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Lapse of statutory holidays: far-reaching obligations for the employer

Posted on: March 14, 2022

Article by Pallas Advocaten

Please be aware that holidays do not simply lapse after the statutory expiry date. This follows from recent case law: holidays only lapse if the employee has actually been given the opportunity to take them. In this respect, the employer has a serious duty of care and information. The employer must be able to demonstrate that he has complied with this obligation. Failure to do so may have far-reaching (financial) consequences.

 

Statutory holidays

Dutch law provides for a minimum holiday entitlement of four times the number of working hours per week: the so-called statutory holidays. The employee retains the right to salary during (statutory) holidays. The entitlement to statutory holidays lapses by law six months after the last day of the calendar year in which the entitlement has accrued (Article 7:640a of the Dutch Civil Code).

EU-law

The entitlement to paid leave is a fundamental right under EU law. According to case law of the EU Court of Justice, the employer has a far-reaching duty of care and associated duty to provide information to its employees in order to ensure that they make use of their right to paid leave. This obligation implies that the employer must inform the employee in a timely and transparent manner about the outstanding holidays and the consequences of not taking them (i.e. the lapse of these days). The employer must be able to demonstrate that he has fulfilled these information obligations and has thus provided his employees with sufficient opportunity to take their holidays.

 

Court of Appeal of the Hague of 16 November 2021

Recently, the Court of Appeal of The Hague ruled, in line with EU case law, that an employee’s statutory holiday entitlement had not lapsed even though the statutory expire date of Article 7:640a of the Dutch Civil Code had passed. The employer was not able to demonstrate that he had sufficiently encouraged the employee to take his holidays and had sufficiently pointed out the consequences of not using them. The employer’s appeal that the employee should have been aware of the consequences given his legal background (the employee was a lawyer) did not succeed either.

Conclusion

Holidays do not simply lapse after the statutory expiry date. The employer must ensure that the employee is actually able to take his holidays and inform him in a timely manner that he is at risk of losing them. Only if the employer is able to demonstrate that the employee – after being given the opportunity to take his holidays – has consciously and with full knowledge of the consequences waived his holiday entitlement, this entitlement can be deemed to have lapsed.


Practical tips

It is advisable to inform employees at the beginning of each calendar year about the remaining holiday balance, the consequences of not taking the statutory holidays (i.e. lapse) and to give employees the opportunity to take their statutory holidays before 1 July.

These notifications must be recorded in writing and kept in the administration system. Failure to do so can lead to high claims at the end of an employment contract, as the employer must pay out the employee’s outstanding holiday balance as part of the final settlement (Article 7:641 of the Dutch Civil Code). This may also have consequences for the negotiations in case of termination of the employment contract by mutual consent with respect to the payment of outstanding holidays.

Any questions or need for further advice about your employee’s entitlement to holidays or other employment law matters? Please contact Pallas Attorneys-at-Law.