24Feb 2015

Proposed changes to the Organisation of Working Time Act, contained in the new Workplace Relations Bill, will have financial implications for employers.

The Bill is at Committee Stage in the Seanad at present.

Until 2009, it was clear that under section 19 of the Organisation of Working Time Act 1997 (‘the 1997 Act’) employees could not accrue annual leave during periods of sick leave, as the wording refers to annual leave having accrued for time worked only. However, in 2009, the CJEU (Court of Justice of the European Union) held in the joint case of Stringer and Schultz-Hoff (Stringer v Revenue and Customs Commissioners and Schultz-Hoff v Deutsche Rentenversicherung Bund) that employees who were unable to take annual leave due to being on sick leave, were entitled to take the annual leave at a later date, after the sick leave had ended. The CJEU later clarified that provisions of national law may limit the accumulation of leave (KHS AG v Winfried Schulte).

In much the same way as under the 1997 Act, employees in Ireland are only permitted to carry over 5 days of statutory annual leave for a period of six months into the new leave year.

Since 2009, most decisions arising out of claims for this leave have been reported from the Labour Court, which has bound public sector employers (as emanations of the State) to the EU decisions by virtue of Direct Effect. It has confirmed on many occasions that, in respect of private employers, it is bound by local law (ie the 1997 Act) until that is amended. Private employers have not been required to comply with these decisions.

However, the Workplace Relations Bill 2014 includes a provision which will amend section 19 of the 1997 Act, with the effect that where an employee has been absent from work by reason of certified illness, he/she shall be deemed to have been at the place of work, and performing the duties of his/her employment. This leave will accrue during the leave year, or within six months of the leave year, or, where the employee was unable to take any annual leave in that leave year due to illness, within a 15-month period from the end of that leave year.

This change (if signed into law) will have a significant cost impact for employers, particularly SMEs, who may have employees returning from long term sick-leave who will have accrued paid annual leave.

For further assistance in relation to any Employment Law matter please contact Ciara Doyle or Anne Leech at Ciara Doyle + Company Solicitors

Article Reference –Law Society of Ireland Legal eZine, February 2015 edition