A refresher on vacation days

It’s June, which means that the vacation season is approaching. Time for a quick refresher: vacation days – how does it work again?

Vacation

Vacation gives an employee the opportunity to rest from work and enjoy a period of relaxation and free time. The legislator has considered the opportunity to enjoy vacation so important that the minimum entitlement to vacation is laid down by law. An employee is entitled to at least 20 statutory vacation days, based on a full-time service. In addition to the statutory entitlement, an employer may grant vacation days in excess of the statutory minimum.

Expiration of vacation days
Unused vacation days may expire. The expiration periods for vacation entitlements are regulated as follows in Dutch law:

1. Statutory vacation days:
   • Statutory vacation entitlements expire six months after the calendar year in which the entitlement was acquired. This means that vacation entitlements accrued in a given year expire on July 1 of the following year.
2. Vacation days in excess of the statutory minimum:
   • Extra-statutory vacation days are subject to a limitation period of five years. This period begins on the last day of the calendar year in which the entitlement accrued. The limitation period can be suspended by the employee, whereby the five-year term starts again.
3. Points of attention:
   • If the employee was reasonably unable to take vacation, for example due to long-term illness, the five-year limitation period applies to both statutory and extra-statutory vacation days.
   • The employer is required to enable the employee to take vacation and, in some cases, encourage them to do so. The employer must also inform the employee of the risk that vacation days will expire if they are not used. If the employer fails to do so, they cannot invoke the expiration period.

The value of a vacation day

This naturally raises the question of how a vacation day should be remunerated. The basic principle is that an employee should not be placed in a less favorable economic position during their vacation than on days worked. As a result, many components of remuneration must be taken into account when calculating the value of a vacation day. The same approach applies to statutory and non-statutory days. This also means that vacation days during illness are worth 100% of the salary and not 70% of the salary if the employee is currently receiving 70% due to illness.

In addition to the basic pay, other components that are intrinsically related to the employee’s work and for which he receives financial compensation must also be included in determining the value of a vacation day. In general, these are the following renumeration components:

• Vacation allowance;
• A fixed thirteenth month;
• A fixed end-of-year bonus;
• Overtime, provided that this occurs on a regular basis and the compensation for this forms an important part of the total compensation;
• Irregularity allowance, evening, night, and weekend allowance, shift allowance, on-call allowance and other allowances related to the employee’s personal and professional status;
• A bonus, provided that the bonus depends on the employee’s performance, individually and/or as part of a team. A bonus that depends on the company’s results, such as profit sharing, is part of the vacation salary if the employee also receives the profit share for periods in which he performs work.
• Other forms of variable remuneration such as a short-term incentive – provided that it is paid on a structural basis and is related to the employee’s efforts.

Questions about vacations? Please contact us!