By Payingit International, a leading payroll company in the Netherland that assists companies and employees with their planning, invoicing and salary administration.
Vacation policy and the holiday allowance – what and why
Working and living in the Netherlands has many rules, and some are more popular than others. Top of the list is vacation days and the holiday allowance, to which you are entitled by law. That is why you will see your Dutch coworkers disappear in the summer months for weeks at a time and many of them will be very enthusiastic about their payslips in May. But how does it actually work?
The holiday allowance is a gross payment of 8% of your total gross salary. It builds up during your employment period in the months June to May, and employers are obliged to pay it. You will hear the term vakantiegeld a lot when you work with Dutch colleagues; it means “holiday allowance” and it’s very popular!
The idea behind the holiday allowance
The holiday allowance was conceived as an incentive to stimulate workers to take vacations and was introduced in the Netherlands in the 1920s. Back then, traveling abroad was very expensive, and in the 1960s, the holiday allowance became an extra payment on top of your salary and was to be paid in May.
The idea behind making it an extra payment and paying it in May is to encourage employees to start planning a trip before the Summer actually starts. Taking a vacation trip is, according to the Dutch system, good for you as a person and improves your performance at work. You are, of course, entitled to spend the holiday allowance however you want to—you can save the money, buy something, or take that trip.
Here is an example of the holiday allowance: on a gross salary of EUR 4.000,00 a month for a whole year, you will get a holiday allowance of EUR 3.840,00 in addition to your regular salary in May. The calculation looks like this: EUR 4.000,00 x 12 = EUR 48.000,00. The 8% holiday allowance of this total amount is EUR 48.000,00 x 8% = EUR 3.840,00. This means that if you earn €4,000 gross a month, you will get a lovely gross sum of EUR 7.840,00 in the month of May. Sufficient incentive to plan a trip?!
Some employers choose to pay the holiday allowance not in one lump sum in May but spread over 12 months. That would mean you earn a higher monthly salary but you do not get that nice, big salary payment in May. Please discuss this with your employer in order to avoid misunderstandings.
You also have the right to paid vacation days in the Netherlands. When you work full-time, you are entitled to a minimum of 20 paid vacation days per year. You can decide how and when to take your 20 vacation days. You can of course get more than 20 days, but never fewer than 20; sometimes your employment is covered under a Collective Labor Agreement that prescribes 24 or 25 vacation days.
Another important note
Another important note is that vacation days cannot be included in your salary instead of pay. This means you always have the right to those days off. The number of vacation days you are entitled to depends on the number of days you work per week, month, and year.
Check your employment contract
Please read your employment contract carefully to be sure about your holiday allowance and vacation days. If you are confused by the Dutch system, please get in touch with us. We’ll be glad to help you understand what’s what before you sign your contract.
Use our handy dandy calculator!
Want to see the effect of the holiday allowance on your gross salary? Calculate your take-home amount using our handy dandy payroll calculator. You can find it on our website.
If you have any questions about the holiday allowance and vacation days or would like to ask our advice about something, please do not hesitate to get in touch at +31 202 252 520 or info@payingit- international.com.