What is the 8% Holiday Allowance (Vakantiegeld) for Employees in the Netherlands?
Everyone who is employed in the Netherlands with a work contract is entitled to a sum of money, usually paid out in May or June, to the equivalent of 8% of the gross salary earned in the past year (e.g. from 1st of May of the previous year until 30th April of this year). This sum of money is referred to as ‘vakantiegeld’ in the Netherlands, roughly translated as ‘Holiday/Vacation Allowance’. You will see this on your salary slip, or next to the advertised salary on open job vacancies in the Netherlands.
Usually, you will only receive the holiday allowance in May/June from your current employer(s). The exception is when a job contract comes to an end, in which case the holiday allowance is paid soon after the end of the work agreement.
The holiday allowance was originally introduced by some collective labour agreements in 1910 and was meant to cover the extra costs experienced during the summer holidays (3). But you can choose to spend or invest it however you like, of course.
Example Calculation of the Holiday Allowance:
So for example, your monthly gross salary is €2500, and you have been working for your company for the past 10 months as of the 1st of May (i.e. 1st July of the previous year), when your Holiday Allowance is due:
- 2500 multiplied by 8% is 200
- 200 multiplied by 10 months is 2000
Therefore, the holiday allowance that you should receive from your current employer would be €2,000, minus tax deductions. Sadly, for employees, your Holiday Allowance is subject to tax.
What you don’t get Holiday Allowance for:
The employee is not entitled to any holiday allowance from end of year bonuses, dividends from profit-sharing schemes, other bonuses, etc.
Changes to the Holiday Allowance as of 1st January 2018
Previously, salary earned for working overtime or extra hours was not entitled to holiday allowance accrual. But as of 1st January 2018, this has changed and employees now do build up vacation allowance for working overtime or extra hours. (1)
Paid Leave: Working Time Directive in the European Union
Being an employee in the European Union (of which the Netherlands is a member state) affords you a number of protections regarding how much you can work and rest, by law. These laws are in the EU Working Time Directive of 2003 (2).
A summary of the key rights employees in EU countries (including the Netherlands) have are:
- a minimum daily rest period of 11 consecutive hours in every 24
- a rest break in any working day longer than 6 hours
- an uninterrupted 24-hour rest period every 7 days, in addition to the daily 11 hours
- at least 4 weeks paid annual leave
- a maximum average working week of 48 hours, including overtime, over 7 days
- normal night work should be no more than 8 hours on average in any 24-hour period
Having said this, it is more relevant to pay attention to Dutch law, because Dutch employment law typically goes above and beyond the minimums stipulated by the EU directives. Furthermore, collective labour agreements (CAOs) are standards that are determined by industry, so it is also important to know which CAO, if any, applies to your situation. Some CAOs can even stipulate terms which may appear to overrule Dutch law or the EU directive, but this is often due to the unique nature of some jobs. For example, the amount of rest a pilot is entitled to.
Paid Annual Leave/Vacation Days in the Netherlands (in Dutch: Vakantiedagen)
If you work full-time (i.e. 5 full days a week), then the legal minimum number of days paid leave that you are entitled to is 20, equivalent to 4 weeks of paid annual leave.
However, it is common practice for employers in the Netherlands to offer 25 days of paid leave, on top of 10 public holidays in the Netherlands.
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- Dutch Government website on Holiday Allowance (Vakantiegeld) (in Dutch)
- Summary of EU Working Time Directive 2003 laws on working time
- Origins of the Holiday Allowance (in Dutch)