How much is an accrued vacation day worth?Legal framework
Article 7:641 of the Civil Code stipulates, among other things, that an employee retains the right to wages during his vacation.
At the end of the employment contract, accrued, unused vacation days must in principle be paid out. This applies to both statutory and non-statutory holidays.
Article 7:641 of the Civil Code further stipulates that an employee is entitled to compensation for unused vacation days ‘up to an amount of the salary for a period corresponding to the entitlement.’
The value of vacation days
The aforementioned legal provision seems quite simple. One day of vacation is worth one day of wages. The question, however, is what falls under ‘wage’ in this context. That this question is not as easy to answer as it seems is evident from the fact that much has been written about this question.
It is now clear that a broad concept of wages must be used in this context. Case law shows that, depending on the actual situation, the following must be included in the calculation of the compensation for unused vacation days:
- Wage;
- Holiday bonus;
- Shift allowance;
- Irregularity allowance;
- 13th month;
- Bonuses that are (or have been) related to the employee’s efforts and are directly related to the employee’s activities in the company and have been paid out systematically;
- The employer’s share of the pension premium (see the statement opposite).
With regard to this last item, the question is how this will work in practice now that the employee’s pension participation stops due to termination of employment.
Case law
Ktr. Northern Netherlands February 28th, 2017
In a judgment, the Court of Justice of the European Union considered the following in the context of the concept of “holiday pay”:
‘Any burden that is intrinsically linked to the performance of the tasks assigned to the employee in his employment contract and for which he receives financial compensation is included in the employee’s overall remuneration.’
Whether this intrinsic connection exists is left to the national court to assess.
Referring to this consideration, the subdistrict court judge determined that the employer’s premium, although it is not a wage in the literal sense, has a certain value and is therefore part of the broad concept of wage.
In this context, the subdistrict court judge considered it important that if the employee had remained employed and taken his vacation days during the period, a premium would also have been due. According to the subdistrict court judge, the employee may not be put in a more disadvantageous position if the situation is compared between payment of unused vacation days and actually taking them.
