We recently outlined the key reforms to be introduced by the Workplace Relations Bill. Here we focus on the provision in the Bill which seeks to address the gap in the Organisation of Working Time Act 1997 with respect to an employee’s accrual and retention of annual leave while on sick leave.
Two significant cases from the Court of Justice of the European Union (the “CJEU”) impact the way in which employees who are absent from work accrue annual leave.
Accrual of Annual Leave
Currently, the Working Time Act provides that the accrual of annual leave is based on hours worked, and as such, an employee does not accrue annual leave while on sick leave.
In the first case of interest, Stringer v Revenue and Customs Commissioners andSchultz-Hoff v Deutsche Rentenversicherung Bund1, the CJEU determined that an employee, who is on sick leave, is entitled to accrue annual leave during sick leave and to take such leave at a later date after the period of sick leave has ended.
This decision of the CJEU currently applies only to public employers and not private employers in Ireland, by virtue of the principle of direct effect, but the provision in the Workplace Relations Bill (the "Bill") will, once enacted, extend the right to continue to accrue statutory annual leave to all employees.
Carry-Over of Annual Leave
The Working Time Act gives little guidance about the carry-over of annual leave, except that it must be taken within 6 months after the leave year, this being a matter to be determined between employee and employer.
The second case of interest, KHS AG v Winfried Schulte2, provides guidance as to the carry-over of annual leave with respect to employees who are on long-term sick leave for more than a leave year. The CJEU ruled that national law is permitted to impose a cap of 15 months on the carrying-over of annual leave, following which the right to take such leave would cease.
The Bill contains a provision which will allow employees on long-term sick leave to accrue and retain annual leave subject to a maximum carry-over of 15 months from the end of the year in which it accrued.
The 15 month limitation period seeks to draw a balance between protecting the rights of employees who are absent from work for long periods and the potential financial implications for employers if the carry-over of untaken annual leave was unlimited.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.