Unlimited vacation days as an employment benefit

In this time of labor market tightness, employers are trying to distinguish themselves. For example, by offering employees an unlimited number of vacation days. But does this work in practice? And what should you pay attention to as an employer?

An unlimited number of vacation days can be a means for employers to attract employees. Some employers also find it an advantage that an unlimited number of vacation days encourages employees to take responsibility for the fulfillment of their employment relationship. However, there are also less positive opinions about offering an unlimited number of days. For instance, it leads to some ambitious employees hardly daring to take any vacation at all. And this can lead to inequality within an organization.

An unlimited number of vacation days: what does that entail?

In the Netherlands, every employee is legally entitled to a minimum of 20 vacation days for a 40-hour work week. These are called statutory vacation days. Statutory vacation days expire (in principle) 6 months after the last calendar day of the year in which they were earned. An employer can choose to offer more vacation days. These are then called extra-statutory vacation days. These expire 5 years after the last calendar day of the year in which they were earned.

Offering an unlimited number of vacation days therefore means: an employee receives at least the statutory vacation days, but otherwise there is no maximum on the number of vacation days.

On vacation all year?

The normal rules about taking vacation also apply to an employee with an unlimited number of vacation days. An employee cannot simply take a whole year off. He must first request this vacation from his employer. The employer can refuse a vacation request when there are compelling reasons that oppose taking vacation at the proposed time. However, compelling reasons do not arise quickly, so vacation cannot be refused so easily.

Additionally, there are also employers who, invoking the rules of “good employeeship,” address their employees when they threaten to take too much vacation. If employees really take an excessively large amount of vacation, this can probably be done. But here too, vacation may not be refused too quickly. So know what you are getting into as an employer.

What do you pay out at the end of employment?

When an employee leaves service, the employer is obligated to provide an overview of the number of outstanding vacation days and these must subsequently be paid out. But what number should be used if the employee has an unlimited number of vacation days?

Most employers try to prevent this ambiguity by agreeing in advance in the employment contract that the employee may take an unlimited number of vacation days, but that upon termination of employment, the statutory number of vacation days is used as the basis. Only a remainder of the statutory vacation days is then paid out. Legally, such an agreement is not entirely watertight. The law states that outstanding vacation days must be paid out and no distinction is made between different types of vacation days.

Conclusion

Offering an unlimited number of vacation days can be an interesting employment benefit to offer. However, we see that current legislation does not yet align well with this relatively new phenomenon. This can lead to discussions, for example when requesting vacation or about payment upon termination of employment.

To prevent these discussions as much as possible, we advise in any case to establish a good vacation policy with clear agreements about taking vacation and payment at the end of employment.

For now, we wish you all a wonderful vacation! We naturally remain accessible to all our clients in the way you are accustomed to.

What does the court rule?

Fair compensation for employee who lashes out at employer

If an employee seriously misbehaves, this does not automatically mean there is a reason for summary dismissal. Whether a summary dismissal holds up depends on various circumstances, but also on what you can or cannot prove. Sometimes you see this leads to special outcomes in case law, such as this case where an employee lashed out at his employer and according to the employer made serious threats.

An employee entered service with the employer on January 1, 2022, as a general employee. Due to wage garnishments, his salary was reduced. This led to discussion about the payment of reserved amounts. On November 3, 2022, a conversation about this escalated, resulting in a physical confrontation between the employee and the director of the employer. After the incident, the employee was summarily dismissed because he allegedly threatened the director and shareholders. In the proceedings, the dismissed employee claims fair compensation due to wrongful summary dismissal.

The positions

The employee claims that he was wrongfully summarily dismissed and that he never made threats. He states that emotions ran high during the conversation and that the physical confrontation was provoked by the director of the employer. The employer maintains that the employee made threats toward the director and shareholders, including even death threats. He allegedly also showed a gun during a video call. Although the employer admits that a physical confrontation took place, it denies that the employer acted reprehensibly.

The legal assessment

The subdistrict court judge concludes that the parties agree that the conversation on November 3 resulted in a heated discussion. The employer has acknowledged that the director physically touched the employee. That the employee reacts to this and says things that, in retrospect, he should not have said, is understandable in that context according to the subdistrict court judge. However, it has not been proven that the employee threatened the director and shareholders (with death). The WhatsApp messages containing threats appear to come from the employee’s nephew. Under circumstances, actions of friends and/or family members of an employee can be attributed to an employee, but this was not presented to the employee in the summary dismissal letter. It has also not been proven that the employee showed a gun during the video call with the shareholder. The employer had argued that witnesses could be heard, but did not sufficiently explain to the court why this was necessary.

Since the summary dismissal is not valid, the employee is entitled to fair compensation. He claims an amount of €33,975 gross based on twelve monthly salaries. The court considers fair compensation of €9,000 gross appropriate given the circumstances, including the disrupted employment relationship and the young age of the employee. Additionally, the employee is entitled to a transition allowance and fixed damages.

Conclusion

This is an extreme case, but it clearly shows how complex a summary dismissal can be. In this case, it becomes clear that the court places great value on what preceded the employee’s actions and how the employer behaved. It is also important that the employer can prove the urgent reason he cites. Finally, it is notable that the court refers to the dismissal letter, which did not include that his nephew’s actions are attributed to the employee. Because this was not made sufficiently clear to the employee in the dismissal letter, the court does not include this in its assessment of the dismissal.

This issue shows that, regardless of the seriousness of the employee’s misconduct, the summary dismissal may still not proceed. And by wrongfully summarily dismissing an employee, an employer acts seriously reprehensibly and this results in the employer having to pay additional dismissal compensation to the employee.

Are you considering giving a summary dismissal as an employer? Always consult with a specialized lawyer first. They can assess whether a case indeed lends itself to summary dismissal and can also help with drafting a proper dismissal letter.

Employment law changes as of July 1, 2023

As of July 1, 2023, quite a bit has changed in the field of employment law. The most relevant legislative changes are explained below.

1. The wage continuation obligation for sick AOW recipients from 13 to 6 weeks
If an employee is incapacitated for work, the employer is in principle obligated to continue paying wages for a maximum period of 104 weeks. For incapacitated employees who have reached the AOW-eligible age, a shorter period of (only) 13 weeks applied. This period has been reduced to 6 weeks as of July 1, 2023.

Note: for AOW-eligible employees who were already incapacitated before July 1, 2023, the 13-week term still applies.

2. The employee’s vision on reintegration must now be recorded in writing
Since July 1, 2023, it is mandatory to record, in addition to the employer’s vision, also the sick employee’s vision on the reintegration process when drafting and updating the Plan of Action and the First Year Evaluation.

The expectation is that with the addition of this employee vision, reintegration will proceed more smoothly and there will be greater involvement in the reintegration process from both parties. Moreover, the vision can be adjusted if there is reason to do so. If a Plan of Action was established before July 1, 2023, and it is not modified, it is not necessary to add the employee’s vision retroactively.

UWV will place new forms on its website from July 1, 2023, for the plan of action and the first year evaluation, in which space has been added for the employee’s vision.

3. The gross amounts of the statutory minimum wage are going up again (3.13%)
The minimum wage for adults aged 21 or older has increased by 3.13% and now amounts to €1,995 per month for full-time employment.

4. The Future Pensions Act has entered into force

This new pension law significantly overhauls the pension system and realizes a more transparent and personal pension system that better aligns with social developments and the current labor market.

Although the law entered into force on July 1, 2023, there is first a transition phase: the existing pension agreements must be adjusted. For this purpose, the law provides transition rules and rules for transferring pension rights and entitlements that have been built up under the current pension system. One of these rules stipulates that employers must in principle draw up a transition plan containing, among other things, the character of the modified pension agreement, the way in which accumulated entitlements and pension rights are handled, the consequences of the modification, and agreements about compensation.

Social partners and implementers have until January 1, 2028, to adjust the pension schemes.

5. Act on Improvement of Flexible Workers in internet consultation

On July 10, 2023, the Act on Improvement of Flexible Workers went into internet consultation. Three days after the cabinet fell. It is the first bill from the package of measures for more security for workers and more agility for entrepreneurs presented in April. This bill announces the following changes:

1. On-call contracts in their current form will disappear. Instead, a ‘basic contract’ will be introduced.
2. The ‘interval’ in the chain regulation disappears.
3. The phases for temporary workers become shorter. Temporary workers receive

   the right to a permanent contract with the employment agency sooner.

4. Exception for pupils, students, and seasonal work.

Everyone can respond to the bill until September 4, 2023, via Overheid.nl. Only after that, on September 12, 2023, will it be announced which files will be declared controversial. It is therefore still uncertain whether this bill will be processed further.