Paying holiday allowance to your staff

Is holiday allowance mandatory?

Paying holiday allowance is mandatory. You must pay it every year. The collective labour agreement (CAO) sometimes contains different agreements about holiday pay. Always check what is stated in the CAO that applies to your employees. If you do not pay, you may be fined or receive a penalty payment from the Netherlands Labour Authority. Set aside the holiday allowance for your employees each month. This will prevent problems with payment.

Are you not covered by a collective labour agreement (CAO)?

Then you can make your own agreements with your employees about holiday pay. You must always pay at least the mandatory amount agreed in law. Put the agreements in writing.

How is holiday allowance calculated?

Your employee is entitled to at least 8% holiday allowance on their gross annual salary for the past year. For example, from May to May.

You must also pay holiday allowance on:

• overtime
• performance bonuses
• rewards (commissions)
• irregular working hours allowances
• paid out holdiday entitlement

Other payments do not count, such as expense allowances, end-of-year bonuses, and profit-sharing.

Paying holiday allowance on overtime

If employees work overtime, you must also pay holiday allowance for those extra hours. This is calculated on the full value of the overtime, including any overtime allowance.

Are you allowed not to pay holiday allowance or to pay less?

A CAO may state that an employee is not entitled to holiday pay. Do you not pay holiday allowance? Then you must pay your employee at least 108% of the minimum wage. Do you only pay the minimum wage? Then your employee is entitled to 8% holiday pay.

Does your employee earn more than 3 times the statutory minimum wage? Then you can agree not to pay any holiday allowance or to pay a lower amount. Put these agreements in writing.

Do you want to withhold (part of) the holiday allowance in order to save your business? Read more about postponing or cancelling holiday allowance on kvk.nl.

Do you have to pay holiday allowance if an employee is sick?

Employees also accrue holiday pay when sick. You must pay a sick employee holiday allowance for the portion of their wages that you must continue paying.

Do you have to pay holiday allowance in case of dismissal?

Are you dismissing your employee? Then you must pay holiday allowance for the period that your employee was employed. You pay this out with their last salary. You must also pay holiday allowance when a contract expires.

Do you pay holiday allowance for a zero-hour contract?

With a zero-hour contract, your employee is entitled to days off and holiday pay. You pay holiday allowance for the hours your employee has worked. The holiday allowance is at least 8% of the gross salary your employee earned in the past year.

When do you have to pay the holiday allowance?

Most employers pay holiday allowance once a year, in May or June. Do you want to pay out the holiday allowance at a different time? Or would you prefer to pay it in several instalments? If so, you will need your employee's written consent. The payment arrangements are laid down in the CAO or in the employment contract.

Do you have to make up for underpaid holiday allowance?

Have you been notified by the Netherlands Labour Authority that you are underpaying an employee? If so, you must pay the holiday allowance within 4 weeks. Your employee can claim the holiday pay for up to 5 years. You must then pay from the day on which your employee was entitled to the wages and holiday pay.