It's that time of the year: Holiday allowance in the Netherlands
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One of the perks of working and living in the Netherlands is that by law an employee must receive holiday allowance and vacation days. Because of these perks, you will see your Dutch co-workers disappear in the months between June and September for weeks at a time. You might also notice that everyone will be very enthusiastic about their payslips in May. But how does holiday allowance actually work?
Holiday allowance in the Netherlands
Holiday allowance in the Netherlands is a gross payment of 8% of your total gross salary. This amount is usually built up during your employment period in the months June to May. Employers are obligated to pay this 8% holiday allowance to their employees. The Dutch word for holiday allowance is “vakantiegeld”, a word you will certainly remember, since you will be hearing it a lot when you work with Dutch colleagues!
What's the idea behind holiday allowance?
Holiday allowance was introduced in the Netherlands in the 1920s in order to stimulate workers to go on vacation and was conceived as a sort of paid leave. But back then, travelling abroad used to be very expensive and in the 1960s, holiday allowance became an extra payment on top of your salary and was paid in May. This extra payment made it easier to take a nice trip during the summer.
The idea behind paying it in May is that employees will feel encouraged to start planning a trip when receiving money for that purpose before the summer has actually started. Leaving for a vacation trip is, according to the Dutch system, good for you as a person and will result in better performance at work. However, what you spend your holiday allowance on is up to you. You can save it, buy something, or you can spend it on a nice trip.
An example of holiday allowance
Let’s take a look at an example of holiday allowance. If you earn a gross salary of 4.000 euros per month for a whole year, you will get a holiday allowance of 3.840 euros, in addition to your regular salary in May.
The calculation looks like this: €4,000 x 12 = €48,000. The 8% holiday allowance of this total amount is €48,000 x 8% = €3,840.
This means that if you earn 4.000 euros a month, you will get a total sum of (wait for it!) 3.840 euros in the month of May. Now that is an incentive to plan a trip!
An important note about holiday allowance
Please be aware that some employers choose to spread out the payment of holiday allowance over 12 months, instead of once per year. That would mean that you earn a higher monthly salary and do not get that nice big salary payment in May. Please discuss this with your employer in order to avoid misunderstandings.
The right to paid vacation days
In addition to the holiday allowance that will arrive in your bank account, you also have the right to take paid vacation days in the Netherlands!
When working full-time, you are entitled to a minimum of 20 paid vacation days per year. This means you do not have to work for 20 days, but you get paid anyway.
You can decide how and when to take your 20 vacation days. You may get more than 20 days, but never less; sometimes a collective Labour Agreement prescribes 24 or 25 vacation days.
An important note about vacation days
Another important note is that vacation days can never be swapped for additional pay. This means that 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 contract
Please check your employment agreement carefully to be sure about your holiday allowance and vacation days. If you are confused by the Dutch system, please do not hesitate to contact us! We’ll be glad to help you understand this important topic.
Have a happy holiday!
So, have you already planned a vacation trip? Then we wish you a great vacation! In case you haven’t thought about it - May is here so maybe it is time to spend some of your hard-earned money.
Are you curious about the effect of the holiday allowance on your gross salary? Calculate your take-home amount using this handy dandy payroll calculator from Payingit International!
If you have any questions about holiday allowance and vacation days or would like to ask for advice about something, please do not hesitate to get in touch with Payingit International: