Facts and risks associated with your employee’s leave HR Laws and regulations

21 apr, 2017

Every employee is entitled to a minimum number of leave days each year. However, if an employee does not take these leave days within a certain period of time, he/she will lose these days. An employee is also allowed to carry forward these days, but how do you prevent these leave days from stacking up and will this cost you more than anticipated? How do you keep control of this?

Leave days

The statutory leave for an employee is four times the number of weekly working hours. This is the minimum number of hours of leave to which an employee is entitled (20 days a year based on a full-time working week). If the employee receives extra leave, we refer to this as leave in excess of statutory annual leave. This can be agreed in the Collective Agreement, staff rules or in the employment contract.

Validity
The statutory leave and leave in excess of statutory leave can expire:

  • Statutory leave is valid for six months after the year in which the leave was accrued. Therefore, leave accrued in 2016 is valid until the 1st of July 2017 and the leave will then expire.
  • Leave in excess of statutory leave is valid for 5 years after the year in which the leave was accrued. The leave accrued in 2016 is therefore valid until the 31st of December 2021 and the leave will then expire.

Leave may only be allowed to expire if the employee has been given the opportunity to take the leave. This is, for example, not the case in the event of sick leave. In addition, an employee must be able to view the number of leave days to which he/she is still entitled. If the leave days expire, you do not have to pay any form of compensation or to make a payment in lieu of accrued leave.

Prevent these leave days from stacking up
As well as it being important for your employee to take leave, this is equally important for you. As leave days remain valid for quite some time, leave days could stack up.

Avoid being faced with unpleasant surprises if your employee suddenly takes a long holiday. As employer you are allowed to allocate specific periods of time during which leave days have to be taken. Or you could pay for the remaining statutory leave at the end of the year. However this must be laid down by agreement between employer and employee in his/her employment contract.

Payment in lieu of accrued leave
An employee is entitled to payment in lieu of leave days in excess of statutory leave. Leave hours are paid at the hourly rate applicable at that time. In any case if employment is terminated, you are obliged to pay holiday pay if a payment is made in lieu of annual leave. If an employee carries forward these leave days to subsequent years and then asks for payment in lieu of these days, it is very probable that these days will become more expensive for you. In the majority of cases, an employee’s hourly rate will increase each year and as a result of the value of these holidays will rise.

Keep track
If you wish to prevent this, it is important to modify your company’s employment contract. Moreover, it would be advisable to have a clear picture of your employee’s leave status. This would enable you to intervene on time and avoid any unpleasant organisational or financial surprises.

Unpaid leave

In addition to leave days and other types of leave, an employee can also put in a request for unpaid leave. There are no set provisions for this in our legislation, but this may be covered in the Collective Agreement. Taking this into account, along with your employee, you can give further consideration to the unpaid leave. During unpaid leave, your employee will not accrue any leave days.

Other consequences
Unpaid leave will possibly have an impact on your employee’s personal life. For example, the level of various allowances, such as care allowance, rent allowance and childcare allowance, but this could also possibly impact a benefit that is paid after the leave has been taken. Not only is the employee’s income taken into account, but his/her partner’s details will also have an impact. Make sure that your employee is aware of this. Unpaid leave can also have an impact on the employee’s pension. Pensions schemes have different rules in this regard. Contact your pension fund or your contact person at Arvode if you would like to know more about this.

Other types of leave

As well as leave days and unpaid leave, there are also other forms of leave. All of these leave schemes have different risks, rights and obligations. In this series of newsletters, we will draw your attention to the various focal points in the different types of leave.

Below is an overview of elements that you could give thought to.

 

Duration

Paid

Payment through the Social Security Agency (UWV)

Accrual of leave days

Impact on benefits

Impact on allowances

Impact on pension

Parental leave

26x weekly working hours

No

No

No

No

Yes

*

Maternity leave

Minimum 16 weeks

Yes

Yes

Yes

No

No

No

Short-term care leave

2x weekly working hours

Yes, min. 70%

No

Yes

No

No

No

Long-term care leave

6x weekly working hours

No

No

Yes

No

Yes

*

Paid disaster leave

As required

Yes

No

Yes

No

No

No

Unpaid leave

No statutory provisions

No

No

No

Possible

Possible

*

* whether the leave will have an impact on the pension depends on the pension scheme.

As an employer, you can deviate from the foregoing in the favour of the employee. In the Collective Agreement, differing agreements can be laid down in this regard.

Sharon Vervloet

Payroll Consultant

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