To get straight to the point, as an employer, you are obliged to pay vacation pay, also known as vacation allowance or vacation allowance. Even if your company is struggling, for example, by repaying the corona debt. How do you deal with this and what can you, as an employer, do to pay the vacation pay.

Is it mandatory to pay vacation pay?

Paying vacation pay is mandatory. But of course, there are also some nuances here. Think about overtime that you reimburse. In general, you do not pay a vacation allowance for this. For example, if you pay an overtime allowance in case of overtime. If your company falls within a collective labor agreement, check your collective labor agreement, where you will find exactly what applies to your company.

Vacation pay according to the CAO

The CLA also states whether your company uses different periods to pay out vacation pay. This is a so-called “survey method”. Here, the total amount of vacation pay is paid spread out, for example each month in salary or per specific period. This can be nice for the employer because costs are spread out, but for the employee, the disadvantage is that the vacation pay must be refunded upon leaving employment. In addition, many employees are also looking forward to the moment the vacation pay is deposited all at once.

Vacation pay without a collective agreement

If your company does not fall within a collective labor agreement, you can include the guidelines for vacation pay in the employment contract. Here you specify the percentage of vacation pay (at least 8% over the gross salary) and the method of payment.

Are all employees entitled to vacation pay?

Not only your permanent, present employees are entitled to vacation pay, but also employees who are ill. For these employees, the vacation pay is calculated on the sick pay paid out. This also applies to staff with paid leave hours and often also overtime. You do not have to pay vacation pay over a profit or an end-of-year bonus.

How does payroll tax on vacation pay work?

Always check whether this percentage is correct, if the percentage is too low, too little payroll tax will be deducted from the vacation allowance. The result is that the employee subsequently joins the income tax you have to pay extra. Have you opted for a monthly payment of vacation pay? Then the usual percentage can be used.

Tough times? Paying or delaying vacation pay

Can you just delay paying vacation pay? The pandemic and corona debt have a major impact on the liquidity of many entrepreneurs. As you've read, cashing out at all is not an option. But you can talk to employees; in good consultation, you can make agreements with your employees about the payment of the vacation pay. For example, paying out in installments or delaying a number of weeks or months. Clearly record this new appointment in writing to avoid misunderstandings. Keep in mind that, as an employer, you are obliged to pay the vacation pay within one calendar year and that not paying out is not an option.

Paying vacation pay with a loan

Paying out the vacation pay can be a major burden; with a loan from Swishfund, you can do this period bridging or choose to use the loan to pay out vacation pay. Curious about your options? Apply for your loan and our account managers will help you further with your dreams and ambitions.