ADJ-00019188

Complainant

Respondent

Anonymised Parties

A facilities coordinator

A bakery

Representatives

None

IBEC

Act

Complaint Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act

CA-00025049-001

16/01/2019

The complainant outlined that when his employment came to an end, he was paid for 26 days of outstanding annual leave when he was due 57 days. He was, therefore, owed a further 31 days of annual leave accrued since 2009. The complainant outlined that per his contract of employment, he received 24 days of annual leave per year, but because of work demands, he was not able to avail of the full complement of annual leave every year. He accrued 33 days of annual leave by 2016 and this increased to 36 days by the end of 2017. The complainant said that he was paid €25.24 per hour and the working day was 8 hours.

The complainant asserted that the respondent had maintained improper records of annual leave taken. He said that holidays were flexible, and he might be called in for maintenance work over Christmas as the bakery remained open over the holiday period.

Post-hearing submissions

In post-hearing submissions, the complainant set out that part of his role involved rostering, recording and approving annual leave and overtime. He was often called into work over Christmas. He states: ‘I would book holidays over the Christmas period but if problems arose I would be called in as new engineering managers were not as familiar with the site, so I would cancel my booked holidays and I also would carry my unused holidays. This is how I had so few holidays taken over the Christmas period, it was to facilitate others.’

There was no policy of using annual leave or losing it. Many staff carried over annual leave. He outlined that 16 days carried over into 2010, so that there were 39 accumulated days of untaken annual leave (having accounted for the 22nd January 2010). He states that he was informed on the 19th December 2018 that the respondent would not pay for carried over leave accrued prior to 2017 and 2018. The complainant outlined that he had no idea how his complaint to the Workplace Relations Commission was registered under the Road Transport Regulations.

The complainant refers to CJEU case law Kreuziger v Land Berlin and Max-Planck v Shimizu regarding the accumulation of untaken annual leave.

The respondent submitted that the complaint was misconceived as the complainant did not drive a HGV for work. It maintained that it was also out of time as the 2017 and 2018 annual leave was paid in full. The complainant was not entitled to seek redress for 2016 and previous years taken. The respondent maintains records of annual leave taken.

The parties made post-hearing submissions in March and April 2019 and again in December 2019 and February 2020.

By letter of the 5th February 2020, the respondent seeks clarification whether the redress provision has been amended from the 2012 Regulations to the 1997 Act. (This arises as my letter referred to this amendment being made, while additional correspondence from the WRC cited the 2012 Regulations.)

The respondent refers to the obligation on section 25 of the 1997 Act to keep records for up to three years. The respondent cites this as the complainant referred to carried-over annual leave for a period of 10 years.

The respondent refers to section 41(6) of the Workplace Relations Act, which provides that a complaint may only be referred within six months of the date of contravention. It is submitted that the complainant availed of his annual leave entitlement in full for 2017 and 2018 and any historic annual leave is out-of-time. It is submitted that there are no reasonable grounds to extend the cognisable period.

The respondent refers to the following clause in the contract of employment: “Holidays must be taken by the end of the leave year and only in exceptional circumstances can they be carried over from one calendar year to the next. This must be previously agreed with your manager.”

The respondent submits that carried over annual leave, for example from 2011, is outside of the cognisable period. The respondent submits that it was well-established that the employee’s claim crystallises at the end of the leave year (see Royal Liver Assurance v Macken).

CA-00025049-001

This is a complaint pursuant to the Organisation of Working Time Act. The complainant seeks payment for carried over annual leave and says that the respondent failed to keep working time records. As set out above, an alleged failure to keep working time records under section 25 is not within the jurisdiction of an Adjudication Officer. This element of the claim is, therefore, not well-founded.

The complainant worked for the respondent on a continuous basis between the 1st April 2001 and the 26th December 2018, when his employment ended. The complainant’s last contract of employment dated the 15th March 2018, provided that he was entitled to 24 days of annual leave. It states: ‘Holidays must be taken by the end of the leave year and only in exceptional circumstances can they be carried over from one calendar leave year to the next. This must be previously agreed with your manager.’

The complainant asserts that he was due 31 days of annual leave at the time his employment ended. He says that this accrued over years as he was called in on days of scheduled leave to ensure the maintenance of the bakery facility. He asserts that there was a custom and practice for leave to be carried over. The respondent asserts that the complainant was paid for all annual leave in 2017 and 2018. It submitted that the complainant could not claim for annual leave from previous leave years and this was outside the cognisable period of this complaint.

Complaint pursuant to section 27 of the Organisation of Working Time Act

Section 27 of the Organisation of Working Time Act provides:

‘A decision of an adjudication officer under section 41 of the Workplace Relations Act 2015 in relation to a complaint of a contravention of a relevant provision shall do one or more of the following, namely: (a) declare that the complaint was or, as the case may be, was not well founded, (b) require the employer to comply with the relevant provision, (c) require the employer to pay to the employee compensation of such amount (if any) as is just and equitable having regard to all of the circumstances, but not exceeding 2 years ’ remuneration in respect of the employee’s employment.’

Cognisable period

The cognisable period for complaints pursuant to section 27 is set out in section 41(6) of the Workplace Relations Act. It states: ‘Subject to subsection (8), an adjudication officer shall not entertain a complaint referred to him or her under this section if it has been presented to the Director General after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates.’

Section 41(8) provides that the cognisable period can be extended by a further 6 months, should the complainant establish reasonable cause in the late presentation of the complaint.

Entitlement to annual leave

Section 19 of the Organisation of Working Time sets out the entitlement to annual leave. Full-time employees, such as the complainant, have a statutory right to four weeks of paid annual leave in any leave year.

Section 20 provides as follows in respect of the taking of annual leave:

‘(1) The times at which annual leave is granted to an employee shall be determined by his or her employer having regard to work requirements and subject— (a) to the employer taking into account— (i) the need for the employee to reconcile work and any family responsibilities, (ii) the opportunities for rest and recreation available to the employee, (b) to the employer having consulted the employee or the trade union (if any) of which he or she is a member, not later than 1 month before the day on which the annual leave or, as the case may be, the portion thereof concerned is due to commence, and (c) to the leave being granted — (i) within the leave year to which it relates, (ii) with the consent of the employee, within the period of 6 months after the end of that leave year, or (iii) where the employee — (I) is, due to illness, unable to take all or any part of his or her annual leave during that leave year or the period specified in subparagraph (ii), and (II) has provided a certificate of a registered medical practitioner in respect of that illness to his or her employer, within the period of 15 months after the end of that leave year.’

Entitlement to cesser pay

Section 23 of the Organisation of Working Time Act sets out the employee’s entitlement to cesser pay in compensation for a balance of annual leave not taken. Section 23 provides:

‘(1) (a) Where — (i) an employee ceases to be employed, and (ii) the whole or any portion of the annual leave in respect of the relevant period remains to be granted to the employee, the employee shall, as compensation for the loss of that annual leave, be paid by his or her employer an amount equal to the pay, calculated at the normal weekly rate or, as the case may be, at a rate proportionate to the normal weekly rate, that he or she would have received had he or she been granted that annual leave. (b) In this subsection — ‘relevant period ’ means — (i) in relation to a cessation of employment of an employee to whom subparagraph (i) of paragraph (c) of subsection (1) of section 20 applies, the current leave year, (ii) in relation to a cessation of employment of an employee to whom subparagraph (ii) of the said paragraph (c) applies, that occurs during the first 6 months of the current leave year (I) the current leave year, and (II) the leave year immediately preceding the current leave year, (iii) in relation to a cessation of employment of an employee to whom subparagraph (iii) of the said paragraph (c) applies, that occurs during the first 12 months of the period of 15 months referred to in the said subparagraph (iii) — (I) the current leave year, and (II) the leave year immediately preceding the current leave year, or (iv) in relation to a cessation of employment of an employee to whom subparagraph (iii) of the said paragraph (c) applies that occurs during the final 3 months of the period of 15 months referred to in the said subparagraph (iii) — (I) the current leave year, and (II) the 2 leave years immediately preceding the current leave year.’

Cesser pay is the ‘allowance in lieu’ referred to below in Article 7 of the Directive. Section 23 provides that it is payable for the ‘relevant period’. Ordinarily, the ‘relevant period’ is the current leave year (as the obligation is for annual leave to be taken within the leave year). Section 23(1)(b)(ii) addresses ‘relevant period’ where the period for leave to be taken has been extended by up to 6 months, with the employee’s consent. Section 23(1)(b)(iii) addresses ‘relevant period’ where the employee accumulates annual leave while on certified sick leave. The provision addresses this in two scenarios: one where employment ends within 12 months of the certified sick leave and a second, where the employment ends in the final 3 months of the period of 15 months.

Royal Liver Assurance v Macken [2002] 4 IR 427

In Royal Liver Assurance v Macken, the High Court held that the period of 20 days of annual leave must be granted to the employee within the leave year. Where this is not done, the Court held that the employer is obliged to consult with the employee to obtain their consent for the balance of leave to be granted within six months of the end of the leave year in question.

The High Court did not agree with the Labour Court’s conclusion that the date of contravention could be extended to include the six-month period that follows the leave year. The High Court pointed out that the effect of the Labour Court decision was that an employee could only submit a complaint after this further six-month period ended, so that the employee may be out-of-time.

The High Court held that the latest date of contravention to grant leave within a leave year is the last day of the leave year in question.

Working Time Directive

Article 7 of the Working Time Directive (2003/88/EC and its predecessor Directive 93/104/EC) sets out the entitlement to paid annual leave. It states:

‘Annual leave 1. Member States shall take the measures necessary to ensure that every worker is entitled to paid annual leave of at least four weeks in accordance with the conditions for entitlement to, and granting of, such leave laid down by national legislation and/or practice. 2. The minimum period of paid annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated.’

Sections 19, 20 and 23 of the Organisation of Working Time Act transposed this provision into Irish law.

Article 31 Charter of Fundamental Rights

Article 31 of the Charter on Fundamental Rights of the European Union addresses annual leave. It provides:

‘Fair and just working conditions 1.   Every worker has the right to working conditions which respect his or her health, safety and dignity. 2.   Every worker has the right to limitation of maximum working hours, to daily and weekly rest periods and to an annual period of paid leave.’

Interpretation of the Court of Justice of the European Union

The Court of Justice of the European Union (the ‘CJEU’) has made several significant decisions that touch on the carry-over of annual leave and the nature of the contravention at the termination of an employee’s employment. As noted by the High Court in Macken, the starting point is that the right to paid, unconditional annual leave is a ‘fundamental social right’. This is now reflected in the Charter of Fundamental Rights.

KHS v Shulte C-214/10

KHS involved an employee who was unable to work on serious health grounds between 2002 and 2008. The Court observed that ‘a provision of national law setting out a carry-over period for annual leave not taken by the end of the reference period aims, as a rule, to give a worker who has been prevented from taking his annual leave an additional opportunity to benefit from that right at the end of the reference period or of a carry-over period. However, the Court attached to that finding of principle the condition that a worker who has lost his right to paid annual leave must have actually had the opportunity to exercise the right conferred on him by that directive (see Shultz-Hoff and Others, paragraph 43).’

The CJEU noted that, where the employee is unfit for several consecutive reference periods, the unlimited accrual of annual leave would no longer reflect the actual purpose of the right to paid annual leave. The CJEU noted that ‘the carry-over period must also protect the employer from the risk that a worker will accumulate periods of absence of too great a length, and from the difficulties for the organisation of work which such periods might entail.’

The CJEU conclude that Article 7 did not preclude national provisions which limit the carry-over of paid annual leave to 15 months where a worker is unfit for work for several consecutive reference periods.

King v The Sash Window Workshop Ltd C-214/16

In King v Sash Window, the employee claimed 13 years of paid annual leave that he had been prevented from taking over the course of his employment. The employer had not paid annual leave as it treated the employee as being self-employed and not an employee.

At paragraph 65, the CJEU concluded ‘Article 7 of Directive 2003/88 must be interpreted as precluding national provisions or practices that prevent a worker from carrying over and, where appropriate, accumulating, until termination of his employment relationship, paid annual leave rights not exercised in respect of several consecutive reference periods because his employer refused to remunerate that leave.’

In the preliminary reference, the UK Court of Appeal had posited a maximum carry-over period of 18 months, but the CJEU did not agree to any such limitation.

To note, the relevant UK statute provided two causes of action: the right to take leave (Regulation 13) and the right to be paid for the leave (Regulation 16). Regulation 30 conferred the following right, subject to a limitation period:

‘(1)  A worker may present a complaint to an employment tribunal that his employer — (a) has refused to permit him to exercise any right he has under — (i) regulation ... 13(1); ... or (b) has failed to pay him the whole or any part of any amount due to him under regulation ... 16(1). (2) An employment tribunal shall not consider a complaint under this regulation unless it is presented — (a) before the end of the period of three months ... beginning with the date on which it is alleged that the exercise of the right should have been permitted (or in the case of a rest period or leave extending over more than one day, the date on which it should have been permitted to begin) or, as the case may be, the payment should have been made; (b) within such further period as the tribunal considers reasonable in a case where it is satisfied that it was not reasonably practicable for the complaint to be presented before the end of that period of three or, as the case may be, six months.’

Max-Planck-gestelleschaft zur Forderung der Wissenschaften eV v Shimizu C-684/16

In Max-Planck, the national law in question provided that annual leave must be granted and taken in the course of the leave year; otherwise, it lapsed unless carried over under the terms of the provision. It provided that an allowance could be paid in lieu where the employment had terminated. In this case, the employee claimed 51 days of annual leave accruing in 2012 and 2013 (his employment ceased on the 31st December 2013).

The CJEU reaffirmed the position set out in preceding judgments that Article 7 did not preclude a national provision that resulted in an employee losing their entitlement to annual leave where they had the opportunity to exercise the right to annual leave but chose not to take leave.

Citing the employee as being the weaker party in the employment relationship, paragraphs 43 to 47 of the judgment refer to the burden resting on the employer to ensure that the employee had the opportunity to take paid annual leave.

At paragraph 46, the Court held ‘Should the employer not be able to show that it has exercised all due diligence in order to enable the worker actually to take the paid annual leave to which he is entitled, it must be held that the loss of the right to such leave at the end of the authorised reference or carry-over period, and, in the event of the termination of the employment relationship, the corresponding absence of a payment of an allowance in lieu of annual leave not taken constitutes a failure to have regard, respectively, to Article 7(1) and Article 7(2) of Directive 2003/88.’

The Court concluded that a national court hearing a complaint must ‘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 to which he is entitled under EU law, the worker cannot be deprived of his acquired rights to that 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.’

Kreuziger v Land Berlin C-619/16

The Grand Chamber of the CJEU heard both Max-Planck and Kreuziger on the same day (29th May 2018) and also handed down both judgments at the same time (6th November 2018). In Kreuziger, the relevant regulation provided that entitlement to annual leave lapsed 12 months after the end of the leave year. The employee sought payment for untaken annual leave for the period of the 1st January to the 28th May 2010, when his employment ended on completion of his legal training.

Again, the CJEU reiterated that ‘it cannot be inferred from the Court’s case-law mentioned in paragraphs 30 to 33 of the present judgment that Article 7 of Directive 2003/88 should be interpreted as meaning that, irrespective of the circumstances underlying the worker’s failure to take paid annual leave, that worker should still be entitled to the right to annual leave referred to in Article 7(1), and, in the event of the termination of the employment relationship, to an allowance by way of substitution therefor, pursuant to Article 7(2).’

At paragraph 42, the CJEU held ‘the Court has in particular held that Article 7(1) of Directive 2003/88 does not in principle preclude national legislation which lays down conditions for the exercise of the right to paid annual leave expressly conferred by the directive, including even the loss of that right at the end of a leave year or of a carry-over period, provided, however, that the worker who has lost his right to paid annual leave has actually had the opportunity to exercise the right conferred on him by the directive.’

At paragraph 52, the CJEU cited that the burden lay on the employer: ‘the employer is in particular required, in view of the mandatory nature of the entitlement to paid annual leave and in order to guarantee the effectiveness of Article 7 of Directive 2003/88, to ensure, specifically and transparently, that the worker is actually given the opportunity to take the paid annual leave to which he is entitled, by encouraging him, formally if need be, to do so, while informing him, accurately and in good time so as to ensure that that leave is still capable of procuring for the person concerned the rest and relaxation to which it is supposed to contribute, that, if he does not take it, it will be lost at the end of the reference period or authorised carry-over period, or upon termination of the employment relationship where the termination occurs during such a period.’

Terveys-Ja Sosiaalialan Neuvottelujargesto (TSN) ry v Hyvinvointialan liito Ri C-609/17 and C-610/17

In TSN, the CJEU held that annual leave entitlement in excess of that required by the Directive is not within the scope of the Directive. The Finnish collective agreement in question could treat differently carry over of untaken annual leave (due to illness) between leave that fell within the four weeks provided under the Directive and leave in excess of this entitlement. The collective agreement could limit the carryover of untaken annual leave to four weeks.

Discussion of EU jurisprudence

I have set out in detail the evolving jurisprudence of the CJEU and the Irish courts in respect of the right to paid annual leave emanating from the Directive and the Charter. It is clear that Article 7 of the Directive does not preclude a national provision which results in an employee losing accumulated annual leave (Max-Planck).

The CJEU distinguishes between annual leave accumulated during prolonged sick leave to situations where inadequate facility is made available so that the employee can avail of annual leave.

In KHS, the CJEU held that in cases of prolonged sick leave, the unlimited accrual of sick leave would not reflect the actual purpose of the right to paid annual leave. In KHS and Sash Window, the CJEU recognised the difficulties employers would face in the light of such unlimited accrual of annual leave in situations where the employee was unfit to work.

In Sash Window, the CJEU was clear to demarcate situations where the employee could not attend work on fitness grounds from those where the employee continued to work and where ‘the employer was able to benefit, until Mr King retired, from the fact that he did not interrupt his professional activity in its service in order to take paid annual leave.’ The CJEU further held ‘unlike in a situation of accumulation of entitlement to paid annual leave by a worker who was unfit for work due to sickness, an employer that does not allow a worker to exercise his right to paid annual leave must bear the consequences.’

In Sash Window, the CJEU concluded that any national provision which prevented an employee being paid at the end of their employment for leave carried over several consecutive reference periods was precluded where ‘his employer refused to remunerate that leave.’

In Max-Planck, the CJEU held that it was for the employer to show it had exercised ‘all due diligence’ to ensure that the employee is enabled to take paid annual leave, and this includes the payment of an allowance in lieu of annual leave not taken.

In Kreuziger, the CJEU cited that the burden lay on the employer to ensure that the employee was actually given the opportunity to take paid leave, including informing the employee ‘accurately and in good time’ that the leave could lapse.

In the above case law, the CJEU has set out that a restrictive approach should not be taken in interpreting the scope of Article 7 of the Directive, in particular in the light of the Charter. It distinguished between accrued annual leave where the employee is sick and not attending work from the very different situation where the employer has the benefit of the employee’s work but where the employee cannot avail of annual leave in full. The CJEU has held that a broader approach is required in the latter situation (in KHS, it held that a more restrictive approach was warranted in cases of long-term sickness absences).

The thread of CJEU jurisprudence is that in cases other than long sickness absences, the onus is on the employer to ensure that the employee can actually avail of annual leave. The employer must exercise all due diligence in ensuring that leave is taken. The jurisprudence centres on the employee being the weaker party in the employment relationship. The right to annual leave draws both from the Directive and the Charter of Fundamental Rights. It is a fundamental social right. Where the employer has not met the burden of due diligence, EU law precludes a national provision that seeks to limit the accrual of annual leave or the payment of the allowance in lieu. Where carried over annual leave is to lapse, this situation must be accurately conveyed to the employee and in a timely fashion. Sash Window addressed leave going back 13 years and the CJEU did not limit the purview of the claim, despite being invited to do so.

Application to the facts of this case

In assessing the factual questions arising in this case, I first note the complainant’s evidence that the respondent acknowledged the carrying-over of annual leave between 2011 and 2018. This evidence is supported by the many pages of ‘holiday form’ submitted by the complainant. These documents are headed with a respondent brand name and state the number of days to be taken as annual leave. They record the numbers of days taken so far and ‘holidays remaining’. They are signed by a manager. The documents also chart the carryover of annual leave from year to year (the ‘holidays remaining’ increases by 24 on the first occasion the complainant takes leave in a year).

I accept the complainant’s evidence that there was a custom and practice for annual leave to carry over, and that he approved carry over for employees who reported to him and the complainant’s own annual leave carried over, with managerial approval, for many years. This is borne out by the holiday forms, which chart accumulating, untaken annual leave. I also accept that the first occasion he was informed that the respondent would not pay for already carried-over leave was the 19th December 2018, a fortnight before his employment ended.

I note the complainant’s evidence of having to attend work on days he had scheduled to take leave to address maintenance issues in the bakery. He was unable to avail of the scheduled annual leave and was required to attend work, for example during the Christmas period. The respondent did not present evidence to counter this.

The fixed term contract of employment signed by the complainant in March 2018 provides that annual leave may only carry over in exceptional circumstances and with the manager’s permission. I do not have sight of any preceding contract of employment to see if this provision was replicated in previous contracts. I also note that the complainant obtained or was paid all the annual leave accrued in 2018, so there is no question of leave carrying over from this time. The March 2018 contract does not address the issue of already accrued leave. I have already found that the complainant obtained managerial assent for the carry-over of annual leave in previous years.

In conclusion, I find that the complainant accumulated untaken annual leave over the course of his employment. He was not presented with the opportunity to avail of this annual leave as he was called into work on days he was scheduled to take as leave. It was only when approaching the end of the complainant’s employment that the respondent said that it would not pay this accrued leave as cesser pay.

I have gone through the holiday forms and the TMS records in detail. I agree with the complainant’s submission that, taking account of what was already paid by the respondent, there are 31 accumulated days of untaken annual leave.

Having considered the above CJEU jurisprudence, I find that the respondent has not met the burden to show that ‘all due diligence’ was provided to ensure that the complainant availed of annual leave. The respondent has also not shown that it accurately conveyed to the complainant in a timely fashion that the accumulated annual leave would lapse. The evidence points to the respondent agreeing to the carry-over of leave, as charted in the holiday forms signed by managers. The complainant was first informed that the respondent would not pay this accumulated leave in the fortnight approaching the end of his employment.

Date of contravention

The complainant seeks payment of cesser pay in lieu of the untaken annual leave he accumulated during his employment. Cesser pay is only payable at the end of employment and not during employment. Any contravention in not paying cesser pay can only arise at the end of the employee’s employment. The complainant’s employment ended on the 26th December 2018 and the complaint referred to the Workplace Relations Commission on the 16th January 2019. It is, therefore, submitted within the six months provided by section 41(6) of the Workplace Relations Act.

The question is whether the complainant can include the historic untaken annual leave in the calculation of cesser pay at the end of his employment.

Royal Liver Assurance v Macken

As noted above, the High Court in Macken held that the limitation period to challenge untaken annual leave was six months from the end of the leave year. The High Court did not agree with the Labour Court’s approach of including within the limitation period the further period of six months an employee can consent to defer the taking of annual leave.

Macken is a well-established authority in the assessment of limitation periods in annual leave claims. It predates Sash Window, Max-Planck and Kreuziger and there is, of course, no discussion of the impact of this CJEU jurisprudence. It cannot, therefore, prevent consideration of this CJEU jurisprudence, so long as it is directly effective.

Horizontal direct effect

The employer, in this case, is a private sector entity. For the complainant to rely on EU law, the right to accrued paid annual leave must be a right that has horizontal direct effect, i.e. enforceable by one private individual against a private entity.

The CJEU jurisprudence establishes that the right to annual leave is derived from a General Principle of European Law and the Charter of Fundamental Rights of the European Union. The CJEU cited that Article 31(2) of the Charter is framed in compulsory terms and contains no reference to “the conditions provided for by Union law and national laws and practices” under which that right is to be exercised.

In ‘Limits on Limitations: The Essence of Fundamental Rights in the EU’ German Law Journal (2019) 20 pp 779 – 793, the President of the CJEU held Max-Planck as authority that the loss of annual leave ‘can never be automatic but may only take place where it has been demonstrated that the employer put the worker in a position that enabled him or her to exercise that right effectively.’ He further stated ‘one may argue that Article 31(2) of the Charter may be relied upon where a national measure compromises the essence of the right to paid annual leave by bringing about the loss of that right.’ He distinguished between essential and nonessential elements of the right to annual leave: ‘Conversely, that is not the case with respect to nonessential elements of that right, such as the precise duration of annual leave and, where appropriate, certain conditions under which that right is to be exercised.’

Conforming interpretation

There is well-established jurisprudence in respect of giving national law a conforming interpretation. In Seclusion Properties v O’Donovan DWT 14114, the Labour Court addressed conforming interpretation in the following terms:

‘It should be noted, however, that the correct application of that doctrine [conforming interpretation] does not require the setting aside of a provision of national law. Rather, it involves the correct application of national law by interpreting that law in light of the wording and purpose of a Directive upon which that law is based. It is founded in part on the presumption that the national legislature intended to transpose a Directive faithfully. If this Court is circumscribed in applying the law of the European Union in deciding a case within its jurisdiction that could offend against the principals of effectiveness and equivalence.’

In Kelly v National University of Ireland [2008] IEHC 474, McKechnie J said the following in respect of a conforming interpretation:

‘19. Before I look at these provisions in detail I should say a word about the relationship between Community law and national law. As a matter of general principle there is no doubt but that Community law constitutes an autonomous system of law and that in all respects it is a system which is superior to any domestic system of a member state. In any case of conflict, inconsistency, or discord, national measures must give way. This means that where conflict exists: i) Community law takes precedence over domestic law; ii) Community law renders automatically inapplicable any relevant national provision; iii) Community law prohibits the adoption of any new measures which are incompatible with it; and finally, iv) a national court, in order to give full effect to this principle, must set aside conflicting provisions, whether passed before or after the Community measure. 20. These principles are non-controversial and well established (see Stato v Simmenthal [1978] ECR 629). These provisions have been supplemented by what might be described as subsidiary rules, established by the ECJ over time. One such rule emerged from the Marleasing case (Marleasing SA v La Comercial Internacional de Alimentacion SA [1991] 1 ECR 4135) and is now known as the “Marleasing principle” or the “principle of conforming interpretation”. This means that a national court has an obligation to interpret domestic legislation “so far as possible” in a manner both compatible with and in conformity to European law. This phrase “so far as possible” has been the subject matter of several decisions. Broadly speaking this interpretive method cannot be stretched to a point which involves a departure from the fundamental or cardinal feature of the provision in question. Subject however to this qualification, the Marleasing principle pervades all pieces of domestic law which necessarily are or ought to be influenced by Community law (see Commissioners for Her Majesty's Revenue and Customs v IDT Card Services Ireland Ltd [2006] EWCA Civ 29 and Pfeiffer v Deutsches Rotes Kreuz [2005] ICR 1307).’

As quoted by the High Court in Kelly v NUI, the CJEU in Pfeiffer v Deutsches Rotes Kreuz (a working time claim regarding the maximum working week) commented as follows in respect of the role of national courts:

‘when hearing a case between individuals, the national court is required, when applying the provisions of domestic law adopted for the purpose of transposing obligations laid down by a directive, to consider the whole body of rules of national law and to interpret them, so far as possible, in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by the directive. In the main proceedings, the national court must thus do whatever lies within its jurisdiction to ensure that the maximum period of weekly working time, which is set at 48 hours by Article 6(2) of Directive 93/104, is not exceeded.’

As cited by the Labour Court in Powderly v Sodexo Ireland Ltd DWT1722, the UK EAT held in EBR Attridge Law LLP and another v Coleman (No.2) [2010] IRLR 10

“The obligation to interpret domestic legislation to give effect to EU law is not limited to resolving ambiguities, i.e. where the words of the domestic statute admit of more than one “possible” meaning. The court may add words to a statute so as to depart from the unambiguous meaning that the legislation would otherwise bear. The real question is whether the departure is compatible with the underlying thrust of the legislation, or consistent with the scheme of the legislation or its general principles. The interpolated words have to go “with the grain” of the legislation.”

Application to the instant case

I note that the right to annual leave is a fundamental right pursuant to the Directive and the Charter. This encompasses both the right to take annual leave and the right to be paid an allowance in lieu. I note that the UK Regulations under consideration in Sash Window are similar to the provisions in the two Irish statutes set out above. I find that the complainant did not lose the accumulated and untaken annual leave, and this carried over to the end of his employment. I find that this is an ‘essential element’ of the right to paid annual leave and therefore has horizontal direct effect.

The CJEU jurisprudence was handed down by the CJEU after the 2015 amendment to the Organisation of Working Time Act. Given the clarity and direct effect of these CJEU’s judgments, I am bound to ensure that the complainant is not deprived of his right to paid annual leave, including payment of the allowance in lieu.

In the particular circumstances of this case, I find that a conforming interpretation can be brought to section 23 (specifically, ‘relevant period’ in section 23(1)(b)(i)). Having regard to the case law above, the purpose is to interpret the statutory provision, so far as possible, to give effect to EU law. The particular circumstances of this case are the respondent knew of, and approved, the carry-over of the complainant’s annual leave over several years. The complainant was not able to avail of his annual leave due to work demands. It was only in the fortnight before the end of the complainant’s employment that the respondent indicated it would not pay cesser pay for the full amount of leave accrued. The accrued and untaken annual leave remained extant at the end of the complainant’s employment. The annual leave was not automatically lost and accrued in line with the respondent’s agreement. Adopting a conforming interpretation with the above-cited EU law, I decide that it is due as cesser pay at the end of the employment.

Number of annual leave days claimable as cesser pay

The complainant’s annual leave comprised of the 20 days arising from the Organisation of Working Time Act (and arising from the Directive) as well as four additional days arising from his contract of employment.

It is clear from the TSN decision that Article 7 of the Directive enshrines the right to 20 days of annual leave, and this reach is not extended to additional days provided by contract, national law or a collective agreement. Different rules can apply to annual leave, whether it falls within the Directive 20 days or whatever additional days the employee may claim.

I note the approach of the Northern Ireland Court of Appeal in PSNI v Agnew [2019] NICA 32. Here, the Court agreed with the Employment Tribunal’s approach to treat each day of leave taken as an amalgam of each of the three sources of leave. As cited by the Court, no police officer ‘ever said “I have two more Working Time Directive days left before I move on to Working Time Regulations days.”’ In this case, the police officers had 30 days of leave, made up of 20 Directive days, 8 Regulation days and 2 days per their contract. So, one leave day was 20/30ths Directive, 8/30ths Regulation and 2/30ths contract.

Having regard to the approach taken in PSNI v Agnew and the CJEU judgment in TSN, I adopt the approach set out in Part D of the Agnew judgment. This is the most practical approach for employers and employees to take. The days taken as annual leave, or owed as cesser pay, is apportioned according to the source of the leave. This reflects TSN in that the employee will not be able to claim all the outstanding leave; when relying on EU law, the amount owed as cesser pay is reduced to reflect the scope of Article 7. It also reflects that annual leave per se is a fundamental social right and a health and safety measure.

I have found as fact that there were 31 accrued and unpaid days of annual leave by the end of the complainant’s employment. He had a total annual leave entitlement of 24 days per year. 20 of these days emanate from the Act/Directive and four additional days emanate from the contract. This is an Organisation of Working Time Act claim and the complainant relies on EU law to succeed. He can only succeed to the extent that there has been a contravention of EU law. (To note, this is not a Payment of Wages Act claim, where the complainant could seek holiday pay for all 24 days but could not rely on EU law to ensure carry over of leave.)

I find that the complainant will be able to claim 20/24ths of this outstanding leave, as this is the measure of his statutory and Directive entitlement. I calculate this as 25.83 days. Given that the complainant’s hourly rate of pay was €25.24 in an eight-hour day, the daily rate of pay was €201.92. The order of redress consists of 25.83 daily rates of pay (€5,215) and an additional €785 for breach of a statutory right.

CA-00025049-001

I decide that the complaint made pursuant to the Organisation of Working Time Act in relation to the payment of cesser pay is well-founded. I order redress of €6,000, made up of €5,215 as cesser pay (which is arrears of pay) and €785 for breach of a statutory right and which does not constitute to arrears of pay.

I decide that the complaint in respect of the failure to maintain working time records is not well-founded as this is not a matter within the jurisdiction of an Adjudication Officer.

Organisation of Working Time Act / cesser pay

Directive / Charter of Fundamental Rights

Untaken and accumulated annual leave

Conforming interpretation