In the Netherlands, the right to annual leave is closely linked to the right to pay. This principle differs from European directives, under which the right to annual leave is linked to the performance of work. This difference is particularly significant in situations where an employee has been off sick for two years and is unable to return to work with their own employer. Once the employer’s obligation to continue paying wages has ended, the employment contract usually comes to an end. The parties often enter into a settlement agreement. If the employee does not agree to this, the employer may apply to the UWV for a dismissal permit on the grounds of long-term incapacity for work. Once the employer has obtained authorisation, they may terminate the employment contract subject to the statutory notice period.
However, in both scenarios, the end date of the employment contract is unlikely to coincide with the date on which the obligation to continue paying wages ends. Given the different approaches to holiday entitlement accrual, the question arises as to whether employees continue to accrue holiday entitlement after the obligation to continue paying wages has ended.
The Dutch approach to holiday entitlement accrual
In the Netherlands, the accrual of annual leave is linked to the right to pay. This means that when an employee is no longer entitled to pay, they also cease to accrue annual leave. Strictly speaking, this means that employees who are still in service after two years of sickness and are not performing any work do not, in principle, accrue annual leave.
Differences between Dutch and European law
In contrast to Dutch legislation, European regulations link the accrual of annual leave to the performance of work. As a result, sick employees retain their full entitlement to accrue annual leave, regardless of whether they are still entitled to pay. This means that Dutch legislation deviates from the European directives on this point and may be in breach of European law.
Case law in the Netherlands
Dutch case law has only addressed the accrual and taking of annual leave following long-term illness to a limited extent. The Supreme Court has not yet ruled on this matter, but a Dutch court recently held that an employee is entitled to pay when taking annual leave after two years of illness. This ruling is in line with the aforementioned European rules, which stipulate that an employee must be treated financially in the same way during their holiday as they would be if they were working.
Consequences for employers and employees
For employers, this means that if they retain employees in their service after two years of sickness, they run the risk that these employees will continue to accrue annual leave, even if they are no longer entitled to pay. After all, an interpretation in line with the Directive implies that employees continue to accrue holiday entitlement for as long as they remain in service after the obligation to continue paying wages has ended.
How does TK ensure you can move forward?
Our employment law specialists have extensive experience with long-term incapacity for work, return-to-work programmes and dismissal procedures. We help you identify the risks, draw up a legally sound settlement agreement and conduct proceedings with the UWV, so that you, as an employer, know exactly where you stand.
Would you like more information?
Do you have questions about holiday entitlement for employees on long-term sick leave, or would you like to know what European case law means for your situation? Please contact Jeffrey or one of the other professionals from our employment law team. We’d be happy to help you find a solution.
