May and June are the months when most employees receive their holiday pay. With the summer holidays just around the corner, this is also the time when many holidays are taken. A good time to review the legislation on holiday pay- and days.
In principle, every employee is entitled to holiday allowance of 8% of the gross annual wage payable by the employer. This holiday pay is traditionally paid in June. This can be deviated from in writing, e.g. by paying the holiday allowance monthly or in May, provided that it is paid at least once a year to the employee.
If the salary (and any benefits) is three times the statutory minimum wage, no holiday pay needs to be calculated on the surplus. In this case, the employment contract can also stipulate that the employee is not entitled to holiday pay at all (in which case the employee receives an ‘all-inclusive salary’), or to a lower percentage than the statutory 8%.
Every employee is entitled to annual leave of at least four times the agreed weekly working time. This is the so-called statutory leave. For a full-time employee, this is 20 days’ leave; giving four weeks’ holiday per year. In addition to these statutory holidays, days of leave in excess of the statutory minimum are often agreed upon in the employment contract or collective labour agreement. These additional days of leave on top of the statutory leave are called ‘extra-statutory leave’.
Employees are not obliged to take their holiday in the same year as they accrued their leave, but the possibility of ‘saving holidays’ is limited. This is because statutory leave expires six months after the year in which it was accrued, unless a longer period is agreed in writing. Extra-statutory leave expires five years after the calendar year in which they were accrued.
It is important to note that the six-month expiry period of statutory leave does not apply if the employee was not reasonably able to take the holidays, for example, due to illness or because the employer did not allow the employee to take the leave. The employer must, however, give the employee the opportunity to take the leave and even encourage him or her to do so. According to (European) case law, employers must also inform their employees about the expiry of holidays. If the employer cannot prove that this obligation to inform the employee has been met, the (statutory and extra-statutory) holidays will not be forfeited and would have to be paid out at the end of the employment contract.
The general rule is that the employer should arrange holidays in accordance with the employee’s wishes, unless there are serious reasons for not doing so. This means that, in principle, the employee is free to decide when to go on holiday. However, this principle can be deviated from (i) in writing, (ii) in the employment contract, or (iii) in the collective labour agreement. For example, it may be stipulated that the day after Ascension Day is an obligatory day off, or that the last week of each quarter is off-limits to take holiday. There is in principle no legal limit to the number of compulsory holidays or working days.
Although practice sometimes suggests otherwise, there is no legal requirement for some public holidays to be (paid) days off for employees. While the government sets the official public holidays (New Year’s Day, Good Friday, Easter, King’s Day, Liberation Day, Ascension Day, Pentecost, and Christmas), whether you are free on these days depends on what is stipulated in your employment contract or collective agreement.
However, it is common practice in many sectors to designate most public holidays as days off. On the other hand, some professions, such as healthcare and hospitality, actually require employees to work on these public holidays. In this case, a collective labour agreement often provides that employees who have to work on an official holiday are entitled to extra compensation (either in time or money).
As part of inclusiveness, collective labour agreements increasingly allow employees to choose another day off instead of a public holiday so that another holiday can be celebrated.
Author: Hanna Steensma