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Annual Leave Law – Employees Set to Accrue Annual Leave on Sick Leave from June 2015

As it stands in Irish employment law, employees in the private sector are not entitled to accrue annual leave whilst on sick leave. However, this is not compliant with EU rules and reform has been on the cards now since 2009.

Annual Leave Law: Current Position

Annual leave law in Ireland is governed by the Organisation of Working Time Act, 1997, and some subsequent regulations. This legislation is very explicit as to when an employee will accrue and what counts as ‘working time’ for this purpose. As a result, it has been the case in Ireland that an employee on sick leave will not accrue annual leave during a period of sickness absence.

European Developments

In the European cases of Stringer and Others v H.M. Revenue & Customs [C-520/06] and Schultz-Hoff [C-350/06] it was determined that an employee should continue to accrue annual leave whilst on sick leave. It was further determined that if an employee is on sick leave for the whole or part of a leave year that any leave they accrued does not disappear when the leave year has ended, and that, as such, the employee must be allowed to carry forward their annual leave.

These key European decisions applied automatically since 2009 in the Irish public sector. This is because the Irish State is bound by such European decisions and as such anybody employed by the State benefitted from this decision for the last six years. However, the private sector was still governed solely by the Organisation of Working Time Act which meant that a private sector employee would not benefit from these decisions until the legislation was amended.

New System – the Workplace Relations Bill

The Workplace Relations Bill primarily concerns the streamlining of the Irish employment tribunal system. However, the Government has seized the opportunity to amend the rules in respect of annual leave at the same time. Accordingly, the Workplace Relations Bill provides as follows:

  • Where an employee is absent from work then that absence will count as working time where it is covered by a medical certificate from a registered medical practitioner.
  • Where an employee is unable to take all or part of their annual leave during a leave year due to a medically certified illness then the employee will still be permitted to take that annual leave for up to 15 months after the leave year has ended.
  • If an employee’s employment is terminated during the 15 month period mentioned above the employee will be entitled to payment in lieu of any such outstanding annual leave.

This bill is set to be enacted into law on 01 June 2015 and when enacted the above will come into force.

Potential Grey Areas

There are a number of potential grey areas in the wording of the legislation which might result in some key decisions and cases at tribunals down the line. For example:

  • The legislation specifies that an employee will only accrue annual leave on a day where the employee was on ‘certified’ sick leave. The difficulty here could be a tribunal’s interpretation of this when viewed in conjunction with any internal company policies. For example, a lot of employers have a policy that an employee is not required to give a medical certificate for the first 3 days’ of absence. If so, does this mean that a tribunal will allow an employee to accrue annual leave for those first three days, even though they were uncertified, on the basis that the employer has stated that they don’t require a medical certificate?
  • What will the entitlement be where an employee goes AWOL but retrospectively provides a medical certificate to cover their absence?
  • What happens where the employer receives two conflicting medical reports, one saying the employee is certified as unfit to work and another saying that the employee is fully fit to work?

 The above questions can likely only be answered should the matter be challenged before a tribunal. As such, whilst we know broadly what an employee’s entitlements will be from circa 01 June 2015, we are as yet unclear how some of these grey areas will be interpreted by a tribunal.


This is an extremely important update for employers to be mindful of. As employees will now accrue annual leave whilst on sick leave, and will be permitted to take it for up to 15 months after the leave year, it could have major financial implications for a lot of employers. In general, a lot more employees will be entitled to take a lot more annual leave going forward as employees will now be able to accrue annual leave during times they never did before. It is strongly suggested that each employer carry out an internal audit to identify, over previous leave years, how many additional days annual leave would have been accrued by employees and how much, therefore, this might cost going forward. This should allow employers to reasonably identify any budget implications in addition to allowing employers to manage and coordinate workloads accordingly.

If you have any questions on the above article or if you have any query in general about annual leave or sick leave then please do not hesitate to contact the 24 Hour Advice Service on 01 855 5050.

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