In a recent Workplace Relations Commission (“WRC”) decision in Ryszard Kulbaka v Drumloman Pork Ltd (ADJ-00051058), the Complainant made several complaints under section 27 of the Organisation of Working Time Act 1997 in relation to a shortfall of annual leave over his six-year employment with the Respondent. The Complainant made other complaints under the Terms of Employment (Information) Act 1994, the Minimum Notice & Terms of Employment Act 1973, and Payment of Wages Act 1991 in which he alleged that the Respondent had failed to issue him with a written contract of employment, that he had not received his public holiday entitlements, and that the Respondent had made unlawful deductions of wages.The focus of this article is on the Organisation of Working Time Act complaints.
Facts: The Complainant gave evidence that he worked at the Respondent’s pig farm between December 2017 and November 2023. It was submitted by the Complainant that he only received a small portion of his annual leave entitlements in each of the six years he worked for the Respondent. In total, the Complainant alleged that the annual leave that he was entitled to but had not received amounted to €11,520.65 across the six years. The Complainant denied that the Respondent had ever advised him that if he did not take his annual leave within each leave year, he would lose his annual leave entitlements. Additionally, the Complainant submitted that he had never received a written contract of employment, thus he was unaware of any term or condition of his employment whereby his annual leave entitlements would be lost if they were not taken, if one existed.
The Respondent denied the Complainant’s allegation that he had not received a written contract of employment and submitted that the Complainant had received a contract shortly after his employment commenced in 2017. In relation to the complaints made regarding the shortfalls in paid annual leave, the Respondent did not deny the shortfall for each of the six years of the Complainant’s employment, however submitted that the Complainant had been advised on a regular basis that if he did not avail of his annual leave entitlements, he would lose them. The Respondent accepted that it had not advised the Complainant of a set period within which the Complainant needed to avail of his annual leave before losing the entitlements. In addition, the Respondent contended that the majority of the Complainant’s annual leave claims were out of time.
In relation to the shortfall for the 2023 leave year, the Respondent’s director, Eamon Briody, accepted that he had withheld payment on the basis that the Complainant had left his employment without notice. It was the Respondent’s belief that the Complainant owed him
at least four weeks’ notice, which he deemed to be an “accepted standard of notice” that must be given by an employee leaving a job.
Decision: The Adjudicator, Emile Daly, first considered whether the complaints (or any of them) which dated back to December 2017 until November 2023 in relation to untaken, unpaid annual leave were statute-barred. She considered it necessary at the outset to consider whether or not, in circumstances where employment is terminated, untaken annual leave can accrue as an allowance at the date of termination if the Complainant can establish that he was not given an opportunity to take leave during his employment.
The Adjudicator referred to a number of decisions of the Court of Justice of the European Union (“CJEU”) in which this question was addressed. In Max-Planck-Gestelleschaft zur Forderung der Wissenschaften cV v Shimzu C-684/16, the CJEU found that Article 7 of the Working Time Directive (2003/88/EC) requires national courts to ensure that
“should the employer not be able to show that it has exercised all due diligence in enabling the worker actually to take the paid annual leave or correspondingly and in the event of the termination of the employment relationship, to the allowance in lieu of leave not taken, which must be paid, in that case, directly by the employer concerned.”
In King v Sash Windows Workshop Ltd C-214/16, the CJEU found thatprovisions of national legislation that prevent employees from receiving payment, on termination of employment, for annual leave accrued over several “consecutive reference periods” are precluded in circumstances where the employer refused to remunerate that leave.
In BU v Comune di Copertino C-218/22 the First Chamber of the CJE confirmed in a preliminary ruling that national legislation cannot prohibit payment for untaken annual leave at the end of an employee’s employment (including by way of a time limit) unless the employer can demonstrate that the employee had a real opportunity to take that leave and was encouraged to take it and informed that if it was not taken, it would be lost.
The Adjudicator concluded that the Complainant’s untaken, unpaid annual leave had accrued as an allowance, payable to the Complainant on termination of his employment. It is the duty of an employer to show that it exercised due diligence in enabling an employee to take paid annual leave and advising the employee that if leave is not taken within a set period, then that annual leave will be lost. In the event that an employer fails to show due diligence in encouraging the employee to take leave over consecutive periods and the employment relationship has come to an end, then the employee shall be entitled to payment of annual leave allowance in lieu.
The Adjudicator also noted the WRC decision in A Facilities Coordinator v A Bakery (ADJ-19188) which also examined the CJEU case law on this point. In that case, the adjudicator described the right to take annual leave as a “fundamental social right” and found that the
onus is on the employer to exercise all due diligence in ensuring the employee can avail of annual leave and communicating to the employee that annual leave may lapse if not taken within a set time period. If the employer does not meet this requirement, then the employee does not lose this right.
The Adjudicator was satisfied that the Respondent in the present case had not exercised due diligence in enabling the Complainant to take annual leave or advising him of a time limit within which leave needed to be taken. The Adjudicator also stated that the Respondent did not seem fully aware of the importance of annual leave as a fundamental social right.
The Complainant was awarded the full €11,520.65 claimed to reflect the losses that he incurred in not receiving his full paid annual leave in each leave year from the commencement of his employment in December 2017.
Takeaway for Employers: This decision highlights the importance of annual leave as a “fundamental social right”. It is important that employers recognise their duty to exercise all due diligence in encouraging employees to avail of their annual leave. If employers operate a “use it or lose it” annual leave policy, they must clearly advise their employees of this policy, and the time period within which employees must take their annual leave. Employers should issue reminders to employees and ensure that they can demonstrate that they encouraged and facilitated employees in taking their annual leave.
This is an important decision that has far-reaching implications for employers and makes it clear that claims for historic accrued but untaken annual leave may not be considered to be statute-barred in circumstances where there have been consecutive shortfalls in an employee receiving his or her annual leave entitlements and the employee’s employment has come to an end. In those circumstances, an employee will likely be permitted to recover payment for all such annual leave unless the employer can demonstrate that the employee was encouraged to take his/her annual leave and informed that if it was not taken within a certain period, it would be lost.
Link – https://www.workplacerelations.ie/en/cases/2024/september/adj-00051058.html
Authors – Lia Berkery & Jenny Wakely
22nd October 2024
Anne O’Connell
Solicitors
19-22 Lower Baggot Street
Dublin 2.
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