Holiday Entitlements for Employees – a Brief Overview

    Holiday entitlements and calculations are one of the most frequently asked questions our payroll service receives. It is important to ensure that employees get paid their entitlements under the Organisation of Working Time Act.  This article sets out the criteria for establishing when holiday entitlement is due, to whom and then the methods for calculating out the monetary value of the holiday entitlement.

     

    Holiday entitlements are governed under The Organisation of Working Time Act, 1997 which sets out statutory rights for employees in respect of rest, maximum working time and holidays and provides minimum legally enforceable holiday entitlement and public holiday entitlement for all employees.

     

    Scope

    In general, the Act applies to any person

    • working under a contract of employment or apprenticeship
    • employed through an employment agency or
    • in the service of the State (excluding members of the Garda Siochana and the Defence Forces but including civil servants and employees of any local authority, health board, harbour authority or vocational education committee).

    In the case of agency workers, the party who pays the wages (employment agency or client company) is the employer for the purposes of this Act and is responsible for providing the holidays/public holiday entitlement.

    Qualifying Period

    There is no qualifying period for holiday entitlement and all employees, regardless of status or service, qualify for paid holidays. All time worked qualifies for paid holiday time.

    Under the Act the minimum holiday entitlements for employees who work at least 1,365 hours per year is 4 weeks with pro-rata entitlements for other employees working less.

    Calculating Holiday Entitlements

    Depending on time worked, employees' holiday entitlements should be calculated by one of the following methods:
    a) 4 working weeks in a leave year in which the employee works at least 1,365 hours (unless it is a leave year in which he or she changes employment).
    b) 1/3 of a working week per calendar month that the employee works at least 117 hours.
    c) 8% of the hours an employee works in a leave year (but subject to a maximum of 4 working weeks).

    If more than one of the preceding methods at (a), (b) or (c) above is applicable, the employee shall be entitled to whichever method provides the greater holiday entitlement. However the maximum statutory annual leave entitlement of an employee in a leave year is four of his/her normal working weeks.

    Calculating Holiday Pay

    The method of calculating the weekly rate of holiday pay is as follows:

    (i) If the employee's pay is calculated wholly by reference to a time rate or a fixed rate or salary, the amount paid to the employee for one week of paid annual leave is equal to the amount paid to him/her in respect of the normal weekly working hours last worked by the employee before the annual leave commences. This payment includes any regular bonus or allowance that does not vary in relation to work done, but excludes any pay for overtime.
    (ii) If the employee's pay is not calculated wholly by reference to the matters referred to above, (e.g., employees who earn commission or who work on piece or productivity rates), the amount paid to him/her for one week of paid annual leave is equal to the average weekly pay of the employee (excluding any pay for overtime) calculated over the period of 13 weeks ending immediately before the annual leave commences.

    If no time was worked by the employee during that period, the average weekly pay is calculated over the period of 13 weeks ending on the day on which time was last worked by the employee before the annual leave commences.

    The method to be used in calculating the appropriate daily rate is set out below in the section on public holidays.

    Calculating Holiday Entitlements

    In calculating how many days' holidays to which an employee may be entitled, employers should include all hours worked including time spent on annual leave, time spent on maternity leave, parental leave, force majeure leave, or adoptive leave, and time spent on the first 13 weeks of carers' leave. Employees do not accrue annual leave while on sick leave, occupational injury, temporary lay-off, or career break.

    A day of sickness during holidays which is covered by a medical certificate is not counted as annual leave.

    The employer decides when holidays are to be taken having regard to work requirements and subject to his/her taking into account the need for the employee to reconcile work and any family responsibilities and the opportunities for rest and recreation available to the employee. The employer must consult with the employee or his/her trade union at least one month before the holidays are due to commence.

    The holidays must be given to the employee within the leave year or, with the employee's consent, within 6 months of the following leave year. It is the responsibility of the employer to ensure that the employee takes his/her full statutory leave allocation within the appropriate period. Employees may, with the consent of the employer, carry over holidays in excess of statutory minimum leave to a following leave year.

    The employer must compensate the employee for any unused annual leave that was accrued during the leave year in which the employee's employment ceases. If the employment ceases in the first half of the leave year, the employee must be compensated for any annual leave accrued in that leave year and the previous leave year.

    It is illegal to pay an allowance in lieu of the minimum statutory holiday entitlement of an employee unless the employment relationship is terminated.

    While the statutory leave year is 1st April to 31st March, there is no restriction on employers using different 12 month periods provided that the same leave year is used consistently.

    Pay in respect of holidays is paid in advance at the normal weekly rate.

    Following 8 months work, the employee is entitled to an unbroken period of 2 weeks which may include one or more public holidays. An employment regulation order, registered employment agreement, collective agreement or any other agreement between the employer and employee may stipulate an arrangement which varies this provision.

     Further Information and Assistance

    Holiday entitlements are usually provided by the employer to their payroll department for calculation and processing.  Speak to one of our representatives today to find out how Paycheck Plus can help you calculate your employees holiday entitlements as part of our managed payroll outsource service.

     

    Paycheck Plus, Your Specialist Payroll Partner

    Paycheck Plus is an award-winning payroll service, providing an outsourced payroll service to businesses across Ireland and the UK. Our highly experienced payroll professionals provide comprehensive, ISO and ISAE 3402 accredited payroll outsourcing services to organisations of all sizes.

    Specialising in all aspects of payroll, our IPASS and CIPP accredited experts are well-versed in all payroll related functions and services including, payroll audits, payroll training, payroll reporting, company set-up and redundancy-management, and special payroll projects.

    If you are looking to outsource payroll for your organisation request a callback now or call our payroll bureau on +353 (0) 1 905 9400.

     

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