Vacation pay in May

The month of May is coming and that means the annual vacation pay is due again. Usually this is 8% of gross pay. But in your CLA a higher percentage may be agreed upon. An all-in gross salary is also possible, in which case the vacation pay is included in the salary. In that case, make sure that the percentage of vacation pay is shown separately on the payslip.

For most employers, the rules about vacation pay are well known. But is the same true when it comes to accrual and lapse of vacation days? In this article, we would like to remind you of the duty of care and information with regard to taking vacation days.

Duty of care and duty of information

What most employers are less aware of is that they must actively encourage their employees to take vacation and give timely warning every year that vacation days will expire on July 1. This is called the duty of care and information.

Vacation is meant to give the employee a chance to unwind with pay. The employer must ensure that the employee can actually exercise this right. The employer must actively encourage employees to do so. This is the duty of care. This is why it is often included in the employment contract that vacation days should be taken in the same year as far as possible.

Expiration and prescription of vacation days

As of July 1 of the current year, the period after which statutory vacation days that an employee has accrued but not taken in the previous calendar year expire. By law, every employee is entitled to a minimum of 20 vacation days (for full-time employment). These are called the statutory vacation days. Employers can voluntarily grant additional vacation days on top of this. These are called extra statutory vacation days. These extra days expire after five years.

Sanction for employer

But beware. This is not enough to make the employee responsible for taking vacation days. As an employer, you must proactively, well in advance, inform the employee in a precise manner about the outstanding vacation days and warn them that any outstanding statutory vacation days will lapse if they are not taken before July 1. This is called the duty to inform. The consequence of failing to inform correctly is that vacation days neither expire nor are time-barred and thus can still be taken or must be paid out at the end of the employment contract.

That became an expensive lesson for one employer last year. The Supreme Court ruled on this (ECLI:NL:HR:2023:955). According to the Supreme Court, the employer has a duty of care to promptly encourage the employee to take vacation time and, if necessary, to formally encourage him to do so. The burden of proof on this rests with the employer. In this case, the trial court previously ruled that the employer had not fulfilled this duty of care or the duty to inform, with the result that the employee’s unused statutory vacation days had not lapsed and could not be time-barred. Employee was therefore entitled to an amount of €60,000 gross in accrued but unused vacation days at the end of his employment contract.

Tips for the employer

Ensure a watertight leave administration. Ensure that all employees apply for leave in the same way in writing or digitally and do not leave applications hanging. Avoid verbal agreements and commitments that cannot be traced later.

Get into the habit of sending each employee a personal e-mail at the beginning of the year listing the outstanding vacation balance and referencing the due date.

Then schedule a personal meeting with each employee at the beginning of each year and discuss the vacation balance and vacation plans. This way you encourage the employee to actually exercise their vacation rights. Warn again about the consequences of not taking vacation days on time. Don’t forget to put this conversation in writing in a report and share it with the employee. After all, as an employer you need to be able to prove that you have fulfilled your duty of care and information.

Contact

Do you have any questions? Then contact one of our lawyers by mail, telephone or fill in the contact form for a free initial consultation. We will be happy to think along with you.