Changes in holiday legislation

• Netherlands

• Employment law

25-11-2011

Introduction

In the Netherlands new legislation regarding the accrual and lapsing of vacation days will come into force as from 1 January 2012. The new legislation introduces a new, shorter, period within which statutory vacation days will lapse and removes the difference in accrual of vacation days between employees on sick leave and non-sick employees. Below please find a brief and general overview of the most important changes as a result of the new legislation and the practical consequences thereof for employers.

What will change?

Dutch law on vacation days recognizes "statutory vacation days" (1), being the minimum statutory holiday entitlement, and other vacation days, being vacation days granted in excess of the statutory minimum, the "additional days". Under the current legislation all accrued but untaken vacation days lapse 5 years after the calendar year in which they have accrued. As from 1 January 2012, employees will have to take the accrued but untaken statutory vacation days accrued as from 1 January 2012 within 6 months of the end of the calendar year in which they have accrued, otherwise they will in principle lapse. For example, statutory holidays accrued in 2012 will in principle lapse, if untaken, as per 1 July 2013. This six month limitation period will, however, not apply if an employee has not had a reasonable opportunity to take the statutory vacation days accrued in the previous calendar year within the first six months of the next calendar year. The six month statute of limitation only applies to statutory vacation days and will not apply to additional vacation days. The limitation period for these additional vacation days remains unchanged at 5 years after the calendar year in which they have accrued.

Under current Dutch legislation on vacation days employees on sick leave only accrue vacation days during the last six months of their illness period. This was considered unlawful discrimination against sick employees. Therefore, as from 1 January 2012 this difference in accrual of vacation days will cease to exist, as a result whereof the accrual of vacation days for employees on sick leave will be the same as for employees not on sick leave.

Practical consequences

The new legislation will have some practical consequences for an employer's holiday administration, as in an employer's holidays administration the following distinctions must be clear:

• All vacation days accrued up to 1 January 2012 but still untaken will remain subject to the expiry period of 5 years after the end of the relevant calendar year in which these days have been accrued;
• Statutory vacation days accrued as from 1 January 2012 will be subject to the (new) expiry period of six months after the end of the relevant calendar year in which the statutory vacation days have accrued;
• Additional vacation days accrued as from 1 January 2012 will remain subject to the expiry period of 5 years after the calendar year in which they have accrued;
• Statutory vacation days accrued as from 1 January 2012 the employee was not reasonably able to take within six months after the year in which they have accrued, are subject to an expiry period of 5 years

As from 1 January 2012 the employer and the employee may also agree to a different statute of limitation with respect to statutory vacation days.

As a result of the new legislation, employers will thus for the period of 5 years (2012 - 2017) be confronted with (at least) three types of vacation days in the vacation day administration, which may be an administrative burden.

Which days will lapse first?

According to (current) case law of the Dutch Supreme Court an employee is always deemed to first take the oldest vacation days, i.e. the earliest accrued vacation days. This rule will no longer apply as from January 2012, as a result of the difference in the statute of limitations with respect to statutory and additional vacation days. The parliamentary history of the new legislation indicates that the current situation is not applicable to this new legislation because of the shorter statute of limitations of newly accrued statutory vacation days.

As from 1 January 2012 an employee is deemed to first take the vacation days with the shortest limitation period, i.e. the statutory vacation days accrued in that year (with a limitation period of 6 months after the year in which they have accrued) and subsequently the "oldest" (additional) vacation days and the (statutory) vacation days the employee was reasonably not able to take (all with a limitation period of five years after the year in which they have accrued).

Note 1: According to Dutch law, the statutory minimum holiday entitlement is 4 times the agreed number of working hours or days per week, e.g. 20 days per year on the basis of a five-day working week. However, many employers grant their employees additional vacation days over and above the statutory minimum. These days are referred to as "the additional days".