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Ensure that accrued overtime is paid out or taken before 2018!

With effect from 1 January 2018, the Dutch Minimum Wage and Minimum Holiday Allowance Act (Wet Minimumloon en minimumvakantiebijslag) will be amended. From that time, employees will be entitled to a holiday allowance of at least 8% of the wage. From 1 January 2018, the term ‘wage’ will also include overtime. Deviating from the holiday allowance will be permitted only if this is arranged in a collective agreement. Consequently, if no deviation is arranged in a collective agreement, overtime will be considered to be included as part of the wage and from 1 January 2018, holiday allowance will therefore be owed on it!

No transitional arrangement has been agreed for overtime hours accrued before 1 January 2018. It is therefore important for employers to ensure that all overtime hours are paid out or taken before 31 December 2017. In the case of payment after 1 January 2018 – even if the hours have been accrued before this date – holiday allowance must be paid on overtime.

Our advice is therefore to assess whether it is possible to have outstanding overtime hours taken as far as possible before 31 December 2017 and to have any remaining balance paid out before 31 December 2017.