Inform employees in good time about untaken holiday leave

As the summer holiday season is approaching, the lapse and prescription of holiday entitlements is a topical subject that regularly raises questions. All employees are entitled to paid holiday. In practice, many employees take less time off than the number of days' holiday they have accrued, which can result in a "build-up" of untaken leave. This is an undesirable situation. Employees might not get sufficient opportunity to relax, while employers come under financial pressure, as they must set money aside for these holiday entitlements.

What can employers do to prevent or reduce the build-up of untaken leave?

Statutory and additional days' holiday

To identify the options, a distinction must be made between statutory and additional days' holiday:

• Statutory days' holiday: the minimum number of days' holiday is four times the number of hours the employee works per week. 
• Additional days' holiday: the days on top of the statutory days' holiday.
  
  

Cashing in holiday entitlements

Employers and employees can agree in writing that the additional days can be cashed in during employment. Employees then 'sell' their additional days' holiday to their employer, as it were. Cashing in additional days' holiday in this way allows employees to reduce the number of accrued days' holiday. However, statutory days' holiday cannot be cashed in. 

Lapse and prescription of days' holiday

Days' holiday can also lapse or be extinguished by prescription. The distinction between statutory and additional days' holiday also applies to the prescription of holiday entitlements. Statutory days' holiday lapse six months after the year in which they were accrued. In other words, statutory days' holiday accrued in 2024 lapse on 1 July 2025. Additional days' holiday are subject to a five-year prescription period. 

The EU Court of Justice has ruled that employers must actually enable their employees to take leave before those days can lapse or expire by prescription. In other words, employers cannot invoke the time periods if they have not actually enabled their employees to exercise their right to paid leave.

In practice, this means that employers must proactively inform their employees and facilitate their taking of holiday leave. It is important in that context that employers inform their employees in good time that days' holiday will lapse or be extinguished if not taken within the defined period. In addition, employers must encourage their employees to take time off. To do so effectively, employers need a clear overview of the number of days' holiday accrued, the dates they were accrued and the dates that they will lapse.

Days' holiday can only lapse if the employer can prove that they have met their duty of care and information obligation (website in Dutch) and the employee, knowingly and fully aware of the consequences, failed to take their annual paid leave. It is advisable to subsequently confirm this to the employee.

Practical recommendations 

Importantly, employers should actually, and in good time, enable their employees to take holiday leave. What is the best way to do so? We recommend informing employees individually and in writing (for example, in an email) at least annually, preferably at the beginning of the year, about:

• any untaken days' holiday that will lapse in that year;
• the need to take this leave before a specific date to ensure the days in question do not lapse; and 
• the consequence of not taking this leave, namely that the days will lapse and the employee will no longer be entitled to them.

This will enable employees to actually take the untaken days' holiday. If an employer informs their employees too close to the expiry date, or not at all, it can more readily be argued that the employer did not actually enable their employees to take holiday leave and that the employer cannot invoke the applicable prescription periods.

Contact 

For more information or advice on these subjects, please contact Anouk Boutens and Yillis Smit. Experts in employment law and pension law, they are well equipped to give you the legal support you need. 

Would you like to know more? You can also read our News Update 'Does holiday leave continue to accrue after 2 years of sickness?' about the accrual of holiday leave in the Netherlands in connection with employers' payment of wages.