Changes to an employee’s right to accrue annual leave entitlements on sick leave
The passing into law of the Workplace Relations Act 2015 on 21 May 2015 brought with it a number of changes for employers and employees. As well as the sweeping and well documented reform of the workplace relations fora, this Act also brings about a significant change to employee’s rights to accrue annual leave entitlements while on sick leave. In this article, Deirdre Crowley and Emer O’Sullivan of Crowley Solicitors provide an overview of the changes to annual leave entitlements and consider the implications of such changes for employers.
Section 86(1) of the Workplace Relations Act 2015 (the “2015 Act”) makes amendments to sections 19, 20 and 23 of the Organisation of Working Time Act 1997 (the “1997 Act”) which govern statutory annual leave entitlement for employees. These changes have the potential to have a significant impact on employees and employers alike. Under these amendments, employees who are on sick leave will accrue annual leave entitlements during this time, subject to a maximum carry over period of 15 months from the end of the year in which the annual leave accrued. These provisions came into effect from 1 October 2015.
These amendments represent significant changes to the Irish position, where private sector employees did not accrue annual leave while on sick leave. Prior to these amendments only public sector workers accrued annual leave entitlements while on sick leave.
Pre 2015 Act Position
The effect of section 19 of the 1997 Act, which sets out an employee’s annual leave entitlement, as previously drafted, was that annual leave entitlement was based on the hours worked in any year. Therefore under Irish law prior to the enactment of the 2015 Act annual leave did not accrue in the private sector while an employee was on sick leave. This position was inconsistent with Article 7 of the Working Time Directive and the CJEU’s interpretation of the Working Time Directive. In 2009 in Gerhard Schultz-Hoff v Deutsche Rentenversicherung Bund (C-350/06) and Stringer and Others v Her Majesty’s Revenue and Customs (C-520/06) the CJEU interpreted the Working Time Directive as providing that annual leave accrues to an employee in the normal way while he or she is absent due to illness. By virtue of the doctrine of direct effect, these rulings applied to Irish public sector workers however they did not apply to private sector workers, the recent judgment by the Labour Court in Roskell Limited and Armads Rksmanis (WTC/11/235) confirmed this. The 2015 Act amendments will remedy this inconsistency. Is comes after the EU Commission issued a Letter of Formal Notice to Ireland in July 2014 indicating that it considered that sections 18 and 19 of the 1997 Act were inconsistent with the Working Time Directive.
Section 20 of the 1997 Act provided for a maximum carry over period of statutory annual leave of six months following the annual leave year. This provision did not take account of the fact that employee’s who are on long term sick leave may not necessarily be in a position to take their annual leave within the six month carry over period due to their illness.
2015 Act Amendments
Section 19 of the 1997 Act has been amended by section 86(1)(a) of the 2015 Act with the inclusion of additional wording to the effect that any day on which an employee is absent from work and has provided a medical certificate then this absence will be counted was a day of work, where the employee was at work and performing their duties, for the purpose of calculating their statutory annual leave entitlement under section 19 of the 1997 Act.
Section 20 of the 1997 Act has been amended by Section 86(1)(b) of the 2015 Act by the insertion of wording to the effect that where the employee is unable, due to certified illness, to take their annual leave during the leave year or the six month carry over period, they may do so within the period of fifteen months after the leave year in question.
The limitation of the carry over period to 15 months is an attempt by the Government to strike a balance between protecting the rights of workers who are on sick leave due to serious illness and the potential cost the employers of this amendment if the accrual right was unlimited. It also takes account of the CJEU decision in KHS AG v Schulte (C-214/10) where the CJEU held that the Working Time Directive does not preclude a national practice or provision which puts a cap on the accumulation of paid annual leave during successive years of absence on sick leave. In this case the CJEU found that a 15 month carry over period was not contrary to the provisions of the Working Time Directive.
Effect of Changes
The effect of this amendment is that is should bring Irish law into line with European Union Law and address the disconnect which had existed between Irish statute and the CJEU position. Private sector employees will now have certainty on their annual leave entitlements while on sick leave. It should be noted that the changes apply to an employee’s statutory annual leave entitlement only and not to any additional contractual annual leave entitlements which an employee may have. Employers should ensure that their contracts and policies are consistent with this amendment. Employers will need to take account of the changes to employees’ annual leave entitlements when on long term sick leave both during employment and in the event of the termination of an employee’s employment.
This article is a generally summary on the subject and is not intended to be a thorough review or a complete statement of the law. Specific legal advice should be sought on a case by case basis.