Holiday allowance in the Netherlands: how to calculate 8%

As an employer in the Netherlands, you pay every employee at least 8% holiday allowance (vakantiegeld) on their gross salary over the past year. The law calls it vakantiebijslag. You usually pay it in one go in May or June, and in any case at least once a year. If someone leaves, you pay out the holiday allowance they've built up with their final pay. Below you'll find which salary you calculate it on, with worked examples, and when you're allowed to deviate from it.

How much holiday allowance do you have to pay?

At least 8% of the gross salary the employee earned over the past year. That's in the Dutch Minimum Wage and Minimum Holiday Allowance Act (Wet minimumloon en minimumvakantiebijslag). A collective labour agreement (cao) or employment contract can give more, but not less than the law allows.

It applies to everyone on the payroll: full-timers, part-timers, on-call workers and employees on a zero-hours contract. For part-timers and on-call workers, you simply calculate 8% of what they actually earned.

Which salary do you calculate holiday allowance on?

On the gross salary, with a few parts included and a few not.

Included:

• the gross salary

• overtime, including the overtime premium

• paid holiday days

• an irregular-hours allowance

• bonuses or commission, if agreed in the contract

Not included:

• expense allowances, such as travel costs

• an end-of-year bonus (eindejaarsuitkering)

• profit sharing

The law doesn't mention a thirteenth month separately. Check the contract or the cao to see whether it counts.

How do you calculate holiday allowance?

Add up the gross salary over the accrual period and take 8% of it. The law assumes the salary up to and including 31 May, paid out in June. The accrual period then runs from 1 June to 31 May.

Example 1: employed for the whole period. An employee earns €3,500 gross a month, without overtime or allowances. Over twelve months, that's €42,000. The holiday allowance is 8% of that: €3,360 gross.

Example 2: started partway through. The same employee starts on 1 September. Up to and including 31 May, that's nine months, so €31,500. The holiday allowance in June is €2,520 gross.

Example 3: with overtime. A part-timer earns €1,800 gross a month and is paid €1,200 in overtime over the year, including the premium. The salary is then €21,600 + €1,200 = €22,800. The holiday allowance is €1,824 gross.

Holiday allowance is a gross amount. You withhold payroll tax on it using the table for special payments (tabel bijzondere beloningen). That's why the net amount is often lower than the employee expects. Your payroll administration takes care of this.

When do you pay out holiday allowance?

According to the law, in June, on the salary up to and including 31 May. Many employers pay it in May or June.

You can agree on a different moment, but then:

• you put it in writing, in the contract or the cao;

• you pay at least once per calendar year.

Some employers pay holiday allowance monthly with the salary, or in a few instalments. That's only allowed if the employee agrees in writing and it fits the cao.

What if someone leaves?

Then you pay the holiday allowance the employee has built up so far and hasn't received yet. It goes along with the final pay, together with any holiday days still outstanding.

Example. An employee on €3,500 gross a month leaves on 31 October. Since 1 June they've worked five months, so €17,500. With the final pay, you pay €1,400 gross holiday allowance.

And during sickness?

Holiday allowance keeps building up during sickness. You calculate it on the salary you keep paying during sickness. If you pay 70%, you calculate 8% of that 70%. How much salary you keep paying during sickness is in sick pay in the Netherlands.

Can you pay less or no holiday allowance?

Only in a few cases:

• High salary. If someone earns more than three times the minimum wage, you can agree in writing that they get less or no holiday allowance. On the part of the salary above three times the minimum wage, holiday allowance isn't mandatory anyway.

• Cao. A cao can set a lower percentage or no holiday allowance. The employee must then still get at least 108% of the minimum wage, including the holiday allowance.

A separate agreement in the contract to go below 8%, without one of these reasons, isn't allowed. Not even if the employee agrees to it.

What happens if you pay too little?

The employee can claim the missing holiday allowance up to five years back, with interest. If the Netherlands Labour Authority (Nederlandse Arbeidsinspectie) finds you paid too little, you have to pay the difference within four weeks.

A common mistake is calculating holiday allowance on the fixed salary only, while overtime or allowances were paid too. Another is forgetting that someone who leaves during the year should also get holiday allowance.

How Heartsome helps

Heartsome doesn't calculate holiday allowance itself. The employee's profile shows the gross salary from the contract. Overtime, allowances, bonuses and payroll tax aren't in Heartsome. You calculate and pay holiday allowance through your payroll administration.

What Heartsome does track are the holiday days: how many someone builds up, what they've taken and what's still outstanding. You need that for the final pay. See all Heartsome features.

Frequently asked questions

What percentage of holiday allowance is mandatory in the Netherlands? At least 8% of the gross salary over the past year.

When does holiday allowance have to be paid? According to the law, in June. A different moment is allowed if you agree it in writing, as long as you pay at least once per calendar year.

Does a bonus count towards holiday allowance? Only if the bonus is agreed in the contract. An end-of-year bonus and profit sharing don't count.

Do part-timers also get 8% holiday allowance? Yes, 8% of their own gross salary.

Can I pay holiday allowance monthly? Yes, if the employee agrees in writing and it fits the cao.

Does a sick employee build up holiday allowance? Yes, on the salary you keep paying during sickness.

What's the difference between holiday allowance and holiday days? Holiday allowance is an extra amount of at least 8%. Holiday days are days off with pay. More on that in holiday entitlement in the Netherlands.

These rules can change. This article gives a general picture based on current Dutch law and is not legal advice. If in doubt, always consult an employment lawyer, HR adviser or your payroll administrator.

Sources

• Wet minimumloon en minimumvakantiebijslag, articles 15 to 17 (in Dutch)

• Government of the Netherlands: Hoe hoog is mijn vakantiegeld? (in Dutch)

• Ondernemersplein: Vakantiegeld (in Dutch)

• Belastingdienst: Handboek Loonheffingen (table for special payments, in Dutch)