In terms of New Year's resolutions: saving on employment costs through age-related vacation and/or leave days

Friday, 6 January 2017

Traditionally, many of the Dutch collective bargaining agreements or terms and conditions of employment include a scheme for vacation and/or leave days that accrue in proportion to the age of employees (“age-related vacation and/or leave days”). For example a scheme that stipulates that employees who have reached the age of sixty accrue additional vacation days. But is such a scheme allowed and if so, under which circumstances? And how can an employer “save” on employment costs when it comes to age-related vacation and/or leave days? The answers to these questions are set out below.

Age-related vacation and/or leave days

Schemes that stipulate that vacation and/or leave days accrue in proportion to the age of employees  discriminate on the ground of age. Consequently, such age-related schemes are in conflict with the equal treatment legislation, except where there is a ground for objective justification.

Objective justification

Objective justification can be found in an age-conscious personnel policy. An age-conscious personnel policy exists if it not only cushions the impact on older employees, but also has consequences for the employment conditions of the relevant age group (stimulus measure including training, additional vacation and/or leave days or measures protecting older employees, including not having to work overtime or having other working hours). Another objective justification ground for granting age-related vacation and/or leave days to older employees is when it concerns a physically stressful profession.

Consequences and risks

In cases in which no ground for objective justification is available, the age-related vacation and/or leave days scheme is prohibited due to age discrimination. Consequently, the scheme is void. Based on settled case law, the employer has the right to change the scheme in the collective bargaining agreement or terms and conditions of employment unilaterally, even when an unilateral changes clause is not included in the employment agreement. The underlying reasoning is that it is unacceptable, according to the standards of reasonableness and fairness,  to hold an employer to a scheme that is void. Good employment practices nor requirements of reasonableness and fairness imply that an employer is obliged to act in breach of the equal treatment legislation any further.

In the event that the employer keeps applying an age-related vacation and/or leave days scheme that is void, employees from other (younger) age-groups can start legal proceedings at the Dutch Institute for Human Rights. They may argue that they are treated unequally compared to other age groups and can claim compensation. The Institute for Human Rights will consider whether the scheme conflicts with the equal treatment legislation. If this is indeed the case, the employer is obliged to realign the inequality. The manner in which the employer chooses to realign is at its discretion. However, it appears from case law that penalties on violation of the prohibition of discrimination in any case must be sufficiently a deterrent.

Advice: provide an alternative and/or phase-out scheme

Employers are in principle entitled to take away rights to age-related vacation and/or leave days. By doing do, employers can easily “save” on employment costs. However, based on good employment practices it is advised to apply a phase-out scheme so that employees will not immediately be confronted with downturn in vacation and/or leave days. To reduce the impact, employers could also provide an alternative to all employees by granting a(n additional) Christmas bonus for example.

Any questions about employment law in the Netherlands? Ask our employment lawyers!

For questions regarding age-related vacation and/or leave days or any other employment law issues, please feel free to contact Bibiche van Berkel or our employment law practice group