Q&A on Working Time Developments

Posted in : Hot topics in Employment and Technology Law with Matheson on 10 November 2015
Deirdre Crowley
Issues covered:

The practice in our organisation was that once an employee was out on sick leave, any time absent from work on sick leave was not included in the calculation of annual leave entitlement, e.g. if the employee missed 1.5 months of work due to sick leave then we calculated the annual leave by dividing 20 days by 12 months and multiplying it by 10.5 to get the annual leave entitlement. We have an employee arguing that they have worked 1,365 hours in a year and so is entitled to full 20 days. Which is correct?

Section 19 of the Organisation of Working Time Act 1997 sets out an employee’s entitlement to annual leave as follows:

  1. Four working weeks in a leave year in which the employee works 1,365 hours or more; or
  2. 1/3 of a working week for each month in the leave year in which the employee works 117 hours; or
  3. 8% of the hours worked by the employee up to a maximum of 4 working weeks.

Where an employee qualifies under 2 or more of the calculations above, he or she shall be entitled to whichever period of leave is greater.

Therefore, as can be seen from the legislation, if the employee in question has worked 1,365 hours in the year, notwithstanding any absence on sick leave, then they are entitled to 4 weeks of annual leave. In addition, pursuant to section 86(1) of the Workplace Relations Act 2015 employees on sick leave now accrue their annual leave entitlements while on sick leave. In cases where an employee has worked less than 1,365 hours in the year, whether due to sick leave or otherwise, then the methods of calculation set out in either (2) or (3) above may apply. 

What changes do I need to make to take account of the changes to the annual leave entitlements while on sick leave?

The changes apply with immediate effect from 1 August 2015 and so employer should carry out a review of their contracts and policies to ensure that they accurately take account of these legislative changes. In addition, if you have employees who are on long term sick leave you must take this new right into account when calculating their annual leave entitlements, keeping in mind the 15 month carry over period for such accrued annual leave entitlements. 

We have an employee who is on long term sick leave and has not submitted sick certificates for 4 months – do they still accrue annual leave entitlements?

Section 86(1) of the Workplace Relations Act 2015 states that a day an employee was absent from work due to illness shall ‘if the employee provided to his or her employer a certificate of a registered medical practitioner in respect of that illness’ be deemed to be working time for the purpose of calculation of annual leave entitlements. 

Therefore, if the sick leave is not medically certified, then it will not be considered as working time for the purpose of calculating annual leave entitlement. In such a situation employers should also consider their absence and sick leave policy which should set out the requirements for employees to provide certification for sick leave and any consequences of a failure to do so.

In payment for annual leave, should this include care allowances/on call allowances/housing subsidies?

SI No 475/1997 – Organisation of Working Time (Determination of Pay for Holidays) Regulations 1997 (the “Holiday Pay Regulations”), at section 3, sets out the basis of calculation, for the purpose of the Organisation of Working Time Act 1997, of the normal weekly rate of an employee’s pay. 

It states that the sum that is paid in respect of the normal weekly pay includes any regular bonus or allowance the amount of which does not vary in relation to work done by the employee, but excluding any pay for overtime. Therefore, if the allowances or subsidies are amounts that do not vary it is likely that this should be included in the calculation. 

In addition, it should be kept in mind, following CJEU decisions such as Williams and Others v British Airways, Lock v British Gas Trading Ltd and Others, that if there is an intrinsic link between the allowances and the work that the employee is required to do then it is likely to be included in the calculation of annual leave payment. It may also depend on the terms of the contract of employment and so this should be reviewed in detail when determining whether or not such allowances/subsidies are included in the calculation of payment for annual leave.

Does the Tyco decision apply to all types of workers?

The Tyco ruling only refers to workers who do not have a fixed place of work and who travel each day between their home and customers’ premises on behalf of their employers.

The impact of the decision in relation to such workers will depend very much on whether an employer is operating in the public or private sector. The decision is directly effective in the public sector – it has “day 1 direct effect”. It is likely that implementing legislation will be required prior to the decision taking effect in the private sector. 

However an Irish Court or Tribunal must take effect of European Union cases such as Tyco when coming to their decisions and it is possible that such Courts and Tribunals will follow the approach that the Equality Tribunal has taken in respect of retirement, and address the disconnect between the Irish and EU position and depart from strictly applying Irish legislation and taking into account the CJEU position. 

The manner in which an Irish Court will take any European decision into account will depend on the facts of each case. It is quite possible that a test case will be brought in the near future addressing the conflict and disconnect between the National Minimum Wage Act 2000, the rationale in the Tyco decision, the Organisation of Working Time Act 1997 and the employment terms of workers who are seeking recognition that travel time constitutes working time in cases where workers have no habitual or fixed place of work.

This article is correct at 10/11/2015

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Deirdre Crowley

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