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A Guide to Holiday Leave Entitlements in the Netherlands

Holiday leave is an essential benefit, especially for EU-based employees where a full month off in the summer is common and expected.  This could come as a surprise to employers in countries like the US, who now have to plan around this statutory entitlement.

The Netherlands is no exception and does have generous leave entitlement, plus an extra ‘bonus payment’ for employees to use and enjoy.  This reflects the Dutch value of work/life balance, and your employees will want to be supported in their need for time off.  This guide will discuss holiday pay and leave and how accrued leave is handled in the event of termination.

How much holiday leave do employees receive in the Netherlands?

In the Netherlands, employees are entitled to paid holidays, the amount depending on the number of holiday leave days that are accumulated.  The statutory formula used is a minimum of four times the number of working days per week, if a full year of work is completed. Full-time workers would be entitled to 20 days per year of holiday leave based on a five-day workweek, but it is common for employers to offer up to 25 days. 

Anyone working for an employer less than one year would have that number reduced, but leave does start to accrue from the first day of work.

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What is the 8% holiday allowance and how is it calculated?

The employee’s salary is paid as usual when they are on holiday, so this holiday allowance is actually an addition to the gross annual salary, calculated as 8% of the annual salary. This is an unusual law that foreign companies may not have planned for when structuring compensation, as it works out to approximately an additional month of salary.

The 8% holiday allowance is paid as one lump sum, usually in May or June of each year. Naturally, an employer can make a different holiday allowance, but this formula is the legal minimum and the payment cannot be less than that amount.

Does vacation leave expire in the Netherlands?

Technically, vacation leave in the Netherlands expires six months after the calendar year when it was accrued.  So accrued leave from 2020, would expire in June of 2021.   However, for the leave to expire the employee must have had the opportunity to take the leave, and expressly waived the entitlement, all or in part, for that year.

To meet this expiration standard, employers in the Netherlands will inform the employee in writing of the pending expiration date, otherwise, it might be carried forward.

Client Case: How is unused vacation leave handled when an employee is terminated?

Context:

Our client with employees in the Netherlands wanted to know if unused leave would be paid out to the employee upon termination, and what is the maximum number of days that could be paid out.

Solution:

We let them know that upon the termination of an employee, the unused leave balance (up to the statutory 20 days) would be paid out or used by the employee during the final days of employment. The 8% holiday allowance accrued during that time should also be paid out to the employee, based on whatever salary was earned up until the date of termination.

If an employee was given paid days in excess of the 20 days, those amounts would be deducted from the final salary.

Do you need more information about the Netherlands?

Employers new to the Netherlands may have other questions, such as:

How are holiday leave days counted if the employee gets sick while on holiday?  Are those now part of sick leave?

Are bonuses and commission included when calculating the 8% holiday pay?

Is holiday leave still paid out if the employee is terminated for misconduct?

We guide our clients in addressing issues like these as they are often new to employing abroad, and we offer them compliant solutions for payroll, tax, and statutory entitlement obligations.

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