Every year, an employee is entitled to vacation days (day’s holiday) of at least four times the working hours per week, known as ‘statutory holidays’. Often, however, an employer grants its employees more than the statutory minimum, known as the ‘extra-legal holidays’.  If the employment ends or the employee becomes ill, the question of the exact wage value of a vacation day may present itself. That question is answered for both situations in this article.

Wage value vacation day at end of employment

At the end of the employment contract, the employer must pay the employee any accrued but not taken vacation days. According to Article 7:641 of the Dutch Civil Code, the wage value c.q. the compensation for accrued but not taken vacation days must in that case be equal to the amount of the last-earned wages for the period during which the employee was entitled to vacation. According to established case law, the ‘last-earned wages’ means the agreed wages, including any perquisites and allowances to which the employee is entitled (such as holiday allowance, a thirteenth month or a year-end bonus) as well as fixed allowances (such as an irregular hours allowance) and bonuses. Wage components that serve only as reimbursement of incidental or ancillary expenses are not counted. In other words, it concerns the agreed basic wages and all wage components that are intrinsically linked to the work assigned to the employee.

Whereas in the past an employer’s pension contribution was deemed to fall under the wage concept if the employer’s pension contribution is continued during holidays, it has since and recently been ruled on several occasions that the employer’s part of the pension contribution should not be included in vacation wages, because a pension contribution is not intrinsically dependent on whether or not the employee performs work.

Wage value vacation day taken during illness

In principle, a sick employee is also allowed to take vacation. If a sick employee takes vacation, the wage value of a vacation day during illness is determined by placing the employee in an economically comparable position as if he or she had performed work. The rules set out above may therefore be applied, which means that the sick employee is entitled to 100% of his or her wages when taking vacation. Even if the employee’s wages are reduced during illness (Article 7:639 of the Dutch Civil Code).

Conclusion

In sum: the wage value of a vacation day at the end of employment is based on the basic wages as well as all the wage components intrinsically linked to the work assigned to the employee. In addition, for the wage value of a vacation day taken during illness, a sick employee is entitled to 100% of his or her wages (even if his or her wages have been reduced during illness).

Please contact Puck Keurentjes (+31-6-12860380) for more information on this subject.

This article was published in the Newsletter Vestius of February 2023