Complainant

Respondent

Anonymised Parties

A Technology Start-up

An Engineer

Act

Complaint/Dispute Reference No.

Date of Receipt

Complaint seeking adjudication by the Workplace Relations Commission under Section 39 of the Redundancy Payments Act, 1967

CA-00031742-001

22/10/2019

Complaint seeking adjudication by the Workplace Relations Commission under section 27 of the Organisation of Working Time Act, 1997

CA-00031742-002

22/10/2019

The respondent is a start-up technical company, engaged in the development of a forensic solution for military and global defence agencies. The complainant is an engineer and he commenced working for the respondent as Senior Design Engineer / Chief Technical Officer on August 1st 2012. He is a minor shareholder in the company, along with the CEO and the CFO who are the major shareholders.

The company was established with the support of funding from the EU Horizon 2020 fund. A research project was completed in September 2019, although the evidence of both sides at the hearing is that funds began to run short around May of that year. The complainant wasn’t paid his wages at the end of August and, in September, he said that he asked the CEO and CFO to give him a letter confirming his dismissal. The project was coming to an end, but an important demonstration to potential clients was scheduled for September 26th, and the complainant said that he worked on preparing for the demonstration and he attended the demonstration itself.   He then worked for a few days in October to finish reports and to return equipment to the company’s premises.

The complainant produced a letter in evidence dated August 2nd 2019, which he said he received on October 9th. The letter is confirmation of the termination of his employment on August 30th “due to a lack of budget for our R&D activities in the Horizon 2020 R&D project.” The letter is very positive about the complainant’s contribution to the company and gives a commitment to re-employ him in the future if funding is available again.

This complaint is about the respondent’s failure to pay the complainant a redundancy lump sum or pay for holidays that he didn’t take when he was employed.

CA-00031742-001: Complaint under the Redundancy Payments Act 1967

The complainant’s contract was submitted in evidence and it shows that he was a permanent employee with no fixed-term end-date or specified purpose associated with his employment. At the hearing, he said that he worked for a few days after September 26th 2019 and he received a letter of termination on October 9th.   When he received this letter, he said that he signed on for job-seeker’s allowance and he started to look for another job.

CA-00031742-002: Complaint under the Organisation of Working Time Act 1997

The complainant’s contract provides that he is entitled to four weeks’ holidays every year. A copy of his September 2019 timesheet was produced at the hearing which shows that he recorded that he had 45.66 days of holidays not taken at the end of that month. He said that due to work commitments, he didn’t take many days off for the last two or three years and he claims that, when his employment was terminated, he was entitled to be paid for his untaken holidays.

CA-00031742-001: Complaint under the Redundancy Payments Act 1967

The respondent’s case is that the complainant’s employment came to an end due to a lack of funding to transfer him to work on another project. At the hearing, the CEO and the CFO said that they were applying for new funding, but that they were not able to start another project until they had confirmation that finance would be available. For the project that was completed in September 2019, they expect to receive the remaining 15% of the funding in mid-2020. Since the summer of 2019, the CEO said that they paid the complainant’s wages out of their own personal funds and they could not cover the cost of redundancy.

CA-00031742-002: Complaint under the Organisation of Working Time Act 1997

At the hearing, the CEO said that the complainant was free to take his holidays and he was never prevented from doing so. At the same time, he agreed that he never insisted that the complainant take his holidays.

CA-00031742-001: Complaint under the Redundancy Payments Act 1967

Section 7 of the Redundancy Payments Act 1967 sets out five specific circumstances in which an employee may be entitled to a redundancy payment, the first of which is:

“(a) the fact his employer has ceased or intends to cease to carry on the business for the purpose of which the employee was employed by him, or has ceased or intends to cease to carry on that business in the place where the employee was so employed,”

From the information submitted to me at the hearing of this complaint, it is evident that the job that the complainant was employed to do ceased with the completion of the project at the end of September 2019. As the complainant’s employer has ceased operations and there is no longer any work for him to do, his job has become redundant. At the hearing, he produced a letter from the CEO dated August 2nd, in which the CEO stated that “the company must unfortunately terminate your employment on 30/08/2019. This is due to a lack of budget for our R&D activities…” The letter makes no reference to the complainant’s entitlement to a statutory redundancy payment; however, it is clear to me, from the definition of the term in the 1967 Act that, on September 30th 2019, and not August 30th, the complainant’s job became redundant.

CA-00031742-002: Complaint under the Organisation of Working Time Act 1997

The Organisation of Working Time Act 1997 transposes Directive 93/104/EC into Irish law and the objective of the directive is to set out rules on hours of work, night work and holidays, to promote the health and safety of workers across the member states. Article 7 of the Directive provides that annual leave may not be replaced by the payment of an allowance, except at the termination of employment.

The complainant’s case is that, because he was busy at work, he didn’t get an opportunity to take all the holidays to which he was entitled, with the result that, on September 30th 2019, he had 45.7 days of untaken holidays for which he claims he is entitled to be paid. He did not say that he was prevented from taking his holidays and it appears that he intended to take them all after the completion of the project in September 2019.

Two issues require to be adjudicated on under this heading:

1 How may days’ holidays is the complainant entitled to be paid for in respect of the current leave year?

This complaint was submitted to the WRC on October 22nd 2019. In accordance with the six-month time limit prescribed at section 41(6) of the Workplace Relations Act, I can consider a complaint under section 19 of the Organisation of Working Time Act from April 23rd 2019.   Section 2 of the Act provides that the “leave year” is any year beginning on April 1st and, in the first instance, I must consider the complainant’s entitlement to holidays for the leave year from April 1st 2019 until March 31st 2020.

I have concluded that the complainant finished work with the respondent on September 30th 2019. Therefore, at the date of his termination, he worked for six out of twelve months of the leave year. As a result, he accrued six twelfths of his annual entitlement of 20 days’ holidays, equivalent to 10 days. I find therefore, that he is entitled to pay for 10 days’ holidays not taken in respect of the leave year from April 1st 2019 until his employment terminated on September 30th 2019.  

2 Is there an entitlement to pay for holidays not taken in previous leave years?

Although there was no dispute about the holidays not taken, and it appears that records were kept on monthly timesheets, neither side produced a record of the holidays that the complainant took since he started work in 2012. For this reason, apart from the current leave year, I cannot determine in what leave years the remaining 35.7 days were not taken.

In general, the responsibility for ensuring that an employee takes their holidays falls on the employer. In the case under consideration here however, the complainant was a part-owner of the company and he had a different relationship with his employer compared to most employees in the “master-servant” type relationship.   The complainant had a degree of autonomy in how he did his job. He made no claim that he was discouraged from taking his holidays or that any request to take holidays was not granted. My sense is that he simply had to inform the CEO when he would be on holidays. He was always aware of the build-up of the holidays he had not taken and, at the hearing, he said that it was intention to take his holidays at the end of the project.

The extension of the time limit in respect of complaints about untaken holidays was considered on appeal to the High Court by Mr Justice Lavan in the case of Royal Liver Assurance Limited V Macken & others [2002] 4 I.R. 427. Referring to section 20(1)(c) of the Act, which provides that annual leave must be taken in the leave year to which it relates or “with the consent of the employee, within the six months thereafter,” Judge Lavan found that “the consent of the employee” was the operative cause of this provision. It is my view that, in the 2018-2019 leave year, the complainant consented to the postponement of his annual leave beyond that leave year into the leave year 2019-2020. As I cannot determine how much of his holidays he had not taken, I have decided to estimate that he did not take 10 out of the 20 days to which he was entitled. I find therefore, that he is entitled to pay for 10 days of annual leave that were postponed until the 2019 – 2020 leave year.

What about the remaining 25.7 days not taken? I note the findings of the Court of Justice of the European Union (CJEU) in the joined cases, C-619/16 (Sebastian W. Kreuziger v Land Berlin) and C-684/16 (Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Tetsuji Shimizu). Here the Court found that the right to pay for holidays not taken may lapse only when the employer gives the worker an opportunity to take the holidays in good time. No evidence was submitted at the hearing of this complaint that shows that there were matters that prevented the complainant from taking his holidays.   My sense is that the complainant managed his own working time and that he could have taken all the holidays that he did not take, without any adverse reaction from his employer. In this regard, he was practically an equal party in the employment relationship and, while I accept that he was never instructed to take his holidays, it is my view that he did not reply on the approval of his employer to schedule his annual leave.

I find therefore, that, because he did not take his full entitlement to holidays in the years prior to the leave year 2019 – 2020, the complainant is not entitlement to be paid in respect of the days he did not take, and he loses his entitlement to the remaining 25.7 days.

CA-00031742-001: Complaint under the Redundancy Payments Act 1967

As I have concluded that the complainant’s job became redundant on September 30th 2019, subject to his PRSI status, I decide that he is entitled to statutory redundancy based on his service with the respondent from August 1st 2012.

CA-00031742-002: Complaint under the Organisation of Working Time Act 1997

As I have concluded that the complainant is entitled to be paid in lieu of holidays not taken for the leave year from April 1st 2019 until September 30th 2019, I decide that the respondent is to pay him €2,916.67 in respect of 20 days’ annual leave.

Redundancy, pay for holidays not taken