Why do the Dutch mention holiday allowance and vacation days?
Holiday allowance and vacation days??? These topics are typically discussed with your potential new employer in the Netherlands. You also get lots of out-of-office and on-vacation messages from colleagues, and they are very enthusiastic about their payslips in May. Yay, vakantiegeld!! But what does it actually mean?
The holiday allowance is a gross payment of a minimum of 8% of your gross salary built up during your employment over the period June – May (the most common build-up period), and it is mandatory that employers pay it.
The holiday allowance was introduced in the 1920s, and it was meant to be a kind of paid leave. But traveling for vacations was very expensive, so in the 1960s it became an extra payment on top of your salary. The thinking was that the payment would allow you to take a trip.
Employers usually pay it in May based on the idea that receiving it before summer starts will give employees a bit of encouragement to plan a trip. Vacation—the thinking goes—is good for you as a person and will result in better work performance and efficiency. But it is up to you whether you use the money to buy a new car or to go on vacation.
So, for instance, if you earn a gross salary of €4,000 per month for a year, in May you will receive a gross holiday allowance of €3,840 in addition to your salary.
These days, many employees choose to get their holiday allowance paid out per month which means a higher net salary per month. This can be agreed between employer and employee. The terms and conditions in regards to the holiday allowance are always spelled out in your employment agreement.
Relatively speaking, your holiday allowance is taxed more than your normal salary. Because it is considered a one-time payment, the Dutch tax authority applies a “one-time payment rate” rather than the standard monthly tax rates.
So in a nutshell— either you receive an annual one-time payment or you receive your monthly salary including holiday allowance.
Yes!! You have a very tidy sum in your bank account. Now you want to take a trip. But you can’t keep from working completely, right? Good news! You are entitled, with a full-time job, to a minimum of 20 paid vacation days. You can stay home, or go on a trip, or do whatever, but you do not have to go to work and you still get paid.
Depending on your employer and if there is a Collective Labor Agreement that applies, you might have more than 20 days. It is up to the employer and it will be in your employment agreement. The usual number of days in the Netherlands is 24 per year.
Heads up! It is a big lie if someone tells you that your vacation days are included in your salary and that if you take days off, you won’t get paid for those days. If this happens to you, get in touch with us. Maybe we can help find out what is going on.
Check your employment agreement
We don’t want to harp on about it, but it is very important that you check your employment agreement for the details about holiday allowance and vacation days. What does it say about your holiday allowance? Is it included in your salary or not? When is it paid (what month)? Are you entitled to vacation days? How many? If you are confused by the difficult terms and conditions in the agreement, we are happy to help you out.
If you have questions or you would like to see how your gross salary, including holiday allowance, impacts your take-home amount, please check the handy dandy Payroll Calculator on our website.
In case you have already planned your vacation, we wish you a great trip. Haven’t thought about it yet? Well, May is here, so almost time to spend some hard-earned money!!