Low-income households can expect more vacation pay this year
Many employed Netherlands residents will get their holiday pay in May. People with a lower-than-average income will get up to hundreds of euros more this year. While employees with an average income or more will get less, NOS reports based on calculations from payroll processor ADP.
Average earners (3,395 euros gross per month) receive about 29 euros less net holiday pay this year. People who earn three times the average (10,185 euros gross per month) will get around 600 euros less. Part-time workers will receive an extra 578 euros compared to 2023, according to ADP’s calculations.
Why one group of workers gets more while another gets less is hard to explain, said Dik van Leeuwerden, legislation and regulations expert at ADP. It has to do with two income tax discounts - the general tax credit and the employment tax credit. The discount amount depends on your personal situation - how much you earn and whether you have certain benefits or a state pension, for example.
Holiday pay is at least 8 percent of people’s gross annual salary, calculated from May to May over the past year. Tax is deducted from this amount. The reason that people with a below-average income are getting more this year is partly due to changes in the minimum wage. From January, employers have been legally obliged to pay employees a minimum hourly wage instead of a minimum monthly wage. So, employees who work more hours per day earn significantly more than they used to.
According to Van Leeuwerden, the holiday pay system is not very transparent, and he understands why people don’t understand its intricacies without the decades of experience he has accrued. “I think it could be easier, but that initiative must come from the government. You should be able to easily explain how you go from gross to net and how holiday pay works,” he said, according to the broadcaster.
