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Understanding Absences in the Netherlands

This topic discusses:

Definition of Absences

Global Payroll for the Netherlands delivers predefined rules for processing absences due to vacation, disability, maternity, and other reasons. PeopleSoft designed these rules in accordance with Dutch statutory requirements. You can modify many of these rules to reflect absence policies that are specific to your organization.

This topic supplements the absence documentation provided in the PeopleSoft Global Payroll product documentation. Before you begin reading about Dutch absence functionality, we recommend that you read the absence sections of PeopleSoft Global Payroll product documentation to develop a basic understanding of the concepts behind absence processing in Global Payroll.

An absence is any event for which an employee fails to comply with the scheduled work time. Absences must be recorded in the system so that the appropriate discounts are deducted from an employee's salary. Absences are also recorded to keep track of an employee's absence history.

In Global Payroll, there are two kinds of absence elements:

  • Absence entitlements

  • Absence takes

An absence entitlement is defined as the amount of paid time off that an employee is entitled to take for each type of absence. For example, employees in a company may be entitled to receive 25 vacation days per year.

An absence take is defined as the amount of time off that an employee takes.

Absence Types in the Netherlands

There are different types of absences in the Netherlands. Global Payroll for the Netherlands delivers absence types in the following general categories:

  • Paid leave (including vacation, reduced working hours, and maternity).

  • Unpaid leave (including strikes and special leaves).

  • Sickness (including disability and accidents).

Note: A complete list of delivered absence elements is available in the Delivered Deductions topic.

See Delivered Deductions.

The following topics describe Dutch absence types in detail.

Vacations

In the Netherlands, every employee is entitled to at least four weeks of vacation per year. An employee may receive additional vacation, depending on the agreement with the employer, or depending on branch agreements. Employees can sell vacation days, typically at the end of the year.

Although vacation days are accrued per pay period, typically, the full vacation balance for an employee is entered into the system at the beginning of the calendar year. For part-time employees, the number of vacation days is prorated based on the FTE factor.

There are several ways to calculate the vacation days that an employee is entitled to, but one method is based on the number of Social Security days the employee will work in the year divided by the total number of Social Security days in the year.

In some cases, the number of vacation days that an employee is entitled to needs to be recalculated. These include when:

  • An employee leaves the company.

  • The FTE factor changes.

  • The employee returns from a long-term illness.

According to law, employees who are ill for more than six months are only entitled to vacation days for the last six months of their illness. For example, if an employee is ill for eight months, the vacation days for the first two months of the illness will be deducted from the employee's vacation balance. At the end of the illness, the exact duration of the illness can be determined and a recalculation can be established.

Besides a flexible recalculation process, it is possible to manually override the vacation days balance at the employee level. You do this on the Define Payee Data NLD page.

See Entering Payee Absence Data.

If an employee reports an illness during a vacation, the absence due to illness has a higher priority than the absence due to vacation, so those days of illness will not get deducted from an employee's vacation balance. Similarly, if an employee goes on vacation during his illness, no vacation days can be deducted from the employee's balance. In these situations, the employee's vacation balance will be overridden.

At the end of the year, unused vacation days can be carried over to the vacation balance for the next year. Only five years after the days were first accrued will the unused vacation days be lost. It is also possible for employees to sell their unused vacation days at the end of the year or during the year. The base for paying out these days is the actual daily salary at the moment of the payment.

Reduction of Working Hours(ADV)

In the Netherlands, many companies have reduced the number of working hours in a week with the ADV hours rule that was created by the Dutch government to create more jobs. The way in which the rule is executed depends on the branch of an industry. In some branches, the number of working hours per day or per week is reduced (for example, to 36 or 38 hours). In other branches, the number of working hours per day or per week is not reduced, but the employee is entitled to extra days of paid time off (PTO). In some branches, there's no difference between ADV days and vacation days, and the ADV days are just added to the vacation balance. In other branches, a distinction exists between ADV days and vacation days and special rules apply. If an employee becomes sick, no ADV days are accrued.

Because of these special rules, it is important to identify which days are PTO days and which days are ADV days. With Global Payroll for the Netherlands, you can order which days are used first for PTO by using the priority option on the Absence Take – Priority page in the core application.

Public Holidays

Global Payroll uses the Holiday Schedule that is created in PeopleSoft HR. Holiday Schedule information is stored on an employee's Job record. Global Payroll uses the Holiday Schedule during absence processing to create daily data and update leave balances. It also uses the Holiday Schedule to resolve count elements during payroll and absence processing. If a holiday schedule is not defined for an employee at the Job level in HR, Global Payroll uses the holiday schedule defined for the employee's pay group. (The holiday schedule defined for the pay group, does not appear, by default, on the Job record.)

To set up holiday schedules in Global Payroll for the Netherlands, go to select Set Up HCM, then select Foundation Tables, then select Organization, then select Holiday Schedule.

See Defining Holiday Schedules.

Time for Time(Tijd voor Tijd)

Employees are compensated for overtime hours or hours worked during a weekend. An employee can choose to receive a payment for these hours (money for time) or take these hours as time off in the future (time for time). The hours can also be used for savings for leave.

For example, suppose that an employee has worked 3 hours of overtime at a rate of 150 percent for overtime. The employee will be compensated for 4,5 hours. The employee can decide to have:

  • 4,50 hours paid; 0,00 accrued to the balance.

  • 0,00 hours paid; 4,50 accrued to the balance.

  • A combination of payment and balance accrual.

Deceased Family Member

By Dutch law, if a family member dies, an employee can take time off for grievance, and have his salary paid 100 percent. The maximum duration for paid time off is one day.

Marriage

If an employee gets married, the employee can take time off, and have salary paid 100 percent. The maximum duration for time off is one day.

Move

If an employee moves to a new home, the employee can take a maximum of two days off, and have salary paid 100 percent.

Maternity

In the Netherlands, a female employee is entitled to take 16 weeks of paid maternity leave at 100 percent of her salary.

An employee's maternity leave is paid by UWV, the Social Security agency, and not the employer. The employer almost always continues to pay the employee's regular salary during the maternity leave. The accrual for the holiday allowance and vacation days also continues as normal during an employee's maternity leave.

While the employer typically pays an employee's salary during maternity leave, the employer also ensures that this money is reimbursed by UWV. Global Payroll for the Netherlands delivers an earning called Maternity Leave which gives the employer the ability to check if the amount paid by UWV matches the amount actually paid to the employee. You can indicate whether the employer can claim the payment from UWV on the Absence Takes NLD page.

If the employee has a maternity-related sickness, it is considered an illness and the regular salary has to be paid by the employer.

Maternity leave dates can be determined by the employee and are flexible—that is, an employee can decide the dates of her leave, prior to the due date.

See Defining Absence Takes in the Netherlands.

Extended Pregnancy Leave

If the delivery occurs after the predicted due date, then the employee receives a sick leave benefit (ZW uitkering) for the additional time. These extra days are not deducted from the maternity leave. There is a maximum of two weeks for extended maternity leave.

Parental Leave

Typically, parental leave is an unpaid absence type, although some branches have different rules and continue to pay the employee up to 100 percent of his salary. An employee can choose to take full leave for 13 weeks or work part-time during a longer period. The leave can also be split over a maximum of three periods that can be no less than one month each. The leave can only be taken once per child under the age of 8.

Parental leave applies to both full-time employees and part-time employees. The entitlement for the leave is calculated by 13 times the number of standard hours per week that the employee works. An employee is entitled to parental leave after working for one year with a company.

Leave for Emergencies (Calamities)

If something unexpected happens in relation to the employee, such as a sick family member that has to be brought to the hospital or the central heating in the employee's house is broken, the employee is entitled to short term leave of a few hours or days. The maximum leave that is paid at 100 percent of salary is two days.

Short Term Leave for Health Care

By law, Dutch employees are entitled to receive a maximum of ten days of paid leave to take care of sick children, partners, or parents. The payment is at least 70 percent of the employee's regular salary during the leave.

Adoption Leave

Employees who adopt a child are entitled to a maximum of 4 weeks of adoption leave within 18 weeks of the adoption date. The leave period can start 2 weeks before the planned adoption. The regular salary is paid for a maximum of 4 weeks. The social security agency pays the claim from the employee through the employer.

Leave for Maternity Care

An employee is entitled to two working days off in case of delivery of his female partner. 100 percent of an employee's regular salary is paid the maternity care leave.

Terminal Care Leave

The same conditions apply to terminal care leave as to the study leave.

Strike

In general, employees are not entitled to wages on the days that they strike. Because these days do not accumulate to the number of Social Security days, the employee receives less than his normal wages. The payment is based on the normal number of working days during the pay period minus the number of strike days. In general, the employee receives a payment from the union during the strike, if the employee is a union member.

Sickness

Under Dutch law, employees must receive at least 70 percent of their regular salary, up to 104 weeks, if they are sick. Within some industry branches, it is common to pay an additional amount up to 100 percent. However, with effect from January 1, 2004, if employers pay more than 70% of salary during the second year of sickness, employees may be penalized at the end of the second year with regard to disability allowance.

The employer does not have to pay out the first two days of sickness so there can be a waiting period. If employees receive 70 percent of their salary or has a waiting period, the sick pay is recorded as a separate wage type called sickness and is shown as a separate earning on the payslip. If employee receive 100 percent of their salary, there is no change to the payroll or the payslip.

There are three common methods to determine sick pay:

  • An employee's salary is paid at 100 percent for up to two years.

    The salary is paid as normal and no changes are made to the payslip. The amount is recorded as a remuneration component called sickness.

  • An employee's salary is paid at a minimum of 70 percent for up to two year maximum.

    The amount is recorded as a remuneration component called sickness.

  • An employee's salary is not paid for the first two days of illness (paid at 0 percent) and then paid at a maximum of 100 percent, using either of the preceding methods after the first two days.

If an employee has a temporary contract, other rules apply and are covered according to the rules in Vang-net.

The accrual of vacation days during an employee's illness is limited to a maximum of six months (the last six months of an illness case).

With Global Payroll for the Netherlands, you can record an employee's expected return date as well as the actual return date on the Absence Events Comments page.

See Managing Absence Events.

If an employee gets sick during a holiday, the vacation days can be transferred over as sickness days and they are not deducted from the employee's vacation days.

Disability(WAO/WIA)

After a maximum of 104 weeks of sickness, an employee is eligible for long-term disability (WAO or WIA). From January 1, 2006, the WIA Act (Wet Werk en Inkomen naar Arbeidsvermogen) replaced the WAO Act (Wet op de arbeidsongeschiktheidsverzekering). For illnesses that began January 1, 2004 the new legislation applies.

Depending on the branch agreement, an employee may or may not be terminated during these years. If the employee is not terminated, there are two options:

  • The employer can pay the employee's salary (up to 100 percent) and collect the disability from insurance.

  • The employee can receive the disability payment directly from insurance and be supplemented up to 100 percent of salary from the employer.

If an employee goes on disability, the payment depends on the disability classification. Record this information on the WAO/WIA Data NLD page.

See EnteringWAO/WIAData.

Disability data should be registered separately from the illness record. When a disability is registered, the illness record has to be closed a day before the WAO/WIA begin date.

Most companies pay an additional supplement to the WAO/WIA payment, to guarantee a certain income. For example, the supplement in the first year of the disability can be up to 90 percent of an employee's salary, and in the second year, up to 80 percent.

As of January 1, 2004, employees may be penalized if they have been paid more than 70% of salary during the second year of illness.

Recurrence of Illness

If an employee recovers from an illness and then gets sick again within four weeks with the same illness reason, the second illness is considered a continuation of the first illness and the cumulative number of days are counted from the first calendar day of the first occurrence.

Note: In Global Payroll for the Netherlands, on the absence event, you would update the Original Begin Date field to refer to the beginning date of the first illness.

If the total duration of the illness is 52 weeks, the employee can go on long-term disability.

It is necessary to track the progress of an illness, including the percentage of illness, that may change over the course of the illness.

Companies must use an Arbodienst for monitoring absences caused by illness. An Arbodienst is a company that carries out the rules that apply to sick employees. For example, they employ the company doctor who examines the sick employee and report data to the government department that pays the disability after a year or two of illness.

By Dutch law, an employer has to report the status of a sick employee periodically to the Arbodienst.

See Understanding Dutch Illness Reporting.

Accidents

Every employer has to report work-related accidents and work-related diseases to an Arbodienst. Employees are paid at 100 percent their salary, if a work-related accident or disease occurs. The maximum duration of work-related pay is one year.

Illness due to Maternity

If an employee becomes ill due to maternity, she is paid her regular salary.

Organ Donor

If employees are absent due to an organ donation, they are paid their regular salary during the time that they are out of the office. The maximum duration for this type of absence is one year.