Managing Annual Leave Balances

As we quickly approach the final quarter of the year, many employers in Ireland will face a familiar challenge – managing employees with high Annual Leave balances remaining. A recent survey undertaken by FRS Recruitment found that one-in-five people did not use five or more days of Annual Leave, whilst 16% did not take four days Annual Leave, 19% had three days Annual Leave remaining, whilst 9% had up to two days Annual Leave unused, 3% of employees had one day of their Annual Leave entitlement remaining at the end of the calendar year.

The Organisation of Working Time Act, 1997 sets out the legal framework regarding Annual Leave entitlements. Understanding these regulations along whilst having a structured Annual Leave Management Policy and good management practices is crucial in addressing and preventing this issue.

Whilst the statutory Annual Leave year runs from the 1^st of April to the 31^st of March, the majority of employers will choose to use the Calendar Year instead for administration purposes. Under the Organisation of Working Time Act, employees who work full-time, or at least 1,365 hours in a leave year are entitled to a minimum of four working weeks of paid Annual Leave per year. Employees who work less than 1,365 hours, or part-time, are entitled to Annual Leave entitlement calculated at 8% of their hours worked in the leave year.

It is important to note that employees should not be permitted to carry over unused Annual Leave indefinitely. Typically, Annual Leave which has not been utilised must be taken within six months after the end of the leave year, unless there are exceptional circumstances. It is important to note that an Annual Leave carryover period of 15 months after the leave year will apply to those employees who could not, due to illness, take Annual Leave during the relevant leave year or during the normal carryover period of 6 months. This means that as we come closer to the end of the calendar year, it is important for employers to act swiftly to prevent potential stress in relation to managing high balances.

One of the most effective ways to manage Annual Leave accrual is to initiate open conversations with your employees. It is important to schedule one-to-one meetings, to discuss their leave balances, and any challenges they may face in taking time off. This approach not only demonstrates that you value your employee’s wellbeing and need for time away from the workplace, but also allows you to identify any workplace issues, such as high levels of work within a team, that may be hindering their ability to take leave. Flexibility in scheduling leave can often lead to a more productive and satisfied workforce.

It is important as employers that you encourage your employees to plan their Annual Leave in advance. Some employers request employees to take their Annual Leave in a particular format, such as one week in the spring months, two weeks in the summer months, and one week in the winter months. Often these Annual Leave dates are requested to be input at the beginning of the leave year. You may also consider implementing a leave planning tool or software that allows employees to view their leave balances and upcoming deadlines clearly such as deadlines to input their Annual Leave for the leave year. This proactive approach can help employees prioritise their time off and ensure they utilise their entitlements before they expire.       

As employers it is important to take a proactive approach to Annual Leave, which if you haven’t already, can be done so by developing a robust Leave Management Policy that outlines how Annual Leave is accrued, taken, and managed. This policy should also detail the importance of taking leave and the implications of not doing so, such as the Company requesting an employee to take Annual Leave they have not already utilised at a specific time. It is important to have robust Leave Management Policies in place to highlight the importance of taking the Annual Leave, but also in educating employees about their rights and responsibilities regarding taking Annual Leave. With the introduction of a Leave Management Policy, employers can mitigate confusion and encourage compliance with leave-taking practices.

Managing high Annual Leave balances requires thoughtful planning, and a proactive approach. By understanding the legislation associated with employee’s taking Annual Leave, communicating effectively and openly with your team, encouraging planning and implementing policies, employers can ensure that their workforce remains engaged and rested.

Happy employees are productive employees which lead to productive teams, allowing the overall business to run effectively and efficiently, facilitating Annual Leave is a vital part of maintaining that balance.

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