Employee still accrues statutory holiday entitlement after 104 weeks of illness!⏳

This case concerned an employee who had been employed as a welder since 1995. Following a motorbike accident in 2019, he became completely incapacitated for work. The employer's obligation to continue paying wages, including wage sanctions, ultimately ended on 1 March 2024. As a return to work was no longer possible, the employee requested the employer to terminate the employment contract by means of a settlement agreement, with the award of a transition payment. However, the employer refused to cooperate.

Xella ruling

The subdistrict court judge put an end to this attitude and explicitly referred to the Xella ruling of the Supreme Court (2019). In that ruling, it was decided that, on the basis of good employment practices (Section 7:611 of the Dutch Civil Code), an employer is obliged to cooperate in the termination of a dormant employment contract, with payment of the transition allowance.

In line with this, the court terminated the employment contract and awarded a transition payment of more than € 37.500,00. In addition, the employer had to pay more than € 13.000,00 for unused holiday days. Why? Because even after 104 weeks of incapacity for work, the accrual of statutory holiday days continues.

Accrual of holiday entitlement after 104 weeks

Last year, another judge at the Gelderland District Court ruled that no holiday entitlement is accrued during the period in which there is no longer any entitlement to wages. This follows from Dutch legislation (Section 7:634(1) of the Dutch Civil Code). Although that judge also indicated last year that our regulations are contrary to European law and case law, he did not want to risk ruling against the law.

In this case, the subdistrict court in Arnhem came to a different conclusion: there is indeed a power to rule against national law. The Charter of Fundamental Rights of the European Union provides a solution for this.

For the lawyers among us, the subdistrict court explained this as follows: Article 31(2) of the Charter also enshrines the right to holidays. In the Max Planck judgment, the Court of Justice of the European Union clarified that Article 31(2) of the Charter of Fundamental Rights of the European Union can be invoked in a dispute between private individuals. Furthermore, the Court ruled that, if a national regulation cannot be interpreted in such a way that it is compatible with Article 31(2) of the Charter of Fundamental Rights of the European Union, it is up to the national court to ensure, within the framework of its powers, the legal protection resulting from that provision and to guarantee its full effect by, if necessary, disapplying the national legislation that conflicts with it. In the literature, it is argued that, similarly, a Dutch employer cannot invoke the restriction in Article 7:634(1) of the Dutch Civil Code, which stipulates that an employee only accrues holiday entitlement if he is entitled to wages.

In other words, the fact that an employee only accrues holiday hours for the period during which he is entitled to wages is contrary to European law.

Important information for all employers and non-lawyers: Sick employees accrue full (statutory) holiday hours for the entire period of illness, and not just for the first two years, regardless of whether they perform work and regardless of whether they are entitled to wages.

Our advice: assess in good time whether the employment contract of an employee who is still incapacitated for work after 104 weeks should be terminated and do so in the correct manner. This will prevent unnecessary proceedings and additional (holiday) costs.

It is unlikely that this ruling will lead to a large number of additional tax assessments. This is because most settlement agreements include a final discharge clause.

If you have any questions, please contact Dennis Oud, Tessa Sipkema and Elke Hofman.

You can read the ruling here.