When you sign a settlement agreement, your employment ends by mutual consent. But what happens to the holiday days you still have outstanding? They cannot simply be allowed to disappear: the law gives you clear rights in this regard. It is essential that this is properly arranged before you put your signature to the document.
Legal obligation at the end of employment
The legal starting point is clear: upon termination of the employment contract, all outstanding holiday days must be settled. This follows from Article 7:641 of the Dutch Civil Code. Both statutory and contractual holiday days that have not yet lapsed or become time-barred must be paid out if you are no longer able to take them. This therefore also applies to a termination via a Settlement Agreement.
Please note: during an ongoing employment relationship, statutory holiday days may not be bought out. This prohibition on buyout is laid down in Article 7:640 of the Dutch Civil Code. Payment is only permitted once the employment contract has actually ended. This makes the final settlement in a settlement agreement a particularly important moment.
Statutory and contractual days are subject to different rules
There are two types of holiday days, and these are treated differently in a settlement agreement. The distinction is crucial for the value of your final settlement.
Statutory holiday days are the days to which you are legally entitled as a minimum: four times the number of hours you work per week. If you work five days a week, this amounts to a minimum of twenty days per year. These days lapse six months after the calendar year in which they were accrued. If you accrue days in 2025, they will therefore lapse on 1 July 2026. An exception applies if you were reasonably unable to take the days, for example due to illness or because your employer failed to alert you that the days were about to lapse.
Contractual holiday days are the additional days agreed above the statutory minimum in your employment contract or collective agreement. These days have a much longer time limit: they only become time-barred after five years. Contractual days accrued in 2025 are therefore valid until 31 December 2030.
Taking leave or being paid out: what is the wisest choice?
In a settlement agreement, you generally have a choice: you take your holiday days before the end date, or you have them paid out in the final settlement. Both options have advantages and disadvantages that you should carefully weigh up.
If you take the days before the end date, your salary continues as normal and you continue to accrue pension entitlements and new holiday days during that period. A possible drawback is that this pushes the end date back, which may affect the start date of your unemployment benefit.
If you have the days paid out, you receive the gross daily wage directly as a sum in the final settlement. This is straightforward and transparent, but it is taxed as ordinary income. If a large number of days are paid out, this can result in a higher tax burden in that year.
There is also a middle ground: a partial arrangement whereby you take some of the days as leave and have the remainder paid out. This can sometimes work out more favourably from a tax perspective.
Release from work and your holiday days
One point that frequently causes dispute in practice is the situation in which you are released from your duties. In such cases, employers regularly attempt to offset outstanding holiday days against the release period. The settlement agreement then states that the holiday days are ‘deemed to have been taken’ during that period. If you voluntarily agree to this arrangement, it may be reasonable. However, if the release was imposed unilaterally by your employer, it is not legally self-evident that you should surrender holiday days for it. Always read the wording of your settlement agreement on this point with a critical eye.
Plan een vrijblijvend gesprek en ontdek wat we voor je kunnen betekenen.
Plan een gesprekPractical checklist for the final settlement
Before signing a settlement agreement, it is advisable to carefully work through the following points:
- Request an up-to-date overview of your holiday balance, with a clear distinction between statutory and contractual days.
- Check which days are at risk of lapsing before or around the end date of the settlement agreement.
- Ensure the settlement agreement explicitly states how many days are outstanding and how these will be dealt with — paid out, taken as leave, or a combination.
- Check whether the wording on release from work treats the holiday days correctly and whether you agree with it.
- Do not forget the pro-rata holiday allowance either: this is likewise owed up to the end date.
- Check whether the collective agreement contains additional provisions regarding lapse periods or the buyout of contractual days.
- Check whether the full and final settlement clause in the agreement correctly covers the holiday day settlement — an error here can lead to disputes later on.
Holiday allowance is part of the picture
In addition to the holiday days themselves, upon termination of your employment you are also entitled to the accrued but as yet unpaid holiday allowance. This is calculated over the period from the last payment of holiday pay up to the end date of the employment contract. This amount must likewise be included in the final settlement of the settlement agreement. Always check, therefore, whether this is stated separately in the agreement.
Full and final settlement and the importance of clear arrangements
Almost every settlement agreement contains a full and final settlement clause: once signed, neither party can make any further claims against the other. In practice, this means that if holiday days are not correctly recorded in the settlement agreement, it will be difficult to claim payment after the fact. Legal practice shows that courts will award claims where the settlement agreement contains an explicit promise that was not honoured. Prevention is better than cure, however: ensure everything is in order before signing.
Why Arbeidsjurist Eindhoven
A settlement agreement often contains more pitfalls than are immediately apparent. Holiday days, holiday allowance, and release-from-work clauses are matters on which employees in the Eindhoven and Brabant region regularly leave money on the table. At Arbeidsjurist Eindhoven, we review your settlement agreement thoroughly, check the final settlement, and help you negotiate the terms that are most favourable to you. Contact us without obligation — we are happy to think things through with you.
Frequently asked questions
Is my employer always required to pay out my holiday days in a settlement agreement?
Yes, in principle. Upon termination of the employment contract, outstanding holiday days that have not yet lapsed or become time-barred must be paid out (Article 7:641 of the Dutch Civil Code). This applies to both statutory and contractual days. The settlement agreement may provide for alternative arrangements, such as taking the days before the end date, but this must be expressly agreed.
What is the difference between statutory and contractual holiday days in a settlement agreement?
Statutory holiday days are the minimum mandatory days under the law (four times your weekly working hours). They lapse six months after the accrual year. Contractual holiday days are additional days agreed in your employment contract or collective agreement and only become time-barred after five years. Different rules apply to each type in the final settlement of a settlement agreement, which is why it is important to distinguish clearly between them in the agreement.
My employer is releasing me from my duties. Is my employer allowed to offset my holiday days against that period?
That depends on the circumstances. If you agree to a release from duties and the holiday days are explicitly offset against that period, this may be reasonable. However, if the release was initiated by the employer, it is not legally self-evident that you should surrender holiday days for it. Always have the wording of the settlement agreement on this point checked by an employment lawyer.
What if my holiday days were not paid out, or were paid out incorrectly, after I have already signed the full and final settlement?
A full and final settlement means that after signing, neither party can make any further claims against the other. However, if the settlement agreement explicitly stated that holiday days would be paid out and this did not happen, you can still hold your employer to that. An agreed obligation remains in force, even after a full and final settlement. Legal practice shows that courts can award such claims. Consult an employment lawyer if you suspect that something is owed to you.
Does the payment of holiday days affect my unemployment benefit?
It can, depending on how the payment is structured. The UWV (Employee Insurance Agency) assesses whether the end date in the settlement agreement aligns with the normal notice period. If a large number of holiday days are paid out in one go, the UWV may investigate whether this is in effect an additional severance payment intended to circumvent the notional notice period. It is therefore important to ensure that the arrangements in the settlement agreement are correctly aligned with the unemployment benefit rules. Seek guidance from an employment lawyer on this point.
We are happy to think along with you. For advice tailored to your situation we would gladly sit down with you. No rights can be derived from the content of this page and it may contain inaccuracies.
