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Calculating annual leave for employees returning from sick leave is about to get complicated!
Currently, under Irish law, employees do not accrue annual leave while they are absent from work on certified sick leave. Lisa McCarthy, Solicitor in the Employment and Benefits Unit reports that this position is contrary to EU law and there are some very substantial amendments to the Organisation of Working Time Act 1997 (the “1997 Act”) hidden in the miscellaneous provisions of the new Workplace Relations Act 2015 (the “2015 Act”).
Accrual of annual leave
Under section 19 of the 1997 Act, employees only accrue annual leave in respect of hours actually worked. However, under the new provisions, employees on sick leave will continue to accrue and retain annual leave for up to 15 months from the end of the leave year in which it was accrued. This entitlement is in respect of statutory annual leave only. On this basis, employees who are absent on long-term sick leave could potentially return to work with a significant amount of accrued annual leave and it will be necessary for employers to conduct a careful analysis in order to determine the exact number of days which an employee has accrued and retained when they are fit to return to work.
The important point to note is that whilst employees will accrue annual leave during certified sick leave, this entitlement will be lost where more than 15 months has passed since the end of the leave year in which it was accrued. By way of example, after the commencement of the 2015 Act, the position will be as follows (where the leave year is 1 April to 31 March):
- Tom is absent from work on long-term sick leave from 1 October 2015 to 1 October 2017.
- On Tom’s return to work, more than 15 months has passed since the end of the leave year, 1 April 2015 to 31 March 2016.
- Therefore, Tom will not retain his annual leave from 1 October 2015 to 31 March 2016.
- Tom will have accrued annual leave from 1 April 2016 to 1 October 2017.
Timing of annual leave
The 1997 Act sets out certain considerations for the timing of annual leave. Generally, annual leave can be determined by the employer, taking into account the needs of the employee. Following the introduction of the new provisions, employees may be returning from long-term sick leave with a considerable annual leave entitlement and in practical terms, employers may look to employees to take at least some of their accrued leave, prior to their return to work.
What's next?
It was originally expected that the 2015 Act would be commenced on 1 July, however Minister Richard Bruton recently announced that the 2015 Act will not now be commenced until 1 October 2015. However, as the current provisions of the 1997 Act are contrary to EU law, the government may opt to commence this section at an earlier date. The 2015 Act does not state whether employees accrue annual leave during periods of sick leave retrospectively, and this point will no doubt be clarified in due course. In advance of the amendment, employers should consider reviewing and updating their existing annual leave and sick leave policies to reflect the new provisions.
Remember that this article is for information purposes only and does not constitute legal advice. Case law is fact specific and readers should understand that similar outcomes cannot be assumed. Specific advice should always be taken in given situations.