Insights into Holiday Allowance & Paid Holidays in the Netherlands

Depending on the sector's collective agreement, public holidays in the Netherlands can be working days, as there's no statutory obligation for employers to entitle their employees to a day off.

However, many companies in the Netherlands offer more than the minimum number of vacation days for employees to take days off from work. Apart from several paid holidays, employees in the Netherlands are also entitled to a holiday allowance – not a common mandatory benefit in Europe.

In this blog, we will explain the most important aspects of the Dutch holiday allowance and paid holidays in the Netherlands.

Understanding Holiday Allowance in the Netherlands

Employees in the Netherlands, both full-time and part-time, are entitled to the holiday allowance. Holiday allowance – "Vakantiegeld" in Dutch – is a mandatory payment by employers in the Netherlands, an additional amount of money on top of the employee's gross salary.

As of January 2020, the standard rate is a minimum of 8% of an employee's last year gross salary. Only if an employee earns over three times the legal minimum wage, the employer does not have to pay holiday allowance. This, however, has to be stated in the contract.

Bonus read: Employment Costs & Benefits in the Benelux Countries Explained

Payment of Holiday Allowance in the Netherlands

In the Netherlands, employers can decide when to pay the holiday allowance to the employee. It is common to do it in one of the following ways:

• In 1 installment: The employer pays the holiday allowance in one
  installment (8% x annual salary). This is usually done in May or June. In this
  case, the employee will receive their monthly salary for the specific month
  and the holiday allowance (monthly salary * 96%). 
• In 12 installments: The employer pays the 8% on a monthly basis on top
  of the salary. 
  

Taxation and deductions related to holiday allowance

Because it is considered a special reward, holiday allowance in the Netherlands may be heavily taxed compared to a regular salary. Dutch employees pay taxes on the holiday allowance in the Netherlands, and the amount depends on a couple of factors, such as total gross salary.

Paid Holidays in the Netherlands

Each year, an employee in the Netherlands is entitled to a statutory number of days of paid leave. For employers, this means they are obligated to pay employees' wages during the vacation days.

Overview of statutory paid holidays

Full-time employees are entitled by Dutch law to a minimum of 20 days (four weeks) of paid leave per year. This is based on a calculation: four times the number of hours worked per week.

Part-time employees are also entitled to four times the number of hours worked per week. A part-time employee who works 24 hours (3 days) is legally entitled to have 12 days of paid leave per year.

Number of vacation days in the Netherlands

Regulations and entitlements for paid holidays

Many Dutch companies offer more than the minimum number of paid holidays. For many employers, it is common to give employees between 25 and 30 days of paid vacation leave. Some employers also offer the possibility to "buy" extra days off via salary sacrifice. Holiday leave is also accumulated during maternity leave and (temporary) sick leave.

Please note that holiday leave is separate from Dutch national (bank) holidays, which are also paid if they fall on a weekday. 

Conclusion

As mentioned above, employees in the Netherlands are entitled to paid holidays with a minimum of 20 vacation days for full-time employees or four times the number of working hours per week for part-time employees. In addition to that, they are also provided with a holiday allowance, usually on an annual level, at a standard rate of a minimum of 8% of the employee's gross salary last year.

All of these costs for the employer need to be considered when hiring in the Netherlands, along with the country's specific regulations and employee entitlements.

Interested in learning more about hiring in the Netherlands? Explore PEO & EOR in the Netherlands, or reach out to us to find out how EuroDev HR Outsourcing services can help you.

Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our HR consultants to ensure that the data presented here is current and accurate.

Sources: CNBC