Ireland: Entitlement To Annual Leave During Sick Leave? Update From An Irish Law Perspective

Since 2009, there has been much uncertainty regarding the accrual of annual leave entitlement during periods of sick leave.

Before 2009, the legal position in Ireland under the Organisation of Working Time Act 1997 (the "Act") was that employees do not accrue annual leave during periods of sick leave. In January 2009, the Court of Justice of the European Union ("CJEU") held in the joint reference of Stringer v Revenue and Customs Commissioners and Schultz-Hoff v Deutsche Rentenversicherung Bund ("Stringer") that an employee who was on sick leave and was therefore unable to take paid annual leave was entitled to take it at a later time, after the period of sick leave had ended. Former employees in the same position were entitled to compensation in lieu of any accrued but untaken annual leave.

The Case Law

Since this decision in Stringer, a number of subsequent referrals to the CJEU have reaffirmed that position.

In the more recent case of Dominguez v Centre Informatique du Centre Ouest Atlantique, Prefet de la region the CJEU has confirmed that the entitlement to annual leave or payment in respect of annual leave cannot be affected while the employee remains on sick leave.

In KHS AG v Winfried Schulte, the CJEU held that where an employee is unfit to work for several reference periods (i.e. several leave years), European Union law does not preclude national provisions or practices, such as collective agreements, which limit the accumulation of leave, by a carry-over period, in this case 15 months, on the expiry of which the right to paid annual leave lapses. From an employer's perspective, these cases are a helpful guidance that the entitlement is not one which is capable of accruing ad finitum.

The Law

Article 7(1) of the Working Time Directive 2003/88 (the "Directive") provides that:

Section 19 of the Act is the implementing provision of Article 7(1). Section 19 (1) reads:

The Act clearly contemplates that an employee's annual leave entitlement accrues for periods within which the employee works. The provisions of the Act appear to be at variance with the CJEU's interpretation of the Directive. Applying the ordinary principles of European law, it should follow that private employers (as distinct from the State and emanations of the State) are only expected to give the Act its ordinary meaning and not interpret the Act to give effect to the meaning of the Directive in a manner which is inconsistent with domestic legislation. If the Act has been implemented incorrectly, it is a matter for the Oireachtas to amend the Act to ensure consistency with European interpretation. A private employer should only be responsible for complying with Irish law as it currently stands. On this basis, private employers are not, or at least should not be, liable to make such payments.

There is a likelihood that State bodies and State agencies are bound by Stringer on the basis that they are 'emanations of the State' and as such, are expected to give effect to the European position by virtue of the doctrine of direct effect, notwithstanding that this position is at variance with Irish law.

Application of Stringer in Ireland

There had been no Irish decision specifically on the Stringer jurisprudence point until 17 September 2012. Up to now all disputes which have come before the Labour Court under the Act on this issue appear to have been dealt with in such a way as to not require the Labour Court to give a view one way or another on what is expected of a private employer when it comes to annual leave during periods of sick leave.

In Roskell Limited and Armands Rikmanis (September 2012), the Labour Court has gone some way to address the issues that it faces in determining this difficult issue. This case arose by way of a private sector employer's appeal from a decision of the Rights Commissioner which found that the employee was entitled to compensation for breach of his rights under the Act arising from the employer's failure to pay him for annual leave while he was on sick leave. The Labour Court held that as the employee remained in the employment of the employer at the time the claim was made and as the employee was on sick leave, he was not in a position to take holidays. The employee's claim was therefore a claim for payment in lieu of holidays.

The Labour Court was satisfied that none of the CJEU jurisprudence supported such a claim. On this basis, the Court upheld the employer's appeal and set aside the decision of the Rights Commissioner. The Labour Court made the following observations in its Determination:

Commentary

While the Labour Court in Roskell has not given a private employer absolute comfort on an important question of employment law which has been uncertain for almost four years since Stringer, it is clear that the Labour Court accepts that the 'entitlement' to pay for annual leave not taken due to illness does not arise automatically, particularly where the employment continues.

The Court has also accepted that serious consideration needs to be given to the various doctrines of European law (specifically referring to 'Conforming Interpretation'). It is comforting for private sector employers that the Court describes section 19 of the Act as a "seemingly clear provision of domestic law".

The Act and Directive are inconsistent. The inconsistency would appear to require legislative intervention. It seems likely that were a question to be referred to the CJEU on this point, that the CJEU would find that the Directive has not been appropriately implemented. The Roskell case is the first in which this matter has been addressed in any meaningful way. In the absence of an amendment of the Act it seems likely that it will be left up to the Labour Court to build on Roskell when another such case comes before it.

This article contains a general summary of developments and is not a complete or definitive statement of the law. Specific legal advice should be obtained where appropriate.