What Is Vakantiegeld and Why Does It Matter?
Vakantiegeld (holiday allowance) is one of the most distinctive features of Dutch employment law. Unlike most countries, the Netherlands legally requires employers to pay an additional 8% of gross annual salary as holiday allowance. This isn't a bonus — it's a statutory right embedded in the Dutch Civil Code (Article 7:639 BW).
For international companies, understanding vakantiegeld is critical. Failing to calculate or pay it correctly is one of the most common compliance violations that triggers employee claims. The allowance accrues monthly, even during probation periods, sick leave, and notice periods.
How Is Vakantiegeld Calculated?
The standard calculation is straightforward: 8% of the employee's gross salary, including regular wage components. However, several nuances catch employers off guard:
- Base calculation: 8% applies to gross salary including fixed allowances and overtime (if structurally agreed)
- Variable pay: Commissions, irregular bonuses, and profit-sharing are typically excluded unless the employment contract or CLA states otherwise
- Part-time employees: Calculated proportionally based on actual hours worked
- Accrual period: Runs from June 1 to May 31 (standard) or follows the calendar year, depending on your payroll setup
Some employers negotiate a higher percentage in collective labor agreements (CAOs). In sectors like construction and healthcare, the holiday allowance can exceed 8%. Always check whether a mandatory CLA applies to your industry.
When and How to Pay Vakantiegeld
Traditionally, vakantiegeld is paid as a lump sum in May or June, coinciding with the start of the summer holiday season. This is when Dutch employees expect to receive their "extra month" of salary.
However, employers can arrange alternative payment schedules:
- Monthly inclusion: Some companies include the 8% in monthly gross salary. This must be explicitly stated in the employment contract and clearly visible on payslips
- Quarterly payments: Less common but permissible with employee consent
- Upon termination: Any accrued but unpaid vakantiegeld must be settled in the final paycheck
Important: if you include vakantiegeld in monthly salary, you must still show it as a separate line item on the loonstrook (payslip). Bundling it invisibly into the total is not compliant.
Tax Implications and Payroll Processing
Vakantiegeld is fully subject to Dutch income tax and social security contributions. The tax treatment depends on how it's paid:
- Lump-sum payment: Taxed under the special rate (bijzonder tarief), which can be higher than regular monthly withholding. Employees sometimes feel they "lose" more to tax, though this is reconciled in the annual tax return
- Monthly payment: Taxed as regular income alongside the base salary
- Pension contributions: Vakantiegeld typically counts toward pensionable salary, depending on your pension scheme's definition of "pensioengevend salaris"
Your payroll provider should handle these calculations automatically, but it's essential to verify the setup during configuration — especially when transitioning from one payroll system to another.
Common Mistakes Employers Make
From our experience supporting hundreds of companies, these are the most frequent vakantiegeld errors:
- Forgetting to accrue during sick leave: Employees on sick leave continue to accrue vakantiegeld on the portion of salary they receive (typically 70-100%)
- Incorrect base for calculations: Including or excluding the wrong salary components leads to underpayment claims
- Not paying upon termination: All accrued vakantiegeld must be paid in the final settlement, regardless of the reason for termination
- Missing CLA requirements: Industry-specific CLAs may mandate a higher percentage or different payment schedule
