Annual Leave

26-01-12

Annual leave is dealt with under Part III of the Organisation of Working Time Act, 1997.  The Act applies to all employees under a contract of service or apprenticeship, civil servants and local authority workers.  Members of the Garda Siochana and the Defence Forces are excluded.  In the case of agency employees, the party who pays the wages (employment agency or Client Company) is deemed to be the employer for the purposes of the Act and is responsible for providing the entitlement.

 

The Act provides for a basic annual paid leave entitlement of 4 working weeks, although an employee’s contract of employment could give a greater period of time off.  All employees regardless of status or service qualify for paid annual leave based on the hours they work.  Employers should be aware that “hours worked” means hours physically worked, including overtime hours.

 

Annual Leave Entitlement

Annual leave can be calculated by one of the following methods:

• Where an employee works a least 1,365 hours in the leave year, they are entitled to 4 working weeks annual leave

 

If the number of hours worked by the employee is less than 1,365 hours, annual leave must be calculated as follows;

 

• Where an employee works at least 117 hours in the calendar month, they are entitled to one third of a working week for that month

Or

 

• 8% of the hours they work in the leave year subject to a maximum of 4 working weeks per annum

 

If an employee is covered by more than one of the above then he/she will be entitled to whichever calculation results in the greater amount of annual leave.  However the maximum statutory annual leave entitlement of an employee in a leave year is four of his/her normal working weeks.

Annual leave is not affected by other leave provided for by law. Time spent on protective leave, such as, maternity leave, adoptive leave, additional maternity and adoptive leave, remaining maternity leave to which a father is entitled to on the death of a mother, parental leave, force majeure leave, the first 13 weeks of career’s leave and health and safety leave is treated as though you have been in employment and this time can be used to accumulate annual leave entitlement.  Hours spent on annual leave itself and time worked on public holidays can also be used to accumulate annual leave.

 

Timing of Annual Leave

The onus is on the employer to ensure that employees receive their annual leave entitlement.  Annual leave should be taken within the appropriate leave year.  The time at which annual leave is taken is determined by the employer but this is subject to a number of conditions:

• the employer must consult with the employee or his/her union representative at least one month before the leave commences

 

• the employer must take into account the employee’s opportunity for rest and relaxation

 

• where the employee has eight qualifying months he/she is entitled to an unbroken period of two weeks leave which may include one or more public holidays

 

• the employer must take into account the need for the employee to balance work and family responsibilities

 

Payment of Annual Leave

The Act provides for payment in advance of annual leave at the normal weekly rate of remuneration.  Where the rate of pay does not vary in relation to work done then pay for annual leave is the rate payable for normal weekly hours in the working week before the annual leave, including any regular bonus or allowance which does not vary.  Pay for overtime is excluded.  If an employee’s pay varies because, for example, of commission or bonus payments, their pay for their annual leave is the average of their pay over the 13 weeks before they take annual leave.  The intention is to provide a fair and equitable estimation of “normal” pay where an employee’s income fluctuates over the year.

 

Overtime is specifically excluded from pay for annual leave under the Act.  However, the Labour Court has made positive recommendations on claims for its inclusion in situations where overtime is worked on a “regular and rostered basis” and where the overtime was an integral and necessary part of the operation.  Where claims are made under the Organisation of Working Time Act, 1997 the court will not have the power to go beyond the terms of the legislation.  However, if claims are made under the Industrial Relations Acts, it will be able to continue to do so.

 

Employers should be aware that it is illegal to pay in lieu of the statutory annual leave entitlement unless the employment relationship is terminated.

 

Annual Leave and sick leave

Where an employee is certified ill on a day of annual leave he/she retains that annual leave day to be taken at a later date.  Illness during the leave year will reduce the total number of hours worked by an employee and can therefore affect their entitlement to annual leave.  Periods of certified sick leave during which an employee may receive payment from the company are not included as hours worked for the purposes of calculating annual leave. However, The European Court of Justice (ECJ) recently ruled a worker’s annual leave entitlement must continue to accrue during sick leave, and the right to paid annual leave cannot be restricted by the imposition of a requirement for a worker to have actually worked during the leave year in question.  Irish law as it stands is not compliant with the above ruling. The Organisation of Working Time Act 1997 requires, with the exception of protected leave as outlined above, a worker to work in order to accrue annual leave entitlements. Therefore, this legislation will have to be amended to reflect this ECJ decision.  The ruling of the ECJ may have significant ramifications for employers across Europe.

 

Annual Leave and absences from work

Absences from work can reduce an employee’s annual leave entitlement.  This happens where the minimum number of hours i.e. 1,365 has not been worked in the leave year.  Absences from work include sick leave, strike and lay-off.

 

Annual Leave not taken within the Leave Year

Annual Leave must be given to an employee within the leave year or, with the employee’s consent, within 6 months of the following leave year.  Employees may, with the consent of the employer, carry over holidays in excess of statutory minimum leave to a following leave year.

 

Annual Leave and Lay-off / Short-time

An employee on lay-off or short-time may be entitled to annual leave.  Absences from work due to lay-off or short-time can reduce the employee's annual leave entitlement as annual leave is dependent on the hours physically worked during the leave year.

 

If an employee works 1,365 hours in a leave year then he/she is entitled to 4 working weeks annual leave.  If less than 1,365 hours have been worked in the leave year, then the calendar month formula must be used to calculate annual leave entitlement, i.e. where more than 117 hours have been worked in the calendar month, the employee is entitled to one third of his/her normal working week in annual leave (subject to a maximum of 4 working weeks). Where less than 117 hours are worked in a calendar month, then the employee is entitled to 8% of the total hours worked in the leave year as annual leave (subject to a maximum of 4 working weeks).

 

Annual Leave and TUPE

Under Transfer of Undertakings (TUPE) legislation when an employee transfers from one business to another business the employee is entitled to carry their accrued annual leave entitlement to the transferee Company.  The cost of this is the responsibility of the new employer.  This is to ensure that employees associated with the transfer have an opportunity for adequate rest and relaxation during the working year.

 

Annual leave and leaving employment

The Act provides that where an employee ceases employment and has outstanding annual leave, any balance must be paid for by the employer.  This is considered payment in lieu of annual leave.  If the employee has taken more leave then due, then the employer can deduct monies from the employee’s final pay.  However, this must be provided for in the employee’s contract of employment or in a signed written agreement.

 

If you require any further assistance or clarification on any of above points please contact HRP on 01 676 0006.

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