Garden Leave in the Netherlands

You have been placed on garden leave during the notice period or pending the end of your employment. What are your rights?

What is garden leave?

Garden leave (vrijstelling van werk) means that your employer releases you from your obligation to work while your employment contract continues. You receive your salary but no longer need to report to work. This is common during reorganizations.

Garden leave is generally distinguished legally from suspension or disciplinary measures. A suspension typically involves a disciplinary action due to alleged misconduct, while garden leave during a reorganization is a neutral measure that forms part of the departure arrangement.

Garden leave is not specifically regulated by Dutch statute and is in practice based on general employment law principles, including the salary continuation obligation. The terms are set out in the settlement agreement. It is therefore important that the conditions are clearly documented: duration, salary, holiday days, secondary employment conditions and the ability to seek other employment.

Garden leave can be a valuable component of your departure arrangement. It provides time to search for a new position, pursue training or prepare for your next step while continuing to receive your salary.

Difference with suspension

It is important to distinguish between garden leave, suspension and being placed on non-active status. A suspension is typically a disciplinary measure due to alleged breach of duty or misconduct. Being placed on non-active status may occur pending an investigation or procedure. Garden leave during a reorganization is a neutral measure: you are released from your duties as part of the departure arrangements, without any suggestion of culpable behavior. Ensure that the settlement agreement clearly states it concerns garden leave and not a disciplinary measure.

Your rights during garden leave

  • Salary continuation as agreed
  • Holiday allowance accrual (8%)
  • Pension accrual while employment continues
  • Retention of secondary employment conditions
  • Use of company car (unless otherwise agreed)
  • Holiday day accrual
  • Bonus entitlement (depending on arrangement)

Key considerations during garden leave

Salary and benefits

During garden leave, you are entitled to continued payment of your full salary, including holiday allowance and fixed salary components. Your pension accrual continues in principle. If you have a company car, its use is typically continued during the garden leave period unless otherwise agreed in the settlement agreement.

Holiday days

A common point of discussion is the deduction of holiday days during garden leave. In principle, the employer cannot unilaterally deduct holiday days without the employee's consent. The settlement agreement often specifies that remaining holiday days are deemed taken during garden leave or paid out at the end of employment.

WW eligibility

Garden leave does not in principle affect your unemployment benefit (WW) eligibility, provided the end date of employment aligns with the applicable notice period. UWV applies a fictitious notice period: if the end date is too early, your WW benefits may only start after this fictitious period has elapsed. Ensure the end date in the VSO accounts for this.

Working for another employer

During garden leave, your employment contract remains in force. This means all obligations from your contract — including any non-compete clause and confidentiality obligations — continue to apply. Whether working for another employer is permitted depends on your employment contract and the arrangements made. It is advisable to address this in the settlement agreement.

Bonus and variable pay

Whether you retain your bonus entitlement during garden leave depends on the bonus arrangement and the terms of the settlement agreement. If your bonus is linked to personal targets, the employer may argue that you cannot meet targets while not working. It is advisable to explicitly address the bonus in the VSO, preferably as a pro rata payment.

Duration and notice period

The duration of garden leave is set out in the settlement agreement. It typically covers the full notice period, which ranges from one to four months depending on tenure. A longer notice period with garden leave means more time to job search with continued salary. Depending on your personal and tax situation, a longer notice period can be financially attractive.

Garden leave in the settlement agreement

The terms of garden leave must be carefully documented in the settlement agreement. Key points to address:

  • Start date and duration of garden leave
  • Confirmation of full salary and all components
  • Holiday day arrangement (deemed taken or paid out)
  • Continuation of pension and other benefits
  • Use of company property (car, laptop, phone)
  • Permission to seek other employment
  • Bonus and variable pay during garden leave

If these points are not clearly documented, disputes may arise later. We recommend treating garden leave as an integral part of the departure arrangement and recording all terms in writing. ReorgLegal reviews your situation and ensures the garden leave is correctly and fully arranged.

Unilateral garden leave by the employer

An employer cannot simply place you on garden leave unilaterally. The right to perform work is recognized in case law as a protectable interest of the employee. The employer must have a reasonable ground for the garden leave, such as confidentiality of information, protection of client relationships or the organizational consequences of the reorganization.

In practice, garden leave during reorganizations is regularly accepted, provided employment conditions are maintained.

Expats and the 30% ruling

For international employees with a 30% ruling, garden leave may have implications. During garden leave, you are no longer actually performing work, which may raise questions about the application of the 30% ruling during that period. It is advisable to seek tax advice on this matter in good time and to address this issue in the settlement agreement negotiation.

Outplacement during garden leave

Garden leave provides a good opportunity to use outplacement support. If an outplacement budget is included in the settlement agreement, you can use it for career coaching, CV assistance, interview training and networking. Outplacement costs may be treated favorably for tax purposes under certain conditions and are a valuable addition to the financial departure arrangement.

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