Minister for Business and Employment, Ged Nash, has announced that employees will be entitled to accrue annual leave while on sick leave from 01 August 2015. This is a very important update for employers and we would strongly recommend that employers review this article to ensure that they are fully aware of this key development.
What Was the Previous Rule?
Annual leave in Ireland is governed by the Organisation of Working Time Act, 1997, and some subsequent regulations. The 1997 Act is very explicit as to when an employee will accrue and what counts as ‘working time’ for this purpose. As a result, it had been the case in Ireland that an employee on sick leave will not accrue annual leave during a period of sickness absence.
So Why Has this Changed?
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 1997 Act which meant that a private sector employee would not benefit from these decisions until the legislation was amended. This amendment has now been made through the Workplace Relations Act 2015.
What Are the Changes?
The Workplace Relations Act 2015 has introduced the following changes:
- 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.
When Do These Changes Take Effect?
The above changes are in force from 1 August 2015. However, these changes are not retrospective. Therefore, if an employee has been on sick leave before 1 August 2015 then they will not accrue annual leave over that time. However, employees will accrue annual leave over any period of certified sickness from 1 August 2015 onwards.
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 tribunal down the line.
- 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 will likely only be answered should such matters be challenged before a tribunal. As such, whilst we know broadly what an employee’s entitlements are from 01 August 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.