It’s that special time of year again! In the Netherlands, most employees receive their Dutch holiday allowance, often worth nearly double a monthly salary. This allowance, also known as vakantiegeld, amounts to 8% of an employee’s gross annual salary and they usually pay it in May or June – perfect for planning a summer vacation. This guide explains everything about the holiday allowance in the Netherlands.
What is the Dutch Holiday Allowance?
Think of the holiday allowance as the Dutch version of “pocket money” for adults. The government requires employers to pay this extra sum on top of the employee’s gross salary. Typically, it equals 8% of the gross annual salary from the previous year.
The History of Holiday Allowance in the Netherlands
In the Netherlands, people work to live, not live to work. The allowance encourages employees to take a proper summer break, supporting their work/life balance. Happier, well-rested employees are healthier and more productive.
Before 1910, vacation time was unpaid, making it hard for workers to take time off. By the 1920s, most white-collar employees earned paid holidays, which improved productivity and morale. Employers introduced the holiday allowance to attract and retain workers. Trade workers, however, did not receive this benefit for decades, leading to disputes between unions and employers.
In 1966, the Holiday Act granted all Dutch workers over 18 the right to paid vacation time. Since then, the holiday allowance has become a standard part of employment in the Netherlands.
Additionally, employers often observe King’s Day, a vibrant national holiday, offering another moment of collective celebration, time off and cultural engagement for employees in the Netherlands
How to Calculate Holiday Allowance
Generally, the holiday allowance equals 8% of an employee’s yearly gross salary. For instance, if someone earns €50,000 gross annually, the allowance would be:
- 50,000 x 0.08 = €4,000 gross per year
Employers may also agree to pay the allowance monthly, increasing the monthly salary instead of providing a lump sum. In that case, the calculation is based on the monthly rate:
- 4,167 x 0.08 ≈ €333 per month
Since January 2020, temporary workers are entitled to a slightly higher holiday allowance of 8.33%.
When is the Allowance Paid?
Traditionally, they pay the holiday allowance as a lump sum in May, enabling employees to fund their summer vacation. However, employers and employees can agree to monthly payments instead, which increases net monthly wages. HR must have written consent from employees to adjust the payment schedule.
If employment ends before May, any accumulated allowance is included in the final salary payment.
Who is Entitled to the Holiday Allowance?
Most employees over 18 automatically receive the holiday allowance when they start a job in the Netherlands. The allowance accrues based on time worked. For example, a full-time employee starting in January will earn 8% of their gross salary over five months.
Some exceptions include:
- Freelancers (ZZP’ers): They set their own holiday arrangements.
- Certain sectors: Collective labour agreements may exclude it.
- Interns: Employers may offer it, but it is not mandatory.
- High earners: Employees earning triple the Dutch minimum wage may have reduced or no allowance.
HR and Payroll Support for Foreign Businesses in the Netherlands
Expanding into the Netherlands presents many opportunities but also challenges. Local expertise is crucial for compliant HR and payroll processes. Octagon Professionals can help foreign businesses navigate Dutch employment law, payroll management, and holiday allowance obligations. Schedule a consultation with one of our experts to learn how we can support your business in the Netherlands.
