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Resources

Resource 1 - Investment of holiday hours

Three restrictions have been imposed on the investment of holiday hours.

  1. The holiday entitlement remaining after the investment must at least be equal to the average hours in four weeks. For a fulltime employee this is 160 hours per year. Remaining leave of previous years can also be invested.
  2. The maximum amount of holiday hours to invest is 120 hours per year (for parttimers this is in proportion to the scope of their employment).
  3. The minimum amount of holiday hours to invest is 16 hours per year (for parttimers this is in proportion to the scope of their employment).

Example

An employee has a 50 percent parttime contract. The number of holiday hours to be invested must be at least 8 but cannot exceed 60 holiday hours (the minimum and maximum respectively for this parttimer can be calculated as follows 16 x 50 percent = 8 hours and 120 x 50 percent = 60 hours).

The AVOM option can be used once per year. The resource can only be made for two or three years in case of investing holiday hours for the bicycle or the reduction of the employee's contribution towards study costs.
The holiday hours resource cannot be used for the object of commuting allowance or the object union-contribution & membership. The employee that demonstrably makes use of regular childcare can have 16 extra holiday hours paid out.

The value of a holiday hour

Salary together with fixed allowances (remuneration), applying to the fulltime employee in the month wherein the AVOM object comes into effect, serves as a basis for the determination of the value of a holiday hour. Holiday allowance and end-of-year bonus are added to this. To come at the hour value the result should be divided by 165 (this is the fulltime amount of hours per month, 38 x 13 : 3 = 165).
Please note! The hour value is not adapted in the course of the agreement.

Example

A participant of parental leave works three days per week (60 percent) and has a salary of € 1,400 with a performance bonus of 6 percent (€ 84.00) during several years. This has been recalculated to full-time: € 1.484/60* 100 = € 2.473,33. Including holiday allowance and end-of-year bonus, that is € 2.473,33 x 1,1633 = € 2.877,22 in total. A holiday hour is worth € 2.877,22 : 165 = € 17,44.

The employee can invest a maximum of 120 x 60 percent = 72 holiday hours per year. The employee can fund a bicycle costing € 750.00 entirely with holiday hours as they will need a total of 43 holiday hours for this (€ 750.00 : € 17.44 = 43 hours).

The costs of objects should always be in balance with the proceeds of the resources. Holiday hours can only be applied per entire hour. The proceeds of an entire amount of holiday hours will not always be equal to the costs of the chosen objects. If the invested hours are not sufficient, the difference will be offset by means of reduction of salary. The payroll administration shall offset differences less than € 50.00 automatically by means of an extra reduction of salary in the first month after the application has been processed. Should the invested hours exceed the expenses of the purposes than this difference will be paid out net with the next salary (after the statutory deductions have been subtracted).

Example

The employee from the previous example falls under the 42 percent tax rate and receives therefore € 6.07 (net) per hour of the € 10.46 (gross).

Resource 2 - Reducing gross salary

Gross salary contribution

By investing gross salary ('salary reduction') less tax and social security contribution will be withheld. This provides an advantage if the reduction in salary is used to fund a higher travel allowance, a bicycle, a course of study, etc. The reduction of salary will be processed in the month the AVOM-option commences. In case the employee wants to use their salary for a bicycle or study expenses then this can only be processed after the expenses of these resources are known.

Example

The employee makes an AVOM agreement concerning the purchase of a bicycle costing € 750.00. Based upon this agreement we will pay € 750.00 from his gross salary net. How does this work?
The gross salary will be reduced (for a certain amount of time) with the total of € 750.00. This means that less will be taxed  and less social security contributions will be withheld, for example € 199.421) . The net salary will thus be reduced with € 750.00 - € 199.42 = € 550.58. The € 750.00 bicycle will cost the employee € 550.58.

You can reduce your salary during various periods, depending on your chosen objects:

  • Object extra travel allowance: your salary will always be reduced with a fixed amount every month.
  • Object bicycle for commuting or reducing your study expenses: you may opt to spread the reduction over two or three years or to have the reduction of salary in the month of May (the month in which holiday allowance is paid out) or December (the month in which end-of-year bonus is paid out) in two or three consecutive years.
  • Other objects: you can chose between one or 12 months.

Please make note of the following when making your choice

  • The period of reduction of your salary cannot extend beyond the lenght of your employment contract.
  • The reduction is limited by the legal requirement that at least the minimum wages should remain every month.
  • The agreement about reduction of the gross salary may lead to a lower holiday allowance but this should never be lower than the minimum amount holiday allowance.
  • The reduction of salary in the year previous to the termination of employment will influence the height of a possible unemployment benefit (WW/WOI).
  • AVOM has no influence on the height of the allowances mentioned in art. 3.8 of the Cao-OI. It also has no influence on the payment of overtime or holiday hours.

It is difficult to give a general indication what the effect will be of reduction of salary on these benefits. Should you have further questions concerning these issues please consult your personnel officer.

Termination

When it becomes clear that the employment contract will be terminated during the agreed term of the period, a new agreement will be drawn up that reflects the changed circumstances. Upon termination of the employment contract, the remaining obligations will be settled against the net salary, as prescribed by the Tax Authority.

Example

The purchase cost of the bicycle of € 750.00 from the previous example is “repaid” by reducing the gross salary by € 20.83 for 36 months. Halfway through the term, the employment contract ends. In that case, € 94.50 in tax and contributions is withheld, rather than € 199.42 as in the previous example. As a result, the employee has had a net salary reduction of € 750.00 : 2 - € 94.50 = € 280.50 over a period of 18 months. Half of the purchase price (€ 375.00) has been repaid. The remaining amount (€ 225.00) must be deducted from the net salary. The bicycle costing € 750.00 therefore costs the employee € 94.50 + € 375.00 = € 469.50.

1) Calculation based on the salary of a researcher in training (second year).

Confidental Infomation