The value of holiday leave

Employees have at least four weeks of holiday leave per year. Often this is a bit more, based on additional regulations such as a collective agreement. If an employee takes leave, he will continue to be paid. If an employee leaves the company and holiday days remain, the remaining leave is paid. In these situations, the question arises, what is the value of holiday leave?

How much is leave worth?

The European Court has ruled that an employee must not be discouraged from taking holiday leave. There is certainly a disincentive if an employee receives less pay during his holiday than the pay he would receive if he continued to work. The pay for a day of holiday must therefore be equal to the pay for a "normal" working day.

The remuneration for a day off therefore consists not only of the basic salary, but also of all salary components intrinsically linked to the tasks and allowances that the employee normally receives. This also applies to remuneration for holidays, which are paid out at the end of the employment. The value of holiday leave is thus equal to the value of 'normal' working days.

Relevant wage components?

What should be paid in concrete terms during holiday leave or at the end of the employment? In any case, the basic salary and the fixed allowances must be paid. The fixed allowances that are paid once a year also count. Think for example of holiday pay, a fixed year-end bonus or thirteenth month.

The (average) variable allowances such as an irregularity, evening, night or weekend allowance must also be paid. These are still excluded in some CAOs, but that is not right. The deviating provisions in a CAO cannot override the compulsory holiday entitlement.

Components such as bonuses, commission and commission must, in principle, also be included (pro rata) in the holiday pay. Expense allowances are not included in the calculation of the holiday pay.

Some wage components are regularly subject to discussion. For example, judges have in recent years addressed the question of whether the employer's portion of the pension premium or the cost of a lease car that may be used for private purposes should be part of the holiday pay. To date, there is no really clear case law.

Conclusion

Continuing to pay wages during an employee's holiday is fairly self-evident, but the amount of these wages is often a matter of dispute. If remaining holidays have to be paid out at the end of the employment contract, things often get complicated, especially if the salary consists of different components.

Would you like advice on your holiday arrangements or assistance with an (impending) dispute about payment for holiday leave upon termination of an employment contract? Please feel free to contact our labour law specialists.