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Your employee has a legal right to holiday allowance on top of holiday pay. Holiday pay is the normal wage, which is paid during an employee's holiday leave.
How much holiday allowance should you pay?
Holiday allowance must be at least 8% of the employee's gross yearly wage (pdf). This includes overtime, performance premiums, any commissions, supplements for working unsocial hours and payment in lieu of holiday days. Holiday allowance is not due over expenses and profit distribution.
If your employee earns over three times the legal minimum wage, you do not have to pay holiday allowance.
What if an employee is ill?
Employees continue to build up holiday allowance even when they are ill. If your employee becomes ill during his or her holiday, they can report sick and can take holiday leave on a different day.
When do you pay holiday allowance?
Most employers pay holiday allowance in a lump sum in May or June. If you wish to pay holiday allowance at a different time of year, or if you prefer to pay holiday allowance in installments, then you need written consent from your employee. Agreements on the payment of holiday allowance are included in the collective labour agreements (CAO) or in the employment contract.