The Background

The traditional position under the Organisation of Working Time Act, 1997, (the “OWTA”) was that an employee’s entitlement to annual leave accrued based on the amount of time the employee actually worked. Consequently, annual leave did not accrue during periods of sickness absence. However, in 2009[1], the Court of Justice of the European Union (the “CJEU”) held that employees on sick leave did not have an opportunity to take their annual leave. As such, they were entitled to take it after their sickness absence had ended.

The New Position

The on-going and somewhat confusing contradiction between the OWTA and the rulings of the CJEU was finally clarified by the Workplace Relations Act, 2015 (the “2015 Act”). The 2015 Act officially amended the OWTA and from 1 August 2015 employees are entitled to: 

  • accrue statutory annual leave during periods of certified sick leave;
  • the benefit of their accrued annual leave for a period of 15 months following the end of the leave year in which it accrued, if the employee was unable to avail of the annual leave due to sickness; and
  • payment in lieu of accrued annual leave which was untaken as a result of illness, where the employee’s employment terminates within a period of 15 months following the end of the leave year during which the leave accrued. 

Practical Implications 

The practical implications of the changes are best explained by way of examples:

Example 1:      

John works for ABC Limited where the annual leave year runs from 1 January to 31 December. John is continuously absent from work on long term sick leave from 1 May 2015 until his return on 1 September 2018. 

1.  John returns to work full time on 1 September 2018

(a)  The accrual of Annual Leave:

  1. John is not entitled to statutory annual leave between 1 May 2015 and 31 July 2015 as the changes in the 2015 Act do not apply retrospectively.
  2. John is not entitled to the benefit of his statutory annual leave between 1 August 2015 and 31 December 2015 as he did not return to work within 15 months of the end of the leave year. For the same reason, John is not entitled to the benefit of his statutory annual leave between 1 January 2016 and 31 December 2016.
  3. John is entitled to the benefit of his statutory annual leave between 1 January 2017 and 31 December 2017 as he returned to work within 15 months of the end of the leave year. John is also entitled to the benefit of his statutory annual leave between 1 January 2018 and 31 August 2018. John will continue to accrue his leave from 1 September 2018 in the normal way.

(b)  Public Holidays:

  1. The 2015 Act does not make any changes to an employee’s entitlement to public holidays. Under the OWTA, an employee must work at least 40 hours in the previous 5 weeks to be entitled to the benefit of public holidays;
  2. As such, John may be entitled to the benefit of the May and/or June Bank holiday, assuming he worked 40 hours in the preceding 5 weeks.  However, he is not entitled the benefit of any other public holiday during his absence to 31 August 2018.

2. John returns to work on a phased basis on 1 September 2018

As most employers are all too well aware, it is unusual for an employee to return to work on a full-time basis following a prolonged period of sickness absence. A phased return to work is often the norm, ie 3 days per week, at least for the first few weeks of his return.  

While the employee’s entitlement is the same with respect to the accrual of annual leave and public holidays as outlined above, we have seen employees request to use their “accrued annual leave” to cover the days they are not at work. 

It is our view that John would not legally be permitted to use his annual leave to cover the balance of the working week, ie 2 days per week, during his phased return.

The OWTA provides that a day on which an employee should have been on annual leave but is certified sick on that same day, cannot be considered a holiday. So, strictly speaking, an employee should not be allowed to use up annual leave for the part of the week during his phased return which he is unfit to work, ie 2 days per week.

3.  Termination of Employment

If John never returned to work and his employment terminated on 1 September 2018, John would be entitled to payment in lieu of the statutory annual leave he would have accrued from 1 January 2017 to 31 August 2018.

John would not be entitled to the benefit of any public holidays which occurred during this period.

Example 2:       

John works for ABC Limited where the annual leave year runs from 1 January to 31 December. John is continuously absent from work on long-term sick leave from 1 May 2015 to 31 October 2015:

  1. John is not entitled to statutory annual leave between 1 May 2015 and 31 July 2015 as the changes in the 2015 Act do not apply retrospectively.
  2. John is entitled to the benefit of his statutory annual leave between 1 August 2015 and 31 October 2015, which leave must be taken in the normal manner.
  3. The 2015 Act does not make any changes to John’s entitlement to public holidays. John may be entitled to the benefit of the May and/or June Bank holidays, assuming he worked 40 hours in the preceding 5 weeks, however he will not accrue any further entitlement to public holidays during his sickness absence

Finally, it is important to note that the 2015 Act only amends the manner in which statutory annual leave accrues. For employees who are entitled to “contractual” annual leave, ie annual leave over the statutory minimum, whether the employee accrues this leave during long term sick leave will be set out in the employer’s annual leave policy or contract of employment.