Your business is running smoothly, your team is happy, and everything feels under control… until you suddenly think: when exactly do I need to pay out holiday allowance again?
Maybe it was already on your radar, or maybe you’ve just realised it’s time to sort this out. No worries! Here’s a quick and clear refresher so you can pay out holiday allowance stress-free and with a properly funded reserve.
When do you have to pay holiday allowance in the Netherlands?
- Usually in May or June. This is when most companies pay it out.
- Exceptions? Only if you’ve agreed on a different date in the employment contract or collective labour agreement (CAO).
- At least 8% of the gross annual salary. This amount must be reserved separately. Have you done this consistently? If not, it might be time for a quick cash flow check.
Are employees already asking about their holiday pay?
Use the Nmbrs Holiday Allowance Calculator when employees have questions. They can calculate it themselves, saving you from doing additional mid-year calculations.
Can you pay holiday allowance differently?
Absolutely. As a Dutch employer, you have some flexibility, as long as your employees agree.
- Spread payments. Pay a small portion periodically (monthly, 4-weekly or weekly) instead of one lump sum in May.
Note: When paid periodically, the allowance is taxed at the regular tax rate instead of the special tax rate. - Early payout on request. For example, if an employee has a large upcoming expense. Not mandatory, but possible.
- Payment in December. Some collective agreements allow holiday allowance to be paid in December. This must be explicitly agreed, as it is not the same as an end-of-year bonus.
Many Dutch employers wonder when they should start reserving holiday allowance to avoid cash flow surprises. The best approach? Start reserving from the moment you pay salaries. By setting aside a percentage each month, you’ll have no surprises when spring arrives.
Tax and holiday allowance
Holiday allowance in The Netherlands is usually taxed at the special tax rate, because it counts as irregular income. This rate is calculated based on the total taxable annual salary, including the holiday allowance.
Help! An employee is leaving. Do you need to pay holiday allowance?
Yes. Whether someone resigns or you terminate the contract, the built-up holiday allowance must always be included in the final payment.
Not sure exactly when to pay it out?
It’s usually settled with the last salary payment or paid separately in the final settlement.
How to avoid financial surprises
- Start reserving as soon as you pay salaries. Set aside 8% monthly to build a buffer effortlessly.
- Check your cash flow. A quick check ensures your reserves are on track and avoids issues in spring.
- Use the Nmbrs Holiday Allowance Calculator. Employees can calculate and verify their own allowance, reducing questions and preventing recalculations afterward.
