Complainant

Respondent

Parties

Vincent Fallon

G4S Secure Solutions (Ire) Ltd

Representatives

Welfare Appeals

 Not represented

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, 1997

CA-00040291-001

07/10/2020

Complaint seeking adjudication by the Workplace Relations Commission under section 6 of the Payment of Wages Act, 1991

CA-00040291-002

07/10/2020

The complainant joined the respondent security company in October 1976 and 41 years later, in 2017, he was in the role of a section sergeant.  He earned €11.65 per hour, plus a weekly supervision allowance of €152.08 and an unsocial hours’ allowance of €13.97, bringing his weekly wages to €690.30.  His payslip dated March 31st 2017 shows that, in that week, he was also paid travel allowances of €6.84 and €5.92.   At the hearing, the complainant said that he generally worked 45 hours each week, although he sometimes worked more than this.  He claims that his regular weekly wages were €719.42.

In March 2017, the complainant went out sick.  Three years later, on March 15th 2020, he gave two weeks’ notice of his intention to resign and his employment ended on March 29th 2020.  He claims that he is entitled to pay for holidays that accrued during the leave years 2018, 2019 and for the first quarter of 2020; in all, a total of 45 days.  The respondent’s position is that he is entitled to pay for the holidays that accrued in the 15 months before his employment ended, limiting his entitlement to holiday pay of 25 days.

Section 41(6) of the Workplace Relations Act 2015 sets out the timeframe within which complaints may be submitted for adjudication:

“…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.”

The complainant’s employment ended on March 29th 2020 and this complaint was submitted to the WRC on October 7th 2020, which is ten days outside the time limit specified in section 41(6) above.

In advance of the hearing on May 27th 2021, Mr MacRitchie wrote to the WRC explaining the reason for the delay.  He said that, following the termination of the complainant’s employment, he was in touch with the respondent to try to resolve matters.  This resulted in the payment of a further amount of holiday pay on August 28th 2020.  The complainant wanted to avoid a hearing at the WRC and he instructed Mr MacRitchie to continue to engage with the respondent to try to have the matter resolved to his satisfaction.  Mr MacRitchie sent emails to the respondent on September 8th and 14th 2020, but got no response.  From September 13th 2020, Mr MacRitchie was prevented from going into his office because a family member contracted Covid 19.  Due to a backlog of work, he submitted this complaint on October 7th 2020.

An extension of time for submitting a complaint is provided for at section 41(8) of the Workplace Relations Act:

“An adjudication officer may entertain a complaint or dispute to which this section applies presented or referred to the Director General after the expiration of the period referred to in subsection (6) or (7) (but not later than 6 months after such expiration), as the case may be, if he or she is satisfied that the failure to present the complaint or refer the dispute within that period was due to reasonable cause.”

It is clear from this section of the Workplace Relations Act that, “for reasonable cause,” the legislation provides for an extension of the time limit from six months to 12 months and therefore, the date for submission of these complaints to the WRC may be extended to March 28th 2021.

Having considered this matter, it is my view that the complainant and his representative have shown reasonable cause for the very short delay of 10 days in submitting this complaint.  The complainant made immediate efforts to seek a resolution with his former employer, and a resolution was achieved, but not to his entire satisfaction.  The complaint should have been submitted before September 28th 2020, but an outbreak of Covid 19 in Mr MacRitchie’s family caused a short delay.  I accept the reasonable cause given by Mr MacRitchie for not submitting the complaint within the six month time limit and, in accordance with section 41(8) of the Workplace Relations Act 2015, I allow an extension of the time limit to 12 months.

The complainant was out of work due to illness from March 2017.  Following his resignation in March 2020, on April 3rd 2020, he received a payment of €1,864 in respect of accrued holidays.  Based on his hourly rate of pay of €11.65, this is equivalent to 160 hours’ pay.

In May 2020, the complainant wrote to the company and disputed how his entitlement to accrued holiday pay was calculated.  He raised five issues of concern:

1.   He said that he was normally paid for 47.5 hours per week, based on him working 40 hours plus five hours at time and a half.  He said that his accrued holidays should be calculated on the basis of a 47.5 hour week.

2.  He said that his weekly wages included the section sergeant’s allowance of €152.08 and an unsocial hours’ allowance of €13.97.  He therefore claimed that his holiday pay should be based on a weekly amount of €719.42.

3.  The complainant also claimed that his contract of employment provided that he was entitled to six weeks’ holidays every year.  He claimed that, at the termination of his employment, his entitlement to accrued holiday pay should be based on his contractual entitlement of six weeks’ holidays and not the statutory entitlement of four weeks.  At the hearing, Mr MacRitchie conceded that the complainant’s entitlement to pay in lieu of holidays accrued during his absence was based on the statutory entitlement of four weeks per year.

4.  The complainant argued that, in accordance with the 2015 amendment to section 20 and 23 of the Organisation of Working Time Act (“the OWT Act”), he should be entitled to pay for accrued holidays for 2018, 2019 and for the first quarter of 2020, up until the date of the termination of his employment on March 29th 2020.

5.  In his initial correspondence with the respondent in May 2020, the complainant claimed pay in lieu of five public holidays which he said accrued during the first six months of his absence starting in March 2017.  The respondent’s payroll manager wrote to the complainant on August 26th 2020 and explained that he had been paid his entitlement to the public holidays that fell during the first six months of his absence from March 2017.  The complainant did not pursue this claim at the hearing.

In summary therefore, the complainant claims an entitlement to pay for nine weeks’ holidays, based weekly wages of €719.42, comprised of the following:

€11.65 @ 40 hours:  €466

€11.65 @ 5 hours x 1.5:  €87.38

Supervisor’s allowance:   €152.08

Unsocial hours’ allowance:  €13.97

Total:  €719.42

The complainant’s claim can be quantified as follows:

2018:  4 weeks @ €719.42  = €2,877.68

2019:  4 weeks @ €719.42 = €2,877.68

2020:  1 weeks @ €719.42 = €719.42

Total holiday pay claimed:  €6,474.78

On August 19th 2020, Mr MacRitchie wrote to the respondent, and complained that the amount of €1,864 was an incorrect calculation of the holiday pay due to the complainant.  The payroll manager replied on August 26th.  It appears from her response that the amount of €1,864 paid in April 2020 was in respect of four weeks’ holidays accrued in 2019, based on a 40 hour week with no allowances.  She amended her calculation and said that the complainant was entitled to the following additional payments:

2020:  Five days’ holidays @ 45 hours x €11.65 per hour = €525.25

2020:  One week’s supervisor’s allowance = €152.08

2019:  Four weeks’ supervisor’s allowance @ €152.08 x 4 = €608.32

2020:  One week’s unsocial hours allowance = €13.97

2019:  Four weeks’ unsocial hours allowance @ €13.97 x 4 = €55.88

Total amount paid on August 28th 2020:  €1,354.10

On September 8th 2020, Mr MacRitchie wrote to the payroll manager setting out the residual aspect of the complainant’s claim.  He said that, as his employment ended on March 29th 2020, this was within 15 months of the end of the 2018 leave year (on December 31st 2018) and that he was entitled to pay for the statutory holidays accrued in 2018.  As he was paid overtime for five hours at time and a half, it is the complainant’s case that he earned 47.5 hours’ pay for working 45 hours per week and that his holiday pay should include his overtime earnings.  Mr MacRitchie therefore claimed that the holiday pay should be calculated on the base of 47.5 hours each week, and not 45 hours. 

The respondent disputes the complainant’s right to have his complaint adjudicated upon, as it was submitted in excess of the time limit at section 41(6) of the Workplace Relations Act.  As I have set out above, I have decided to accept the complainant’s reasonable cause for the delay.

Two items remain in dispute between the complainant and his former employer; firstly, an entitlement to pay for holidays accrued in 2018, and secondly, a claim that overtime pay should be included in the calculation of holiday pay.

In relation to the claim that the complainant is entitled to pay for 2018, the HR business partner argued that this is not in line with the amendment of section 20 and 23 of the Organisation of Working Time Act by section 86 of the Workplace Relations Act 2015.  He said that the complainant was not entitled to holidays that accrued over more than 15 months after he commenced his absence from work.  The respondent’s position is that, having been paid for holidays accrued in 2019 and 2020, the complainant has received the holiday pay to which he is entitled.

In relation to the inclusion of overtime pay in holiday pay, the payroll manager said that it is the policy of the company to include overtime pay in the calculation of holiday pay.  However, in the weeks before he went on sick leave, the payroll manager said that the complainant did not work overtime.

The Legal Framework Regarding Annual Leave and Absence Due to Illness

Prior to the amendments of sections 19, 20 and 23 of the OWT Act by section 86(1) of the Workplace Relations Act 2015, there was no provision for the accrual of annual leave during absences due to illness.  Before these amendments were enacted, holidays were treated in much the same way as wages, being accrued or “earned” in line with attendance at work.  Five years after the passing of the OWT Act, Directive 2003/88/EC, concerning certain aspects of the organisation of working time (“the Working Time Directive”) was adopted by the member states of the European Community to improve the health and safety of workers by providing “a codification of the provisions” on working time, night work, breaks and holidays established in the earlier Directive 93/104/EC. 

Under the heading of Annual Leave, Article 7.1 of the Directive provides as follows:

“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.”

In 2006, the decisions of the Court of Justice of the European Union (CJEU) in case C-350/2006, Schultz-Hoff v Deutsche Rentenversicherung Bund, [2009] ECR I-179andcaseC-520/2006, Stringer and Others v. Her Majesty’s Revenue and Customs, [2011] ECR I-11757 resulted in a finding that the accrual of annual leave based on attendance at work was incompatible with Article 7 of the Working Time Directive and that the Directive allowed for the accrual of annual leave during periods of absence due to illness.

In 2015, the objective of the amendments of sections 19, 20 and 23 of the OWT Act was to bring this judgement into effect in Irish law and, at the same time, to limit the accrual of holidays to avoid an onerous financial burden on businesses where employees are absent for a long time. 

Amendment to Section 19 of the OWT Act:  Entitlement to Annual Leave

To bring the treatment of holidays in Ireland into line with the jurisprudence of the CJEU, the new section 19(1A) of the OWT Act changed the law in relation to the accrual of annual leave.  The Act now provides that annual leave is accrued during periods of absence due to illness:

“(1A) For the purposes of this section, a day that an employee was absent from work due to illness shall, if the employee provided to his or her employer a certificate of a registered medical practitioner in respect of that illness, be deemed to be a day on which the employee was -

(a) at his or her place of work or at his or her employer’s disposal, and

(b) carrying on or performing the activities or duties of his or her work.”

Amendment to Section 20 of the OWT Act:  Times and Pay for 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—

(Sub-sections (a) and (b) are not relevant to this complaint.  The amendment, which is key to this complaint, is at sub-section (c)).

(c) to the leave being granted -

(Sub-sections (i) and (ii) are not relevant to an employee who is not absent due to illness).

(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.  

The effect of this amendment is, that an employee who is medically certified as unable to attend work due to illness is entitled to the benefit of the annual leave that accrues during the leave year in which they are absent.  We know that the amount of leave is limited to the statutory entitlement of 20 days.  This amendment provides that an employee must take the holidays within 15 months from the end of the leave year, after which, they are lost.

Amendment to Section 23 of the OWT Act:  Compensation on Cesser of Employment

The next issue for consideration in the legislation is what happens with regard to holidays not taken when an employee who is ill does not return to work. 

(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) and (ii) are not relevant to this complaint.)

(iii) in relation to a cessation of employment of an employee to whom subparagraph (iii) of the said paragraph (c) applies, (this refers to Section 20(1)(c)(iii) of the OWT Act) 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.

It is apparent from (iii) and (iv) above that the legislation intends that employees are to be compensated differently for annual leave not taken, depending on:

(iii)  whether their employment ends during the first 12 months following the end of the year in which they went absent, in which case they are entitled to compensation for holidays accrued during the leave year in which their employment ends and the preceding leave year.

Alternatively,

(iv)  If their employment ends during the final three months of a period of 15 months after a leave year in which they have been absent, they are entitled to compensation for holidays accrued during the leave year in which their employment ends and the preceding two years.

Based on the outcome from the decisions of the CJEU and the objective of the amended legislation to place some limit on the entitlement to compensation for holidays not taken as a result of long periods of sickness absence, my understanding is that the maximum compensation to which an employee is entitled is equivalent to pay for holidays accrued in the 24 months before the year of termination, plus the leave that accrues in the year of termination.

Section 20 of the OWT Act in Relation to Pay for Annual Leave

No amendments were made in 2015 to sub-sections (2), (3) or (4) of section 20, in relation to holiday pay:

“(2) The pay in respect of an employee's annual leave shall—  

(a) be paid to the employee in advance of his or her taking the leave,  

(b) be at the normal weekly rate or, as the case may be, at a rate which is proportionate to the normal weekly rate, and  

(c) in a case in which board or lodging or, as the case may be, both board and lodging constitute part of the employee's remuneration, include compensation, calculated at the prescribed rate, for any such board or lodging as will not be received by the employee whilst on annual leave.

(3) Nothing in this section shall prevent an employer and employee from entering into arrangements that are more favourable to the employee with regard to the times of, and the pay in respect of, his or her annual leave.

(4) In this section “normal weekly rate” means the normal weekly rate of the employee concerned's pay determined in accordance with regulations made by the Minister for the purposes of this section.”

Regulation 3 of the Organisation of Working Time (Determination of Pay for Holidays) Regulations 1997 provides a definition of “normal weekly rate” of pay.  As the complainant’s wages were based on a fixed-hourly rate, sub-section (2) is relevant to the calculation of his holiday pay:

“(2) If the employee concerned's pay is calculated wholly by reference to a time rate or a fixed rate or salary or any other rate that does not vary in relation to the work done by him or her, the normal weekly rate of his or her pay, for the purposes of the relevant sections, shall be the sum (including any regular bonus or allowance the amount of which does not vary in relation to the work done by the employee but excluding any pay for overtime) that is paid in respect of the normal weekly working hours last worked by the employee before the annual leave (or the portion thereof concerned) commences or, as the case may be, the cesser of employment occurs.”

It is the complainant’s case that his “normal weekly rate” included five hours’ pay at time plus a half and that this should be included in his holiday pay. 

Findings:  Compensation for the Number of Days’ Holidays Not Taken

The complainant was absent due to illness from March 2017 until his employment ended on March 29th 2020, following his resignation on March 15th.  For the purpose of determining his entitlement to compensation for statutory holidays not taken, I will assume that he took no annual leave in 2017, although this assumption has no effect on my findings.

Based on the intention of the amended section 23(1)(c)(iv), the complainant is entitled to compensation for holidays not taken during the leave year in which his employment ended, (“the current leave year”) and for the holidays not taken in 2019 and 2018 (“the 2 leave years immediately preceding the current leave year”).  In summary, he is entitled to the benefit of 45 days’ holidays not taken which accrued over a period of 27 months.

As an additional intricacy, it is interesting to note that, if the complainant’s employment had ended on April 1st 2020, and not March 29th, he would not have been entitled to pay for the holidays that accrued in 2018, because the time limit from the end of December 2018 would have been greater than 15 months.   

Findings: Overtime Earnings and Compensation for Holidays Not Taken

The General Note on section 20 of Anthony Kerr’s consolidated version of the OWT Act in Westlaw, (© Thomas Reuters) Act tells us that, while overtime is specifically excluded from holiday pay, the Labour Court has taken the view that regular overtime should be included in the definition of the “normal weekly rate” of pay.  A number of examples are cited in favour of employees,* but the Court has also disallowed the inclusion of overtime in holiday pay in very similar circumstances, for example, in MCM Security Ltd v Power, DWT 95/2008.  Decisions of the UK employment appeals tribunals since 2015 appear to favour the inclusion of regular and rostered overtime in holiday pay and this trend was followed recently in a significant decision of the Court of Appeal in Northern Ireland in Chief Constable of the PSNI v Agnew [2019] I.R.L.R. 782.  At the CJEU, in case C-385/17, Hein v Albert Holzkamm GmbH [2019] 2 C.M.L.R 19, the Court found that where an employee is contractually obliged to work overtime “on a broadly regular and predictable basis,” that pay for overtime should be included in the calculation of holiday pay.

The complainant’s case is that he generally worked 45 hours a week, of which, five hours attracted a premium of time plus a half, resulting in pay for 47.5 hours (€547.55).  At the hearing, the payroll manager said that overtime pay is generally included in holiday pay but that the complainant did not work overtime in the weeks leading up to his absence. 

In response to the complainant’s query about his holiday pay, on August 26th 2020, a member of the HR department wrote to him to clarify the error in the payments made to him in April 2020.  In an email, the complainant was informed that holiday pay for five days in 2020 was €524.25, based on an hourly rate of €11.65 per hour.  This is equivalent to 45 hours’ pay, but is not the same as 40 hours’ plus five hours at the overtime rate of time and a half, which, as we can see from the previous paragraph, is €547.55.

The complainant was employed by the respondent for 44 years.  Until shortly before he went out sick, he generally worked 45 hours a week and, for this reason, his overtime can be considered to have been “regular and predictable.”  Section 20 of the OWT Act seeks to ensure that an employee receives the same remuneration while they are on holidays, that they received while they were at work.  To do otherwise would associate holidays with a financial disadvantage and would, in my view, be contrary to the spirit of the Directive on working time.

In conclusion therefore, I find that the complainant’s holiday pay should have been based on his normal weekly pay of 45 hours, of which, five hours should have been paid at time and a half, resulting in pay for 47.5 hours.

Conclusion

The complainant’s normal weekly rate of pay was €719.42, comprised of the following:

40 hours @ €11.65 = €466

5 hours @ (€11.65 x 1.5) = €87.38

Supervision allowance:  €152.08

Unsocial hours allowance:  €13.97

I have concluded that, when he finished up in his job on 29th March 2020, having been absent for three years, the complainant was entitled to the following pay in lieu of holidays that accrued while he was out sick:

2018:  20 days (4 weeks @ €719.42) = €2,877.69

2019:  20 days (4 weeks @ €719.42) = €2,877.69

2020:  1 week @ 719.42

Total:  €6,474.78

*LCR 7135 (CIE); LCR 7318 (Dublin Voluntary Hospitals); LCR 7365 (Waterford Crystal Ltd); LCR 9273 (Ergas Ltd); LCR 10155 (Easons); LCR 10390 (St Vincent's Hospital); LCR 10494 (Donnelly Mirrors Ltd); LCR 10794 (Deansgrange Joint Burial Board); and LCR 18118 (Banagher Concrete).

I have decided that this complaint is upheld and that, at the end of his employment with the respondent, the complainant was entitled to €6,474.78 in lieu of holidays not taken during 2018, 2019 and 2020, when he was absent due to illness.  On April 4th 2020, he was paid €1,864, in respect of four weeks’ holidays in 2019.  On August 28th, he was paid €1,354.10, in respect of one week’s holidays in 2020, plus five weeks of allowances.  The total pay in lieu of holidays received by the complainant was therefore, €3,218.10, leaving a shortfall due of €3,256.68.  I order redress of €4,000, comprising €3,256.68 as cessor pay, which is arrears of pay, and €743.32 for breach of a statutory right, which does not constitute arrears of pay.

This complaint under the Payment of Wages Act is concerned with the breaches of section 20 and 23 of the OWT Act which I have adjudicated on above.

As this complaint is a duplication of complaint, CA-00040291-002 submitted under the Organisation of Working Time Act 1997, I make no award under the Payment of Wages Act 1991.

Pay in lieu of holidays, absence due to illness