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Holiday Leave Entitlements in Netherlands

A client of ours with employees assigned in Netherlands had a question about an 8% holiday pay allowance included in the payslip for May. Each country has different rules on how holidays are handled for all employees, whether local citizens or foreign nationals, that must be followed exactly.

In Netherlands, employees are entitled to paid holidays, the amount depending on the number of holiday leave days that are accumulated.  The 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 work week.  Anyone working for an employer less than one year would have that number reduced.

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What Happens to Salary During the Holiday?

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

How Does Shield GEO Assist Our Clients With Leave Allowances?

One of the reasons that employers sending workers on assignment use Shield GEO is to ensure compliance with all local rules for payroll and withholding.  The vast differences between rules in foreign markets make compliance a significant hurdle, especially if attempted DIY.

Our account managers stay on top of all host country laws that pertain to employment, to make certain that our clients are paying employees according to local standards.  We help you understand the calculations and methods of payment so that both foreign workers and residents are paid correctly.  The 8% holiday allowance is a great example of an unusual rule that could add unexpected expense of not known ahead of time and taken into account when planning assignment costs.

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