Holiday pay is an annual cost that you need to spread over 12 months. Many restaurant owners forget to include this in their monthly calculations, which means they face surprises at the end of the year. Here's how to correctly process holiday pay in your monthly labor cost calculation.
What is holiday pay and when do you pay it?
Holiday pay is a legal requirement in the Netherlands. You pay a minimum of 8% of the gross salary as holiday pay, usually in May. But the costs run throughout the year.
- Minimum holiday pay: 8% of gross salary
- Payment: usually in May (for the previous year)
- Accrual: you build up holiday pay every month
- Collective labor agreements can require a higher percentage
⚠️ Note:
You build up holiday pay throughout the year, but pay it out all at once. If you forget to include this in your monthly costs, you'll face an unpleasant surprise in May.
Calculate your total holiday pay per year
First, you need to know how much holiday pay you'll spend per year. You do this based on the gross annual salaries of your staff.
💡 Example:
You have 3 employees with the following gross annual salaries:
- Chef: €35,000 per year
- Cook: €28,000 per year
- Server: €24,000 per year
Total gross salary: €87,000
Holiday pay (8%): €87,000 × 0.08 = €6,960 per year
Spread holiday pay over 12 months
Now that you know how much holiday pay you'll spend per year, spread this over 12 months. This gives you your monthly holiday pay costs.
Formula: Annual holiday pay ÷ 12 = Monthly holiday pay costs
💡 Example:
Holiday pay per year: €6,960
Monthly costs: €6,960 ÷ 12 = €580 per month
You need to set aside this amount every month, even though you don't pay out the holiday pay until May.
Add holiday pay to your total labor costs
Your monthly labor costs consist of more than just gross salaries. Holiday pay is part of it — a pattern we see repeatedly in restaurant financials where owners underestimate their true labor expenses.
- Gross salaries
- Employer contributions (social premiums)
- Holiday pay (8% minimum)
- Possible 13th month
- Pension premiums
💡 Example complete calculation:
Monthly labor costs:
- Gross salaries: €7,250
- Employer contributions (25%): €1,813
- Holiday pay: €580
- Pension premium: €145
Total labor costs per month: €9,788
Set aside money monthly for holiday pay
It's wise to set aside the calculated holiday pay every month. This prevents liquidity problems in May.
⚠️ Note:
Many entrepreneurs forget to set aside holiday pay. In May, they suddenly need €7,000+ that they don't have. Set aside the calculated amount every month in a savings account.
Track labor costs with restaurant management tools
Tools like KitchenNmbrs help you keep track of all your labor costs clearly, including holiday pay. The app automatically calculates your total personnel costs per month and takes into account all legal obligations.
- Automatic calculation of holiday pay
- Overview of total labor costs per month
- Comparison with your revenue and food cost
- Insight into your break-even point
How do you calculate holiday pay in your monthly labor costs?
Calculate total gross annual salary
Add up all gross annual salaries of your employees. Use the contractual annual salaries, including any fixed allowances. Don't forget yourself if you also draw a salary.
Calculate annual holiday pay
Multiply the total gross annual salary by 8% (or the percentage from your collective labor agreement). This gives you the total holiday pay you need to pay per year.
Spread over 12 months
Divide the annual holiday pay by 12. This amount should be included in your labor costs every month and preferably also set aside in a separate account.
✨ Pro tip
Set up an automatic bank transfer for exactly €580 monthly into a dedicated holiday pay savings account starting January 1st. This prevents the common May cash flow crisis that hits 73% of restaurants unprepared.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
Do I also have to pay holiday pay on holiday pay?
No, holiday pay is calculated on the gross annual salary excluding the holiday pay itself. You calculate 8% on the base salary, not on salary plus holiday pay.
What if an employee starts mid-year?
Then you build up holiday pay from the start date. An employee who works 6 months receives half of the annual holiday pay. Adjust your monthly calculation accordingly.
Can I pay out holiday pay in installments?
Yes, you can. You can pay out holiday pay in a maximum of 3 installments, but it must happen within the calendar year. Many entrepreneurs pay in May and December.
Should I include holiday pay in my break-even calculation?
Absolutely. Holiday pay is a fixed labor cost that you build up every month. If you forget this, your break-even point won't be correct and you risk liquidity problems.
What about holiday pay for temporary workers?
Temporary workers also have the right to holiday pay. Calculate 8% on their actual gross salary per year. With varying hours, it's helpful to set aside 8% of their salary every month.
How do I handle holiday pay for staff with fluctuating hours?
Calculate based on their average monthly earnings over the past 12 months. Set aside 8% of each month's actual wages to account for seasonal variations. This ensures you're always covered regardless of hour fluctuations.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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