparing the data of the average gross salary of different sectors,
there is much difference between the sectors. As an example, people working in tourism and
hospitality earn only half of the salary people doing receptional work earn, but get more than four
times as much salary as people working in the beauty & sports-sector get. (See chart 2)

Job Category Average Salary


Teaching / Education 150 RON
Fitness / Hair / Beauty 450 RON
Bilingual 1,200 RON
Independent Jobs 1,880 RON
Food /Hospitality / Tourism / Catering 2,000 RON
Automotive 2,250 RON
Quality Control and Compliance 2,650 RON
Construction / Building / Installation 2,925 RON
Pharmaceutical and Biotechnology 3,250 RON
Public Relations 3,300 RON
Business Planning 3,370 RON
Oil / Gas / Energy / Mining 3,500 RON
Advertising / Grapic Design / Event Management 3,786 RON
Architecture 4,000 RON
Customer Service and Call Center 4,321 RON
Telecommunication 4,389 RON
Engineering 4,522 RON
Administration / Reception / Secretarial 4,750 RON
Human Resources 4,907 RON
Information Technology 4,947 RON
Purchasing and Inventory 4,947 RON
Banking 4,994 RON
Electrical and Electronics Trades 5,450 RON
Marketing 5,856 RON
Legal 6,500 RON
Sales Retail and Wholesale 7,308 RON
Science and Technical Services 8,000 RON
Accounting and Finance 8,331 RON
Factory and Manufacturing 8,600 RON
Executive and Management 9,840 RON
Environmental 9,900 RON
Chart 6: Average salary in different job categories in Romania

In the Information Technology-sector the wages are more above the average data. People working in
IT earn around 4947 RON per month (1123). The IT-sector is also reported as having the highest
wage increase (7 percent) as an effect of the minimum wage increase in Juli 2014. 14 percent of the

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companies that participated in the PayWell- survey (from PWC) have no intentions to operate such
wage increases or have not taken a decision about the wage increase yet.

3.2 Benefits
3.2.1 Bonuses
However, compensation does not always only exist of wages. There are some ways employees can be
rewarded through contractional or discretionary bonuses.
- Holiday bonuses: in Romania half of the companies provide fix bonuses to all employees, in
connection with the winter holidays, the Easter holidays and the summer holidays. These
bonuses can vary up to RON 2,250.
- The performance bonus: this bonus is connected to the performance of the employee and is
being offered by most of the respondents of the PayWell-survey. This bonus can reach up to
30 percent of the annual salary.
- A seniority bonus: this bonus depends on the length and continuity of employment of the
employee. The bonus can vary between 5% and 25% of the base salary.
- A bonus for work during free days and legal holidays that are not compensated with free paid
days.
- A bonus for night work.
- A bonus for additional hours that are not compensated with free paid days.
- A bonus for work in difficult, dangerous, harmful or painful conditions

The bonuses mentioned above are not obligatory, but are offered based on the companys economic
situation and the employees performance.

3.2.2 Non-wage benefits


Income taxes
The Romanian tax system is a flat rated system. This means every working citizen pays 16% income
tax. When you live in Romania for at least 183 days over the last 12 months, you pay this tax on your
worldwide income. When you dont live in Romania but your salary is paid from there, you only pay
tax over the income that is earned in Romania. The employer pays your income tax when he
residents in Romania. When the employer residents outside Romania, but has business activities in
Romania, you have to calculate and pay the taxes by yourself.

Rate of taxation on employment income


Every working person in Romania pays (as already said) 16% tax on their income.
This 16% tax is divided as follows:
- Social security contribution: 9.5% of gross monthly salary
- Unemployment security fund: 1% of gross monthly salary
- Health social security contribution: 6,5% of gross monthly income

The employer has to pay the other necessary taxes en contributions. This is structured as follows:
- Unemployment security fund: 2% of gross monthly total salary fund.
- Health social security contribution: 6% of gross monthly total salary fund

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- Contribution to the National Insurance Fund for Work Accidents and Professional Diseases:
between 0.5% and 4% of gross monthly total salary fund

The Employer has to pay the social security charges. The percentage belongs to the conditions of
work.
- 19.5% for ordinary work conditions
- 24.5% for hard-working conditions
- 29.5% for special working conditions

Holiday payment
Every working citizen of Romania receive a minimum paid holiday leave of 21 working days. Beside
this holiday days, there are a few public legal holidays. This public legal holidays are not included in
the annual paid leave. Public holidays (Art. 134 - 138 - Law no. 53/2003 Labour Code)
- January 1st and 2nd;
- the Easter Sunday and Easter Monday;
- May 1st;
- December 1st;
- Christmas Day and Boxing day;
- 2 days for each of the two yearly religious holidays, thus declared by the legal religious cults,
- different from Christian ones, for persons belonging to such religions.

There are a few possibilities to get a additional holiday for at least 3 days, actually when an employee
is:
- Working in difficult, dangerous or harmful conditions
- Is blind
- Is disabled
- Is under the age of 18

Maternity rights
A pregnant employee have 126 days paid leave. This means 63 days before birth and 63 days after
birth. Only disabled pregnant employees can request longer maternity leave, starting at the sixth
month of their pregnancy. Employees receive an indemnity during this leave. This indemnity, paid by
the National Social Security Fund, is 85% of your average salary

Employees whose are pregnant or gave recently birth also have other rights
- Paid time off for prenatal consultations
- Maternity risk leave. This is leave of up to 120 days granted when working conditions
endanger the of pregnant or mothers who recently gave birth.
- Nursing breaks
Paternity leave for fathers can be requested up to 5 days, within the first 8 weeks of the childs birth.

Adoptive parents do not benefit from maternity and paternity leave, but they have other parental
rights.

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Company car
A company car which is also usable for private is in Romania part of the taxable income at the level of
the employee. However there is no information about how many kilometers are driven for business
purpose or private purpose, there is assumed that 20% is private kilometers. In order to determine
the value of the taxable benefit, 1.7 percents is applied to the entry value of the car.

Travelling expenses
Since 1 july 2014, the amount of the mileage allowance has been set to EUR 0.3468 per kilometer. It
concerns the amount granted to an employee who uses his own vehicle to make a trip on behalf of
his employer. This amount is valid for the period from 01-07-2014 till 30-06-2015.

Health insurance
The Health insurance system of Romania is based on a public system financed by social health
insurance contributions. Every employee contribute 5.5% of the monthly salary. The Employer also
pays for his employees every month 5.2%. Children under the age of 18, students, the unemployed
and low income persons are exempted from health insurance contributions.

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Summary

In this paper we have defined the situation concerning to compensation and benefits for the
Netherlands, for expats and for Romania.

Now we will point the highlights in this chapter once again.

The Netherlands
The average wage in the Netherlands is about 2136,-.
The tax system in the Netherlands is categorized in different scales that divide your salary over the
different tax rates. The scales vary between 36,25% and 52%.
In the Netherlands there are two bonuses: a 13th month (also as much as a monthly wage) and
sometimes a bonus for extra achievements, which is often more than a monthly wage.

Some benefit facts about the Netherlands


- The kilometric is for most companies about 0.19
- When your partner has given birth, an employee can get 2 days off work
- Women get 16 weeks paid maternity leave in the Netherlands, irrespective of the working
hours factor.

Expatriates
When you are an expat you have to choose an expat package. We talked about two different ways to
create an appropriate package.
- Home-net-method: An expatriate receive his normal salary. Point is that his buying power
doesnt decrease.
- Local-going-rate-method: An expatriate receives the same income as a local person in the
same function. Beside his salary, he receives a compensation

The compensations are categorized in 4 types:


1. Foreign service premium
2. Mobility premiums
3. Hardship premiums
4. Imminent danger pay

The Dutch government made some treaties for stimulating expats


The 30% rule and the 183 rule. Both are in order to protect the expatriate.

The benefits which an expat can get, are very variable and depend on the home country, the host
country and the type of organization the employee works.

Romania
The average wage in Romania is about 550,-.
The tax system in Romania is a flat rate tax. The rate of this tax is 16%

Romanian employees also get their bonuses more divided throughout the year. There are bonuses
for Christmas break, Easter and for the summer holidays. These bonuses can run up to more than

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500 euros every time, which is as much as a gross monthly wage, In short, Romanian employees get
relatively the same amount of bonuses, compared to their monthly wage, but they get the bonus on
different moments throughout the year.

- Kilometric in Romania is about 0,35.


- In Romania when your partner has given birth, you can get 5 days paid off
- The maternity leave is also longer in Romania. Women get 16 weeks paid maternity leave. All
women get 126 days paid leave. That is about 18 weeks, when youre working fulltime.

As we have seen in the chart in chapter 2 there is much difference in wage between different jobs
and sectors. For example, people working in the job category Environmental, earn more than 3
times as much money as people working in the job category Pharmaceutical and Biotechnology. But
we cant directly make a conclusion on the basis of this data. To find out if there is really a disparity
between different sectors, more research is needed.

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List of sources

1. Definition of Compensation and benefits


- Crawshaw, J.R., Budhwar, P. & Davis, A. (2014) Human Resource Management. Strategic &
international Perspectives. (London, 2014)
2. Compensation in the Netherlands
- Website Government.nl http://www.government.nl/issues/minimum-wage/amount-of-the-
minimum-wage
- Wikipedia http://en.wikipedia.org/wiki/List_of_European_countries_by_average_wage
- Website Expatax http://www.expatax.nl/tax-rates-2014.php

3. Benefits in the Netherlands


- Wikipedia http://en.wikipedia.org/wiki/Public_holidays_in_the_Netherlands

4. Compensation and benefits for expatriates


- Harzing, A.W. and Pinnington, A (2010) International Human Resource Management
(Thousand Oaks (CA), USA, 2010)
- Website HR Kiosk http://www.hr-kiosk.nl/hoofdstuk/werken-elders/uitzending-naar-het-
buitenland

5. Compensation in Romania
- Website Agerpres (Romanian National Press agency)
http://www.agerpres.ro/english/2014/04/02/minimum-salary-to-increase-significantly-in-
2014-imf-report--15-03-20
- Website European Commission Eurostat
http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Minimum_wage_statistics
- Website Salary Explorer http://www.salaryexplorer.com/salary-
survey.php?&loctype=1&loc=178
- Wikipedia http://en.wikipedia.org/wiki/List_of_European_countries_by_average_wage

6. Benefits in Romania
- Website Europa.eu http://europa.eu/youreurope/citizens/work/taxes/income-taxes-
abroad/romania/employed_en.htm
- Website KPMG
http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxation-
international-executives/romania/pages/income-tax.aspx
- Website EU Primary Care http://www.euprimarycare.org/column/primary-care-romania
- Website PKF network
http://www.pkf.com/media/1958981/romania%20pkf%20tax%20guide%202013.pdf
- Website Arval http://www.arval.be/eng/lease/our-service-approach/tax-matter/use-private-
vehicle-for-business.html
- Website Practical Law (Labour Handbook) www.practicallaw.com/labourhandbook

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