Vacation hours after two years of illness: accrual continues during dormant employment
Employers, take note! Many employers assume that employees no longer accrue vacation hours after 104 weeks of illness because the obligation to continue paying wages ends. However, this appears to be incorrect. A ruling by the Gelderland District Court on August 12, 2025 (ECLI:NL:RBGEL:2025:7054) states that employees continue to accrue vacation hours even after that period.
The transition payment in the case of dormant employment
Previously, the Supreme Court (November 8, 2019, ECLI:NL:HR:2019:1734, Xella) had already ruled that, on the basis of good employment practices, an employer must agree to a proposal by the employee to terminate the employment contract by mutual consent, in practice by means of a settlement agreement, in the event of long-term incapacity for work. In addition, the employer must pay the statutory transition allowance. An employer may therefore not maintain a “dormant employment relationship” in order to avoid paying the transition allowance.
However, in the case of an employee requesting termination by mutual consent, the amount of that compensation need not exceed the amount that would be due upon termination on the day after the end of the 104-week waiting period. Only in that specific case is the duration of the employment contract fictitiously shortened. So, keep in mind that when you, as an employer, terminate the employment contract in the normal way, the accrual of transition compensation continues until the end of the employment contract as usual. (See: Arnhem-Leeuwarden Court of Appeal, June 3, 2021, ECLI:NL:GHARL:2021:5510)
Accrual of vacation days after two years of illness
According to Section 7:637(1) of the Dutch Civil Code, sick days may only be counted as vacation days if the employee explicitly agrees to this. The legislative history shows that this may only happen on an incidental basis and must always be agreed in consultation.
Section 7:634(1) of the Dutch Civil Code then stipulates that vacation days are only accrued over the period during which the employee receives wages. At first glance, this would mean that after two years, there is no longer any entitlement to accrue vacation days.
European law takes precedence
However, this section of the law has recently been ruled to be inconsistent with European law. Article 7(1) of Directive 2003/88/EC and the case law of the European Court of Justice stipulate that employees are entitled to vacation, regardless of whether they receive wages. Article 31(2) of the Charter of Fundamental Rights of the EU confirms this right. The Charter may be invoked directly by individuals.
The European Court of Justice has ruled that national provisions that conflict with this must be disregarded by judges. In the Netherlands, too, employers cannot simply invoke the restriction of Article 7:634(1) of the Dutch Civil Code. An amendment to the law is desirable.
Conclusion: vacation hours continue to accrue
In short, employees accrue vacation hours throughout their entire period of illness—not only in the first two years, but also thereafter. This applies regardless of whether the employee receives wages and regardless of whether work is performed.
In practice, this means that employers must also pay out these accrued but unused vacation days. The final settlement can therefore be considerably higher if the employment contract is not terminated in time.
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