Payroll Compliance 2026: Your Employer Checklist
As an employer, you face a range of legal obligations around payroll and employment law. Minimum wage, holiday pay, payslips, and time tracking each come with their own rules and their own pitfalls. This checklist covers what you need to have in place for 2026, even without a dedicated HR team.
The Four Core Payroll Obligations
1. Statutory Minimum Wage Every employee is entitled to the statutory minimum wage (in the Netherlands: Wettelijk Minimumloon, WML). Rates are indexed twice a year. Check the current figures as of 1 January 2026 via the government website or your payroll administrator. Paying below the minimum wage risks fines from the Labour Inspectorate.
2. Holiday Pay: Minimum 8% Employees in the Netherlands are legally entitled to at least 8% holiday pay on top of their gross annual salary. Collective agreements (cao) may be more generous, but never less. Holiday pay is typically paid out in May or June, though some agreements require monthly payment. Check which collective agreement applies to your sector.
3. Providing Payslips You must provide a payslip with every salary payment. It must show gross pay components, tax withheld, holiday pay accrual, and the net amount paid. Digital payslips are permitted, provided the employee has agreed.
4. Accurate Time Tracking Reliable time records underpin your entire payroll administration. Without them, you cannot accurately calculate holiday pay accrual, overtime, or leave balances. Read more: Is time tracking legally required in the Netherlands?
Calculating Holiday Pay: A Simple Formula
Holiday pay = gross annual salary × 8%
This covers all fixed pay components: base salary, fixed allowances, and regularly paid overtime. Variable bonuses may be excluded. Consult your collective agreement or an employment lawyer for the details.
Example: you engage an employee on a project basis, and your client expects invoicing on actual hours worked. Without solid time records, you can neither pay your employee correctly nor invoice your client accurately. Two problems at once, solved by one good system.
Freelancers facing similar challenges will find time tracking as a freelancer: 5 tips for accurate invoicing a practical starting point.
Five Common Payroll Mistakes
Mistake 1: Calculating holiday pay on net salary The 8% rule applies to gross pay. This classic error leads directly to back-payments during an audit.
Mistake 2: Ignoring the applicable collective agreement Your sector's collective agreement may require higher percentages or different payment dates. Review this annually; agreements are regularly renewed.
Mistake 3: Inadequate time records The Labour Inspectorate can request timesheets during an inspection. If they are missing or incomplete, the burden of proof falls on you. Digital time tracking is far more reliable than paper lists or spreadsheets. See also: Excel vs. time tracking software: which is right for you?
Mistake 4: Failing to index the minimum wage The statutory minimum wage is typically updated twice a year. Missing an update means paying below the legal minimum, unintentionally.
Mistake 5: Late or incomplete payslips A payslip must be available no later than the moment of payment. Late or incomplete payslips are a violation the Labour Inspectorate can act on.
Ready to get your time tracking in order? Try PrikKlokPlus for free and track hours, leave, and projects in one clear overview.
Time Tracking as the Foundation of Payroll
Payroll compliance starts with accurate time records. If the foundation is wrong, salary calculations, holiday pay accrual, and leave administration will be wrong too, creating risk with both employees and the tax authority.
A modern time tracking system helps you:
- Automatically maintain timesheets per employee
- Gain clear visibility into leave and overtime
- Generate exportable reports ready for your payroll administrator
- Demonstrably meet statutory record-keeping obligations
With PrikKlokPlus's hour logging and calendar view, you can see at a glance how many hours each employee has worked in any given period, which saves time at every monthly payroll submission.
For larger teams, time tracking for your team: how to do it efficiently offers practical guidance on scaling your setup.
Your 2026 Payroll Compliance Checklist
- ✅ Verify current minimum wage rates as of 1 January 2026
- ✅ Calculate holiday pay correctly on gross salary (minimum 8%)
- ✅ Confirm which collective agreement applies and note any special provisions
- ✅ Issue complete, timely payslips with every payment
- ✅ Maintain reliable, digital time records
- ✅ Retain timesheets and payslips for at least five years (statutory retention period)
Payroll compliance does not have to be complicated. With the right tools and an annual review of current standards, your administration stays demonstrably in order.
Frequently Asked Questions
Do small employers also need to keep time records? Yes. The legal obligation applies regardless of company size. Whether your staff are permanent or flexible, you are responsible for demonstrably accurate records of hours worked.
When must holiday pay be paid out? The law does not prescribe a fixed month, but May or June is standard. Your collective agreement may specify a different date or require monthly payment. Check this each agreement year.
What happens if I pay below the minimum wage? The Labour Inspectorate can impose fines and enforce back-payments. Serious violations may also be made public. The risk never outweighs any saving.
Can I include holiday pay in the monthly salary? This is generally not permitted unless your collective agreement explicitly allows it and the amount is shown separately on the payslip. Without an explicit basis in the agreement, you face legal risk.
Get Your Time Tracking in Order Today
PrikKlokPlus helps employers and freelancers track hours simply and reliably: the foundation of sound payroll compliance.