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Important guidelines on the implementation of annual leave changes

On 1st August 2015, significant changes were introduced into law with the Workplace Relations Act, 2015. The critical changes were as follows:

1) Employees will accrue statutory annual leave entitlement during a period of certified sick leave

2) There will be an annual leave carryover period of 15 months for those employees who could not, due to illness, take annual leave during the relevant leave year or during the normal carryover period of 6 months after the end of the leave year.

3) On termination of employment, payment in lieu of untaken annual leave will apply to leave which was untaken as a result of illness in circumstances where the employee leaves the employment within a period of 15 months following the end of the leave year during which the leave entitlement accrued.

So how do employers apply this?

From 1st August 2015, all employees may be entitled to accrue annual leave during a period of certified sick leave. This ONLY applies from 1st August 2015, and employees MUST provide a medical certificate in respect of their absence to their employer. Voltedge suggests that this is updated in employee handbook policies.

Also, employees only accrue STATUTORY annual leave entitlement i.e. four weeks’ paid annual leave. The changes do NOT apply in respect of any additional contractual annual leave entitlements and employee may be entitled to. For example, if an employee is entitled to 28 days annual leave, the accruing of annual leave only applies to 20 days – not 28.

With regard to carry over, employees are now permitted to carry over accrued annual leave for a period of 15 months after the leave year in question. Employers can then discard any remaining carry-over after this 15 months period is exceeded.

Employers need to be particularly careful with employees on long-term sick leave – these employees will be accruing annual leave during sick leave, so the employer needs to be very clear as to the date of return to work, termination date (if relevant) so that the correct annual leave entitlement can be calculated accurately.

In summary, Voltedge suggests that employers review their current absence policy and sick pay policy, and update them accordingly. Also, tracking of sick leave and holidays will be even more important to ensure that accurate carry-over and accruing is applied.