Netherlands: Supreme Court ruling: beware of the employers’ duty of care regarding (the lapse of) vacation days
In a recent landmark case, the Supreme Court shed light on the lapse of vacation days and the employers’ duty of care in this regard.
In Dutch labour law, a distinction is made between statutory vacation days (a minimum of 20 days per year for full-time employment) and additional vacation days known as “bovenwettelijke vakantiedagen.” These additional days are granted beyond the statutory minimum and are often awarded based on company policies or collective bargaining agreements. Statutory vacation days have a short expiration period. They must be used within 6 months after the end of the year in which they were accrued (Art. 7:640a Civil Code). Bovenwettelijke vakantiedagen, on the other hand, expire five years after the year in which they were accrued (Art. 7:642 Civil Code).
Dutch lower courts have established that if an employer fails to inform an employee about their vacation entitlements, does not enable them to take vacation, and does not warn them about the consequences of expiration, the employer cannot reasonably enforce the expiration period for accrued statutory vacation days. Mere inclusion of expiration clauses in employment contracts or vacation regulations is insufficient.
The Supreme Court upheld the decision made by the lower court, which found that the employer had failed to provide sufficient evidence to demonstrate that they had fulfilled their duty of care and information obligations towards the employee. The employee should have been genuinely enabled to exercise their vacation rights with full pay before they expired. Notably, the Max Planck case dealt with a three-year expiration period, but the Supreme Court emphasized that even with a five-year expiration period, the employer must meet their duty of care and information obligations to successfully invoke expiration as a defence.
Key Action Points for Human Resources and In-house Counsel
- Review employment contracts and vacation policies to ensure they clearly state the expiration periods for statutory and additional vacation days.
- Train managers and HR staff on the duty of care and information obligations regarding vacation entitlements, including the importance of enabling employees to take vacation before expiration.
- Consider implementing a system for tracking and reminding employees about their accrued vacation days and expiration periods to avoid disputes and potential legal claims.