Policies & Procedures

 

Annual leave is paid time off work that employees are granted by their employers - it can be used for whatever the employee wishes. It is important for employees to recharge the batteries and annual leave helps maintain a motivated and productive workforce. It is essential to note that the employer is statutorily obliged to provide a certain amount of annual leave to his or her employees. An employer can, of course, provide more leave than he or she is obliged to give – if an employer offers more leave to employees with long service histories or employees who exceed targets, for instance, this policy should be clearly defined and should be applied fairly across the board.  

Regardless of the employee’s status or length of their service everyone is entitled to annual leave. All time worked is eligible for paid holidays.

 

Here is an easy guide to assist employers in working out what leave should be allocated to each employee:

 

There are three methods used to work out leave entitlements:

 

a)            The most common method used is: 4 working weeks in a leave year during which the employee works a minimum of 1,365 hours (Unless the employee has changed employment during that year).

b)            1/3 of the employee’s working week per calendar month of at least 117 working hours (Eg: 1.67 * 12 = 20 days)

c)            8% (.08) of the hours worked by the employee in the leave year (the total is not to exceed 4 working weeks)

In some instances an employee’s leave could be worked out using more than one of the approaches listed above – where this is the case all applicable methods should be calculated and the employee shall be entitled to the highest result. Remember - the maximum statutory annual leave entitlement is four of his / her normal working weeks.

 

How to calculate an employee’s annual leave pay:

 

Not everyone works a 9-5 office job and not all employees earn the same gross figure on a weekly basis so here is a guide on how to determine holiday pay due to various categories of employees:

(a)            If the employee’s pay is calculated by a fixed rate or a salary then the figure due to the employee per week of paid annual leave is equivalent to the amount he or she received for the normal weekly working hours last worked - This payment includes any regular bonus or allowance (that isn’t based on work completed) - it excludes any overtime pay.

 

(b)           If the employee’s pay is not calculated by a fixed rate or salary but instead by commission, for instance (or based on productivity rates) the amount paid to this employee per week of annual leave should equal their average weekly pay calculated over the 13 weeks prior to their annual leave commencing. (If the employee did not work during that period, the average weekly pay is calculated over the 13 weeks prior to the employee’s last working day before the annual leave commences. This excludes overtime.

In order to accurately calculate the number of annual leave days an employee is entitled to it is necessary to incorporate all hours worked in the calculation including time spent on annual leave (yes, employees accrue annual leave while on annual leave!), time spent on maternity leave, parental leave, force majeure leave or adoptive leave as well as time spent on the first 13 weeks of carer’s leave. Employees do not accrue annual leave while on sick leave, occupational injury, temporary lay-off, or career break.

 

If an employee falls sick during his or her annual leave this day(s) is not counted as annual leave (once it is covered by a medical certificate) and the annual leave day is kept for them to use at a later date.

 

It is common practice for an employee to request their desired leave dates and usually, once an agreed period of advance notice is given (allowing the employer to arrange suitable cover etc.), the employer agrees. Annual leave is usually discussed in terms of weeks but, with employer consent, it can be broken down into shorter periods – often days or even half days at a time. It is the employer who approves holidays (it would not work from a business perspective if all employees were to arrange leave at the same time, for instance). The employer is, however, required to take the employee’s family responsibilities and need for rest and recreation into consideration.

 

This annual leave must be given to employees within the leave year or, with the consent of the employee, within the first six months of the following year. The onus is on the employer to ensure that the employee takes their statutory leave allocation within the appropriate period. Employees may, with the consent of the employer, carry over holidays that exceed the statutory allowance to the next year.

 

If the contract of employment is terminated and there is unused annual leave in respect of the employee the employer is obliged to compensate the employee for the accrued leave. It is illegal to pay an employee in lieu of the minimum statutory leave entitlement unless the employment relationship is terminated.

 

 

For decades the pay rates and conditions of hundreds of thousands of workers across several sectors, like electrical contracting and construction, in Ireland have been governed by Registered Employment Agreements (REAs).

 

REAs are legally binding agreements that govern the pay rates and other conditions of employment for all employees in a given sector.

 

A Supreme Court ruling yesterday, Thursday 9th May 2013, found the existence of such agreements to be invalid. The ruling outlined that a section of the Industrial Relations Act of 1946 (the Act that provided for the REAs) was incompatible with the Irish Constitution on the grounds that the agreements were not created by the Oireachtas (which has exclusive responsibility for creating laws in this country) but instead by the Labour Court - a Court that does not have the power to enforce the conditions contained within the REAs.

 

While this ruling came about as a result of an appeal brought by the National Electrical Contractors of Ireland (NECI) – the ruling will have massive implications for all sectors governed by REAs.

 

The electrical contractors who challenged the REA by which they were bound did so because they said that the REA was created by parties that did not represent the electrical industry as a whole. They felt that because they were not a party to the REA they should not be bound by it – they felt as though the rates of pay dictated by the REA were far in excess of what they could afford and that, for those reasons accompanied by the economic downturn, they were not competitive in tendering for projects. The group are said to be delighted with the five judge Supreme Court decision and say that they will be better able to secure existing jobs.

 

The NECI spoke out to reassure concerned workers that the problem was not so much that they had an issue with having some sort of wage agreement in place but that they felt they had the right to be involved in a decision making process if they are to be bound by the results of such a process. Any future agreement needs to consider and represent the requirements of both big and small employers alike and not just a subset of the contractors in the sector.

 

The NECI moved to reassure employees that their intention is not to reduce pay arrangements to the National Minimum Wage level (discussed below).

 

 

The Technical Engineering and Electrical Union (TEEU) stated that the ruling does not affect existing pay rates and conditions as they are set out in contracts of employment and the terms of this cannot be altered without consultation and negotiation.

 

Eamon Devoy, General Secretary and Treasurer of the TEEU said: “There are established Rates of Pay and Conditions of Employment in the Construction and Electrical Contracting Industry and any employer who attempts to undermine these standards will be met with the wrath of the TEEU who will use all means at its disposal to protect our members in the industry. It is worth noting that with the loss of registration the requirement for workers and their unions to go through national disputes resolution procedures was also extinguished and should the employers attempt to take advantage of vulnerable workers we could be in for a rocky road ahead”.

 

The NECI asked “that the inevitable scaremongering by the TEEU, who will claim that the Industry will descend into chaos, be ignored”.

 

The National Minimum Wage – Ireland

 

Under the National Minimum Wage Act, 2000 experienced adult employees (those who have been in any employment in any two years from the date of first employment over the age of 18) are entitled to a minimum rate of pay. Lesser rates are applicable for other categories of employees.

 

For instance, an employee under the age of 18 is entitled to €6.06 per hour or 70% of the National Minimum Wage. An employer can, of course, pay more than what they are required to pay.

 

The employee would be entitled to 80% and then 90% of the minimum wage in the first two years of employment over the age of 18.

 

It is important to note that the referenced two years of employment does not have to have been with the same employer nor does it have to have been in Ireland – Any employment carried out from the age of 18 is reckonable for the purposes of the minimum wage entitlement.

 

 

If you employed somebody on the National Minimum Wage (currently €8.65), that specific rate is their pay rate. The National Minimum Wage decreased by €1 to €7.65 for a short period in February 2011 but the previous rate of €8.65 was reintroduced on 1st July 2011.

If the National Minimum Wage was to be reduced again in the future this does not mean employers can simply drop the employee down to the new rate - Employees are entitled to remain on the wage at which you employed them unless you negotiate a new deal with them. It would, however, be acceptable to employ new employees at the new rate.

 

The text of the National Minimum Wage Act, 2000 and related Statutory Instruments can also be accessed on the website of the Office of the Attorney General at http://www.attorneygeneral.ie/.

 

For support and advice on all of your human resources issues contact The HR Company and avail of a complimentary Employment Law consultation.