One of the components of an employment contract is the employer's obligation to pay the employee the agreed wage. The law requires the employer to deduct payroll taxes and contributions from the gross wage. The net wage remaining after deduction must be paid. When the net wage must be paid to the employee (in legal terms: when the net wage is due) will generally be clear from the employment contract. Usually, the employment contract stipulates that wages are paid monthly, but weekly and 4-weekly payments are also common.
Fine
The law¹ stipulates that the employer must pay the wages immediately after the end of the agreed period. If the employer fails to do so and the reason for the failure to pay on time lies with the employer, the employee may claim a penalty². That penalty is then calculated from working day 4 after the time when the net wage should have been paid. The fine is from working day 4 to 8: 5% per working day. From working day 5 onwards, the penalty is 1% per working day. The penalty is calculated on the amount not paid on time gross wages and can reach a maximum of 50% of the late pay (this maximum is reached after 33 working days).
The court may moderate the fine calculated on the basis of the rules described above if it deems it fair.
Cash wages
The fine described above can be claimed on regular cash wages paid late. Thus, for example, for periodic salary paid late, for holiday pay paid late and for profit shares or commissions paid late. But not for incidental remuneration paid late, such as expense allowances, a (non-structural) 13th month, bonuses and the like.
If wages in kind are provided late and this is not caused by the employee, the employee can claim an increase only if such compensation is fixed by agreement and is reasonable. Compensation may also be awarded by the court, if and to the extent it deems such compensation fair³.
__________________
¹ Article 7:623 BW
² Article 7:625 BW
³ Article 7:630 BW