Do you want to award an all-in salary? Then pay close attention!

An all-in salary is permitted in the Netherlands, but only under strict conditions. You may pay holiday allowance and wages for vacation days together with the regular salary, provided that you agree to this in writing in the employment contract (or collective labour agreement), make the distribution between wages, holiday allowance, and vacation days transparent and understandable, and do not infringe upon the right to actual, paid vacation. If you do not agree on this properly, a court may set aside the all-in agreement, and you may be required to pay the holiday allowance and vacation days again.

What is an all-in salary?

In a standard employment contract, you pay your employee three things: the basic gross salary, plus holiday pay (the holiday allowance) and continued salary during vacation days. Employers usually pay out holiday pay once a year, and the salary continues when the employee takes time off.

With an all-in salary, you incorporate holiday pay and wages for vacation days directly into the monthly or hourly salary. The employee therefore receives the full amount at once each period. This is particularly attractive for flexible workers, on-call workers, and employees with highly variable hours, where separate continued payment during vacation is difficult to calculate.

Why do employers choose this?

• Payroll administration becomes simpler with variable hours.
• You do not need to keep separate track of how much salary you have to continue paying during taken vacation days.
• For on-call and agency workers, it aligns better with practice.

The downside: the law and the courts impose strict requirements. If you do not adhere to them, it will turn against you.

Is an all-in salary allowed? The legal basis

The general rule is that holiday pay is paid out at least once a year. You may deviate from this in writing, for example by monthly payment of holiday pay . If such a written agreement is lacking, an all-in arrangement for holiday pay is not permitted.

The matter is more sensitive regarding wages for holiday days. The basic principle is that holidays are intended for rest and that you may not buy out the right to holiday. In the Robinson-Steele that an employer may indeed pay holiday pay in installments, but only if this is done in a transparent and understandable manner . This concerns an advance payment that is settled at the moment the employee actually takes holiday leave, not a buyout of holiday entitlement. Dutch case law follows this line: an all-in wage is permitted, provided it is transparent and understandable. The burden of proof that the agreement meets these requirements lies with you as the employer.

An all-in salary must not undermine the employee's right to genuine, paid vacation. It is an advance, not a replacement.

The conditions for a valid all-in salary

If you want to legally award an all-in salary, pay attention to the following points:

1. Record this in writing. Explicitly agree in the employment contract (or collective labour agreement) that the salary includes holiday pay and pay for vacation days.
2. Name the components separately. Clarify which part of the wage relates to the basic salary, which part to holiday pay, and which part to vacation days. Vague wording is insufficient.
3. Be transparent and understandable. The employee must be able to see that he or she receives an advance on holiday pay every period. A specification on the payslip is the most obvious route for this; another sufficiently clear and accessible overview may also suffice.
4. Guarantee genuine vacation. The employee must actually be able to take the vacation days. The all-in agreement may not be a reason to take less time off.

If you miss one of these elements, you run the risk that a judge will rule that there is no valid all-in salary at all. The consequences of that are substantial.

Example: what does an all-in agreement look like in practice?

Suppose you agree on an hourly rate with an on-call worker. In the employment contract and on the payslip, you clearly break down that rate: part is the basic hourly wage, part is the holiday allowance, and part is the reservation for wages for vacation days. Every month, you see these three items listed separately. If the employee takes time off, that wage has already been paid via the settled advance, while the right to actually take those days remains. Because the employee can review the accrual at any time, you are in a strong position should a dispute ever arise.

Step-by-step plan: how to safely implement an all-in salary

Do you want to introduce an all-in salary? Then follow these steps to cover the most important risks:

1. Determine if it fits. An all-in arrangement pays off, especially for variable hours, on-call workers, and agency workers. For a fixed monthly salary with a fixed number of vacation days, a regular, separate payout is often clearer.
2. Check the collective labor agreement (CLA). If a CLA applies, first check whether it permits or prohibits an all-in salary. The CLA takes precedence over what you agree upon yourself.
3. Calculate the components separately. Break down the gross salary, holiday allowance, and holiday entitlement so that each component is traceable.
4. Record it in writing. Incorporate the agreement explicitly and clearly into the employment contract, with the three components listed separately.
5. Specify on the payslip. Show the three items separately on the payslip for each period or another continuously accessible overview.
6. Encourage the employee to actually take time off. Keep track of vacation days taken and urge them to actually take the days, so that there is no question of buyouts.

The risks: what if you don't arrange it properly?

Recent case law shows that judges are critical of all-in agreements, especially when the distribution between salary, holiday pay, and vacation days is unclear. If things go wrong, the consequences can be:

• The all-in agreement is (partially) set aside or declared void.
• You still have to pay out the holiday allowance and/or the wages for the holiday days separately, even though you thought this had already been processed. In effect, you are paying double.
• Upon termination of employment, an employee may claim a final settlement for unused vacation days.
• On top of a back payment, the statutory surcharge and statutory interest may be added, further increasing the bill.

Proper wording beforehand is therefore not a luxury, but saves you a costly dispute afterwards. Should a conflict arise regarding wages or a final settlement, our legal experts will assist you with practical legal support.

Provide the employee with a clear overview

Since transparency is at the core of a valid all-in salary, you would do well to regularly provide the employee with a clear overview. This demonstrates that the holiday allowance and holiday pay have actually been paid out in a recognizable manner. This can be done via the monthly payslip with a separate specification, or via another system that remains continuously transparent and understandable to the employee, such as a digitally accessible payroll overview.

It is important that the employee can verify at any time which part of the salary constitutes holiday allowance and which constitutes holiday pay. If you keep proper records of this throughout the duration of the contract, you will be in a strong position should a dispute ever arise.

Frequently asked questions about the all-in salary

Is an all-in salary allowed in the Netherlands?

Yes, but only under conditions. You must agree in writing that the salary includes holiday pay and wages for vacation days, make the distribution transparent and understandable, and ensure that the employee can actually take vacation.

How much holiday pay and vacation days are included in an all-in salary?

The statutory principles remain in effect: holiday pay amounts to at least 8% of gross salary, and a full-time employee accrues at least the statutory minimum number of vacation days per year (four times the weekly working hours). An all-in salary does not change these rights; it only determines how they are paid out. A collective labor agreement or employment contract may contain broader entitlements.

Does the breakdown need to be shown on the payslip?

The law primarily requires that the agreement be transparent and understandable. A separate specification on the payslip is the safest and most common way to achieve this. Another sufficiently clear overview may also suffice under certain circumstances, but you offer your employee (and yourself) the best certainty with a clear payslip specification.

What happens if the all-in agreement is not properly documented?

In that case, a judge may rule that no valid all-in salary exists. You may then still have to pay out the holiday allowance and the wages for the holiday days, possibly increased by the statutory surcharge and interest. In practice, you would then be paying double.

Does an all-in salary also apply to on-call and agency workers?

An all-in arrangement is particularly often used for flexible workers. In this case, too, the same requirements regarding written documentation, transparency, and guaranteeing genuine vacation apply. Furthermore, pay attention to the collective labor agreement applicable to temporary agency work.

Can I buy out vacation days with an all-in salary?

No. The salary for the vacation days is an advance that you settle when the employee takes vacation. The right to actual, paid days off remains and may not be bought out.

What is the difference between an all-in salary and a revenue-dependent salary?

With an all-in salary, holiday allowance and holiday pay are already included in the amount paid. A turnover-dependent salary (for example, commission or piecework) is slightly different: in that case too, you must continue paying wages during vacation at a level comparable to what the employee normally earns. Therefore, you may not pay an employee less simply because he or she is on vacation.

Assigning an all-in salary? We can help you

Granting an all-in salary is not without consequences. The requirements regarding written documentation, transparency, and guaranteeing genuine vacation time are strictly adhered to, and a minor wording error can cost you dearly later on. Our legal experts draft a watertight employment contract in which the all-in agreement is correctly incorporated and provide practical tips to prevent disputes. If you have broader questions regarding personnel and contracts, please also take a look at our expertise in employment law.

Do you want to safely implement an all-in salary or have an existing agreement reviewed? Schedule a no-obligation intake, and we will look together at how to handle this properly from a legal perspective.