Accrual of vacation days continues during dormant employment relationships

On 12 August 2025, the Gelderland District Court issued a judgment of great importance for long-term ill employees and their employers (ECLI:NL:RBGEL:2025:7054). The subdistrict court held that employees continue to accrue statutory vacation days even after the statutory wage continuation period during illness has expired. This ruling follows directly from European law and overrides Dutch legislation on this point.

Background of the case

The case concerned an employee who had been employed as a welder at a machine factory since 1995. Following a motorcycle accident in 2019, he became fully and permanently incapacitated for work. After two years of illness, the Employee Insurance Agency (UWV) decided that the employer had not fulfilled its reintegration obligations, extending the wage continuation until 1 March 2024. From that date, the employee received an IVA benefit. Once it became clear that recovery or return to work was no longer possible, the employee requested the employer’s cooperation in terminating the employment contract with payment of a transition allowance and final settlement. The employer only paid the holiday allowance, after which the case was brought before the court.

Court’s decision

Because the employment relationship had become dormant, the subdistrict court—referring to the Supreme Court’s Xella judgment—ruled that the employer was obliged, under the principle of good employment practices, to agree to a termination proposal including payment of the transition allowance. The court therefore dissolved the employment contract and awarded the employee a transition allowance of over €37,500, calculated until the end of the wage continuation period.

Remarkably, the court also held that the employee remained entitled to accrue vacation days even after the wage continuation obligation ended, i.e. after 1 March 2024. This is notable because under Article 7:634(1) of the Dutch Civil Code, vacation days are accrued only over periods in which the employee receives wages. However, the court found that this national rule conflicts with European law and therefore set Article 7:634(1) aside. In other words: employees accrue statutory vacation days throughout the entire period of illness, regardless of whether they perform work or receive wages. In this case, setting aside Dutch law resulted in the employee being awarded compensation of over €13,000 gross for accrued but unused vacation days.

Significance of this judgment

The judgment makes clear that, contrary to Dutch law, sick employees continue to accrue statutory vacation days even after the end of the wage continuation obligation. For employers, this can result in considerable additional costs in dormant employment relationships. Timely termination of such contracts can prevent unnecessary cost increases.