External leave savings, is it going to happen after all?
Publication date: April 25, 2025
The legislation following the 2019 Pension Agreement includes provisions for leave savings up to a maximum of 100 times the weekly working hours. High volumes of leave savings have two disadvantages: the risk of employer bankruptcy and the need for the same employer to maintain high reserves. Some employers are willing to offer leave savings, but only if it can be managed by an external provider. However, there is no product offering and no product demand, and fiscal obstacles keep appearing, rightly or wrongly. This may finally change due to a call from the Dutch Labor Foundation.
Leave savings and sustainable employability
Accumulating leave savings is not a legal right. An employee can accumulate more leave than the statutory and additional leave if the employer or collective labour agreement allows it. If the maximum of 100 times the weekly working hours is permitted, an employee can save up to nearly two times an annual salary through leave savings. This allows an employee to finance a sabbatical, part-time job, or early retirement. In the context of sustainable employability, leave savings can be a significant employment condition and can increase labour productivity.
Obstacles to leave savings
Not every employer or sector will offer high leave savings balances to employees. Leave savings are not a goal in itself and sustainable employability can be achieved in other ways. If leave savings are a suitable means for sustainable employability, there are two obstacles: the aforementioned risk of employer bankruptcy (a disadvantage for the employee) and the high reserves employers must maintain.
The impasse around external leave savings
The above two obstacles can be eliminated by external leave savings. The Dutch Tax Administration has repeatedly confirmed that external leave savings are possible, but details remain unclear. This creates an impasse; there is insufficient clarity to implement external leave savings and no providers can be found.
Call from the Labour Foundation
The Dutch Labor Foundation has called on the Ministry of Finance and the Ministry of Social Affairs and Employment in a letter dated April 16, 2025, to come up with fiscal legislation and regulations if necessary to make external leave savings possible. KWPS highly welcomes this call, in the interest of decentralized social partners we assist. They are now confronted with long-term and uncertain advisory and research projects, which is why we currently even recommend postponing projects related to external leave savings.
KWPS is closely monitoring the relevant developments and will report as soon as more is known. If you as an employer of employee representative are interested in this subject, please feel free to contact us.
