This case addressed exactly what should count as the wages an employer must pay an employee for the days they take as holiday.
First instance
The employee (a driver) argued at first instance that her employer had not paid her the correct wage for holiday days throughout her employment, since it had wrongly excluded overtime worked (including allowances), the annually recurring bonus, and the subsistence expense allowance from the calculation. The employer disputed the claim. The subdistrict court ruled that structural overtime, the bonus, and the subsistence allowance all form part of holiday pay. Her claims were granted.
The appeal
On appeal, the employer sought to have the subdistrict court’s ruling overturned and the employee’s claims rejected.
The Court of Appeal set out the following starting point. Under Section 7:639(1) of the Dutch Civil Code, an employee is entitled to continued payment of wages during holiday. This applies to both statutory and additional, non-statutory holiday days. In determining the scope of pay owed during holiday, the interpretation given by the Court of Justice of the EU is decisive. Both the legislative history and Supreme Court case law also apply a broad concept of pay. The Court of Appeal therefore likewise applied a broad concept of pay. What matters is that the employee has the opportunity to recover from their work effort, and is not deterred from taking holiday by receiving lower pay for those days.
Subsistence allowance and bonus
The subsistence allowance reimburses expenses incurred while travelling for work. The employee did not argue that the amount was so high that the allowance was, in reality, not used to cover expenses and was therefore disguised pay. The Court of Justice of the EU excludes genuine expense allowances from the pay owed for holiday days. The subsistence allowance therefore does not fall under “pay”.
Taking holiday has no negative effect on the bonus. The Court of Appeal therefore ruled that the bonus does not need to be included in holiday pay.
Overtime
Overtime made up a significant part of the employee’s income. It must be included when determining the level of pay she is entitled to during holiday. The overtime had been structural for years, and had thereby become part of the obligations flowing from the employment contract for both employer and employee. Taking holiday should not result in a significant loss of income.
The overtime, including the irregular-hours allowance, must be paid by the employer to arrive at the correct holiday pay. The employee is also entitled to the 10% statutory surcharge on this amount.
For the Court of Appeal’s full ruling, click here (in Dutch).
Questions about the above?
Please contact one of Sørensen Advocaten’s employment lawyers. Call: +31 (0)10-2492444
