Accrual of Vacation During Long-Term Illness: What Employers Need to Know

For a long time, the situation seemed clear: employees accrued holiday entitlement as long as they were entitled to continued salary payment. After 104 weeks of illness, the employer’s obligation to continue paying wages ends (unless the Employee Insurance Agency (UWV) imposes a wage sanction), and therefore holiday accrual was also considered to stop. This was how the Dutch legislator had regulated the matter.

However, the European Court of Justice (ECJ) took a different view. As early as 2009, the Court ruled that employees on sick leave continue to accrue statutory holiday, regardless of whether they are entitled to wages.

Due to technical legal reasons, this initially had no practical effect in the Netherlands: the national rule continued to apply.

This changed when the ECJ determined that national courts must apply EU rules on holiday, even if national law states otherwise. Recently, the subdistrict court in Arnhem applied this principle: employees on long-term sick leave continue to accrue statutory holiday, even if they are no longer entitled to wages.

This development carries important implications:

1. Holiday accrual continues
   Employees on sick leave continue to accrue statutory holiday entitlement.
2. Increased payroll costs
   This leads to higher costs for employers.
3. Full salary during holidays
   If a sick employee takes holiday, they are entitled to the full salary they would have received if they had not been ill—even if they are otherwise not entitled to wages during that period.
4. Payout upon termination
   Unused statutory holiday days must be paid out when the employment ends. Newly accrued days therefore also need to be compensated. Note: this obligation applies only to statutory holiday entitlement, not to additional contractual days.
5. Written consent required for holiday deduction
   If a sick employee wishes to take holiday, they must give written consent for the days to be deducted from their balance. Without such consent, the entitlement remains unaffected.

1. Account for the costs
   Budget for continued holiday accrual during long-term illness.
2. Be aware of UWV delays
   Due to backlogs in medical assessments at the UWV, ending an employment contract after two years of illness may take longer. These delays currently cannot be recovered from the UWV. Act promptly to mitigate additional costs.
3. Document holiday usage
   Ensure that employees confirm in writing when they take holiday, so the days can be properly deducted from their balance. Without written confirmation, the holiday entitlement remains intact.

Adjust your HR and payroll processes to reflect these developments.

Please contact Jan-Pieter Vos for further information.

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