Holiday pay

Monday, October 3rd, 2016 by

Holiday pay is a basic aspect of the Dutch payroll. What does this imply?

Holiday pay

Holiday pay is paid in May and amounts to 8% over the gross salary over the 12 previous months including the month of May. This is a right stated in the Dutch labour law. Which implies that you cannot simply not pay the employee this holiday pay in May.

This payment in May or June was introduced in the period that employees barely had enough income to feed the family and to pay for the rent. That implied that a holidaywas not possible, hence this reimbursement was introduced.

In this time and age for a lot of families this situation has not changed. For others who can finance a holiday themselves already, the holiday pay is used to purchase a TV or something else that is being desired. That explains the consumer good advertisement overflow around May.

No holiday pay can be agreed upon between the employer and the employee. This is only possible when explicitly in the employment agreement it is determined that the salary is already including the holiday pay. If not done in writing and this obvious, it will not stand in court.

Can an employee demand the holiday pay to be paid at another moment than the month of May?

Yes and no. Yes, holiday pay is either paid in May or in June. And if the employment agreement is terminated, part of the termination reimbursement is the build up amount of holiday pay.

No, the employee cannot demand from the employer to pay out the build up amount of holiday pay just because the employee needs money. Neither can employer and employee agree on any other period than May or June to pay out this reimbursement. If this is done, then the amount paid out is regarded a basic remuneration.

For instance, the holiday pay is paid out in April, then for labour law purposes the paid out amount is not regarded holiday pay. That implies the employee can demand in May or June to have his or her holiday pay paid out.

Holidays

Holiday pay is not to be confused with holidays. Holidays are days set by law and agreement during which the employee does not need to work but the salary is being paid for these holiday days. The bare minimum is 20 days per year. Commonly used in the Netherlands is 25 days per year. Issuing more days to the employee is experienced by employees as a very much appreciated benefit in kind.

Orange Tax Services

We can process your payroll. If you have a budget for an employee, but you would not know how to convert the budget into a gross salary, we can also assist you with that. Contact us, and we assist you.

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