In the Dutch Civil Code the Netherlands has implemented the obligation for all member states of the European Union as set out in the Working Time Directive to take the necessary measures to ensure that every employee is entitled to paid annual leave of at least 20 days (in case of full-time employment).
Recently the European Court of Justice in Lock ruled that, based on the Directive, the employee's holiday pay cannot be limited to basic salary and should also include commission payments. It is to be expected that in many countries within the European Union this judgment will have a major financial impact. However in the Netherlands, the definition of "wages" was already broadly interpreted.
In the Netherlands, article 7:634 of the Dutch Civil Code stipulates that during holiday the employee must retain their entitlement to wages. The Supreme Court of the Netherlands considered holiday without loss of payment of wages as an important right and ruled that the entitlement of an employee to wages during holiday must include all wages agreed upon between the employer and the employee. Based on this ruling Dutch Lower Court case decisions already showed in 2011 and 2012 that, respectively, shift work allowances and agreed bonuses are considered part of the agreed wage and therefore a part of holiday pay.
Accrual of holiday during sickness
Since 2012 Dutch law on the accrual of holiday during illness corresponds with the Directive and no longer makes a distinction between normal working days and sick days; an employee is entitled to the statutory minimum of 20 days of holiday regardless of state of health. Before 2012, sick employees could only build up holiday over the last six months of the period during which they were unfit for work.
The removal of the exemption has consequences not only for the accrual of statutory days' holiday during sickness. In addition, agreed days' holidays exceeding the statutory minimum are to be fully accrued during illness. Exceptions are however possible in a Collective Labour Agreement.
Holiday pay during sickness absence
Employees in the Netherlands are entitled to continued payment of their salary during illness for, in principle, a maximum period of 104 weeks. The amount of salary that has to be paid depends on what has been agreed upon in the employment contract or, if applicable, in a collective bargaining agreement; however, a minimum of 70% of the last earned income and during the first year of illness the statutory minimum wage as a minimum applies. This obligation does not apply during the second year of illness.
The employer and the employee can agree to consider a day of sickness absence as a holiday, if it relates to days over and above the statutory minimum (of 20 days) and if the employee has agreed to it in writing.
If an employee takes holiday during illness, the employee is entitled to continued payment of the full holiday pay and not the statutory continued payment of wages during illness which could be lower (70% as a minimum).