Drafting a director's employment contract: this should be included

Drafting a director-major shareholder employment contract involves four steps: determine the salary according to the customary salary scheme, establish the job title and working hours, arrange for sickness, pension, and termination, and have the general meeting approve the remuneration by resolution. The contract itself resembles a standard employment agreement, but three points differ: the director-major shareholder is usually also a statutory director, is generally not insured under employee insurance schemes, and the Tax and Customs Administration monitors the salary level. Below is a list of what should be included in each section.

The short answer

1. Wages: at least the customary wage under Art. 12a of the 1964 Wage Tax Act, with justification if you go lower.
2. Position: describe the role as statutory director and refer to the appointment decision.
3. Illness: establish continued payment of wages; there is no ZW or WIA coverage.
4. Clauses: confidentiality, ancillary activities, intellectual property and potential competition.
5. Termination: notice period and the link to a dismissal resolution of the general meeting.
6. Formality: shareholders' resolution regarding remuneration, plus signing on behalf of the BV.

Drafting a director-major shareholder employment contract: the standard components

Start with the basics that belong in every employment contract, but tailor them to a director-major shareholder:

• Parties: the BV (with Chamber of Commerce number) and the director-major shareholder in their private capacity. State who signs on behalf of the BV and on what grounds.
• Position: statutory director, with a brief job description and reference to the appointment resolution of the general meeting (Art. 2:242 BW).
• Effective date and duration: almost always for an indefinite period. A probationary period makes little sense with a sole shareholder, but sometimes does with multiple shareholders.
• Working hours: the number of hours per week. This is directly relevant to the customary wage, because for part-time work, you may apply the standard amount pro rata.
• Base location: office address, with the freedom to work elsewhere.

Wages and the customary wage scheme

This is the part where things go wrong in practice. The salary must be at least equal to the highest of three amounts: the salary from the most comparable employment, the highest salary of the other employees of the BV or an affiliated entity, and the annual standard amount (in 2025 €56,000; check the amount for the current year). The efficiency margin that previously allowed you to stay below the comparable salary no longer exists as of 2023.

If you wish to apply a lower salary, for example in the case of a loss-making BV, part-time work, or the start-up scheme for research and development, document the justification in writing and include the amount in the contract. In addition, include:

• holiday allowance or an explicit agreement that the salary includes holiday allowance;
• whether a bonus or profit-sharing is possible and who decides on that;
• the agreement that the salary is reviewed annually against the customary wage scheme.

Illness, vacation and retirement

The obligation to continue paying wages during illness (Article 7:629 of the Dutch Civil Code) also applies to the director-major shareholder: a minimum of 70 percent of the salary for a maximum of 104 weeks. The difference compared to a regular employee is that there is no safety net under the Sickness Benefits Act or the Work and Income Act (WIA), because most director-major shareholders fall outside the scope of employee insurance schemes pursuant to the 2016 Director-Major Shareholder Designation Regulation. The BV therefore pays for it itself. Therefore, agree on whether to top up to 100 percent and whether there is absence or disability insurance.

Vacation days: a statutory minimum of four times the agreed working hours per week (Art. 7:634 BW). You may grant days exceeding the statutory minimum, but keep the accrual limited; a large provision for vacation days on the balance sheet is rarely practical during a business transfer.

Self-administered pension schemes have not been possible since July 1, 2017. If you accrue pension, this is done with an insurer or pension fund. Explicitly include the arrangement, or the lack thereof, to avoid any disputes regarding a commitment later on.

Conditions you choose consciously

• Confidentiality: include as standard, even after the termination of the employment contract.
• Ancillary activities: since 2022, a prohibition may only be enforced with an objective justification (Art. 7:653a BW). Formulate it as a notification obligation with a reasoned right to prohibit.
• Competition and business relations: required in writing, and in the case of a fixed-term contract only with a justification of the compelling business interest (Art. 7:653 BW). Note that an employment clause is subject to stricter scrutiny than a clause between shareholders. In the case of multiple shareholders, the emphasis lies in the shareholders' agreement.
• Intellectual property: copyright on work performed in the course of employment rests with the employer (Art. 7 Copyright Act), but record the transfer and patent rights separately for added security.
• Expenses and car: reimbursement scheme, taxable benefit, and the use of the work-related expenses scheme.

Termination and the position of the director

The general meeting may dismiss the statutory director at any time (Art. 2:244 BW), without the permission of the UWV or the subdistrict court. In principle, that dismissal decision also terminates the employment contract, unless a prohibition on termination applies or the parties have agreed otherwise. Therefore, include the following provision in the contract in any case:

• the mutual notice period, with due observance of Article 7:672 of the Dutch Civil Code;
• the agreement that the end of the directorship coincides with the end of the employment contract;
• what happens to business assets, access rights, and current powers of attorney;
• the connection with an obligation to offer the shares, if such is stated in the shareholders' agreement.

For a sole shareholder, this is primarily administrative. With two or more shareholders, it is the most hard-negotiated part of the contract.

Brief practical example

Two partners, each holding 50 percent of a consultancy firm, signed identical director-major shareholder contracts. When one of them left, it turned out that the non-compete clause was included only in the employment contract and not in the shareholders' agreement. The departing party remained a shareholder and could compete outside the employment relationship. A reference between the two documents would have prevented this.

Honest recommendation

You do not need a lawyer for this if you are the sole shareholder and sole director, work full-time, maintain the standard amount as salary, and do not arrange for a pension, bonus, or non-compete clause. A reliable template plus a shareholders' resolution regarding remuneration is sufficient in that case. Keep both documents with the records and review the salary once a year.

Do seek assistance in the case of multiple shareholders or directors, a holding structure with chargebacks to the operating company, a deviating customary salary, a pension commitment, or an impending sale or the entry of an investor. In such cases, the contract, articles of association, shareholders' agreement, and tax position interlock, and a standalone model contract is usually insufficient.

Read more: what is a director-major shareholder employment contract and having a director-major shareholder employment contract drawn up. You can arrange this directly via the director-major shareholder employment contract.

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