Complainant

Respondent

Parties

Fernanda  Guilherme Aureliano

Tara Support Services

Representatives

 Adrian Phelan, Owner

Act

Complaint/Dispute 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-00047759-001

20/12/2021

The Respondent Tara Support Services confirmed this to be correct respondent name and he agreed to updating the name to Tara Support Services accordingly and confirmed it is a sole trader. Ms Fernanda Guilherme Aureliano, the Complainant was employed as a Cleaner from 6 November 2018 to 20 August 2021.  She worked a 20-hour week with a gross per week on average €224. She stated she did not receive her pay for annual leave entitlement when she was on annual leave.

Mr. Phelan confirmed there was a local agreement in place when Ms Aureliano joined at this site based on an accrued holidays to be paid on a year diem basis.  The Respondent stated there was a 10% allowance i.e. 8% for holidays and 2% for shift premiums included in her wages and she was paid for breaks.

The Respondent stated this agreement was in place in writing in the Terms & Conditions and under remuneration it said this would mean holidays would be paid via breaks instead of actual holiday payment being paid.  There was an opt out clause also stated which she didn’t evoke.

The Complainant confirmed when she started in 2018 the Respondent, Tara Support Services was very good to her.  She didn’t realise she was entitled to paid holidays.  She confirmed all staff were immigrants. Once the Complainant realised this was the case, she said that the staff said it to the Respondent.

The Complainant stated she had a bad work incident with Mr. Adrian Phelan, the Respondent so she didn’t feel she could ask him about her holidays.  Three to four months before she was leaving, she asked for her contract of employment.  She received the contract when she started but she had no English and didn’t think she was entitled to holidays then.  When the Complainant started a new job and realised you got paid holidays then and only then she took this claim.  Ms Aureliano said she went away on holidays for 1 month or more and didn’t get paid holidays which was difficult when she was working in this company.

In response to the Complaint, the Respondent said that Ms Aureliano, Complainant did in fact receive all annual leave monies due in line with her agreed contract of employment. They stated that the receipt of her terms of employment had been acknowledged by the complainant as being in force as she had submitted a copy of the said statement of main terms of employment for consideration in this matter as it was submitted (together with copies of her bank statements) that was received from the WRC with a cover letter dated the 16 August.

Mr Phelan stated within the clearly defined terms issued, Ms Aureliano was fully aware of two particular conditions that were very relevant in this case which should be taken into account:

1. Within the main terms it clearly states that within the HOURS OF WORK section “You will receive appropriate unpaid rest breaks depending on the length of your shift and in accordance with the Organisation of Working Time Act 1997”.

2. Within the main terms it clearly states that within the RENUMERATION section “Following an agreement with the workplace representation group (WRG) your role will receive a daily 10% shift payment paid via paid breaks in lieu of your basic holiday entitlement of 8% of the total hours worked and a 2% contribution for your public holiday entitlement. If you wish to opt out of this agreement you can do this in writing at any time”.

Mr Phelan stated the arrangement for the paying of all accrued holiday pay on a daily basis was proposed by non-EU staff as they needed to access all monies due in order to meet the accommodation and other commitments they had as they had no access to any other government etc. financial supports for obvious reasons.  Within the terms Ms Aureliano, Complainant was clearly informed that her expected hours of work would be the inclusive salary/accrued pay and she could opt out of that arrangement at any time and that all she needed to do was to make that request in writing.  He said that no such request was ever received, either verbally or written, during the period of her employment.

The Respondent stated to enable this agreement to fully reflect the holiday pay that would be accrued each pay period it was based on the hours completed calculated daily. It is felt that the current misunderstanding had arisen as the accrued amounts were incorporated into the gross amount within each payslip and the payslips reflect the employee submitted timesheet which can been seen as copies of these were submitted to the WRC.

Mr Phelan, the Respondent stated they moved away from manual records in 2021 and introduced a NFC based electronic attendance recording system and he attached Ms Aureliano's reports for June, July and August 2021 which clearly show actual location log in/out times which support our submission regarding the fact that Ms Aureliano, Complainant was paid for all hours she was present on site without any deductions being made for breaks (staff had a minimum of 90 minutes break per shift due to the operation timetable of the coaches).

Mr Phelan stated with hindsight he appreciated that it would have been much clearer if we had fully broken down the payments made within the payslips. Although we are more than confident that no underpayment has been made, to ensure Ms Aureliano is satisfied that she did receive all monies due we propose that one solution would be for a full review of her payments made over her period of employment, deduct the unpaid breaks that would normally have been deducted and then recalculate the holiday pay that would have accrued during her employment with us committing to pay any difference found/due.

Mr Phelan commented they regret that Ms Aureliano, Complainant felt that she was at a loss as we have always done our best by all our employees paying over minimum wage where possible and ensuring they have the correct tools and training to safely carry out their assigned tasks.

Mr. Phelan confirmed there was a local agreement in place when Ms Aureliano joined at this site based on an accrued holidays to be paid on a year diem basis.  The Respondent stated there was a 10% allowance i.e. 8% for holidays and 2% for shift premiums.

The Respondent stated this agreement was in place in writing in the Terms & Conditions and under remuneration it said this would mean holidays would be paid via breaks instead of actual holiday payment being paid.  There was an opt out clause also stated.

The Respondent stated normally breaks are unpaid and he paid them via this premium in lieu of holiday payment. 

The Respondent stated in each payment period therefore the Complainant was paid for hours worked and for holidays in this premium also.  He confirmed Ms Aureliano was never asked to opt out of this agreement.

The Respondent stated this agreement was in place for many others and no issue raised and all were treated the same.  Payments were made in good faith.  The Respondent stated the Complainant had not signed the Contract he referred to, but she had received it.

The Organisation of Working Time Act 1997 was enacted to give effect to Directive 93/104/EC of 23 November 1993 of the Council of the European Communities which delegated to the Member States of the European Union the right to determine all aspects of holiday pay, including its calculation. The Directive left it to national legislation to determine the conditions of entitlement to, and granting of, an employee’s paid annual leave, including the determination of the basis upon which payment is calculated for such periods of leave and the level of such payment.

Section 19(1) of the Act provides for the calculation of statutory annual leave as follows:

“(1) Subject to the First Schedule (which contains transitional provisions in respect of the leave years 1996 to 1998), an employee shall be entitled to paid annual leave (in this Act referred to as “annual leave”) equal to—

(a) 4 working weeks in a leave year in which he or she works at least 1,365 hours (unless it is a leave year in which he or she changes employment),

(b) one-third of a working week for each month in the leave year in which he or she works at least 117 hours, or

(c) 8 per cent of the hours he or she works in a leave year (but subject to a maximum of 4 working weeks):

Provided that if more than one of the preceding paragraphs is applicable in the case concerned and the period of annual leave of the employee, determined in accordance with each of those paragraphs, is not identical, the annual leave to which the employee shall be entitled shall be equal to whichever of those periods is the greater.”

Section 20(2) makes provision in general terms for the basis on which payment for statutory annual leave is to be calculated and subsection (4) of that section enables the Minister to promulgate regulations for the purpose of determining the manner in which “normal weekly rate [of pay]” is to be determined:

“(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) ….

(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.”

In Royal Liver Assurance Limited –v- SIPTU DWT41/2001 the Labour Court used the description of annual leave as;

“A term of common usage in Industrial Relations and is well understood as meaning a period of rest and relaxation during which a worker is paid his normal wages without any obligation to work or provide any service to the employer”.

In this case the employer is paying an allowance for Holiday Pay instead of granting and paying for annual leave at the time it is taken. 

This issue has been before both the WRC and Labour Court in the past and the guidance in relation to the legislation is clear.  Namely in case ADJ-00025369 between a Former Tutor and an Educational Training Board the employee was paid an additional sum on top of the salary to cover annual leave. The Adjudication Officer referred to the case of Kvaerner Cementation (Ireland) Limited -v- Martin Treacy DWT017 where the Labour Court confirmed that “Article 7 of the Directive provides as follows:

·        Member States shall take the measures necessary to ensure that every worker is entitled to paid leave of at least four weeks in accordance with the conditions or entitlements to, and the granting of, such leave laid down by national legislation and/or practice

·        The minimum period of annual leave may not be replaced by an allowance in lieu, except where the employment relationship is terminated. Part III of the 1997 Act was enacted to give effect to Article 7 (1) of the Directive. If provides employees with an entitlement to four weeks paid annual leave per year (and proportionally less where the employee has less than a full year’s employment) and to be paid leave, or additional payment in respect of public holidays. This part also makes consequential provisions in relation to the calculation and time of payment for such leave. It also makes provision at Section 23 where the payment of compensation to an employee where annual leave is outstanding at the cesser of his/her employment”

The Adjudication Officer pointed out that the Labour Court went on to state

“What emerges from theses statutory provisions is that:

1.       The primary obligation on an employer is to ensure that employees receive the requisite period of paid leave.

2.      That obligations cannot be offset by payment of an allowance in lieu of such leave.

3.      The obligation is imposed for the protection of the health and safety of workers”

Therefore, the Labour Court confirmed that “The inclusion of an element in basic pay designed to cover holiday pay is inconsistent with the result with Article 7 of the Directive Part III of the Act is intended to achieve.”  The Labour Court in this case also stated that

• The main purpose of providing annual leave is to allow employees to reconcile work and family responsibilities and to provide opportunities for rest and recreation. Thus, it is of significant benefit to employees and their families. This is only the case, however, if they have an income on which to live during the leave.

• There is no reality in the proposition that the average worker, particularly those on low pay, would have the frugality to faithfully put aside a designated portion of their weekly pay, to be drawn down up to 18 months later, so as to cover up to four weeks without an income. The strong probability is that workers would not take leave in such situations through economic necessity, or if forced to do so, would seek alternative work during the leave. This would defeat the central health and safety imperatives of the Act and the Directive on which it is based.

• Given the disparity in the bargaining position of those seeking employment and those offering it, a facility to designate an element of basic pay as being in respect of holidays would be inherently open to abuse. This would set at nought the protection which the legislation is intended to afford employees.

For all of the above reasons the Court is satisfied that the inclusion of an element in basic pay designed to cover holiday pay is inconsistent with the result which Article 7 of the Directive and Part III of the Act is intended to achieve. 

This is also enforced in the Labour Court case is Mold Nal Limited -v- Motovilova DWT0754 where the Labour Court did not accept the Respondent’s position of paying an allowance in lieu of annual leave entitlements where the Labour Court stated

“The right of paid annual leave is provided for by Article 7 of Directive 93/104/EEC concerning certain aspects of the Organisation of Working Time. Section 19 of the Organisation of Working Time Act gives effect to Article 7 of the Directive and must be interpreted so as to achieve the result envisaged by the Directive.”

In the case of Faser Court Limited trading as Casey Enterprises and Shay O Brien DWT0743 where the Labour Court drew on the case of C-134/04 known as the Robinson Steel case, and C-257/04 being a case of Michael Jason Clarke –v- Frank Staddon Limited stating;

“The fact that the type of arrangement relied on by the respondent does not meet the requirements of the Directive and the Act has been put beyond doubt by recent decisions of the ECJ. In that case the Court of Justice made it clear that the relevant obligation imposed on an employer under the Directive can only be met by paying the employee in respect of holidays at the time the holidays are taken. The Decision is absolutely binding on this Court. Consequently, the defence to the within claim relied on by the respondent is unsustainable by law”.

I have considered all the written and oral evidence presented in this case and gave the parties the full opportunity to have their case heard.  I find that an employer cannot pay an allowance instead of granting leave and paying the employee for the leave at the time of taking it.  The Labour Court in a number of cases has held that holiday pay or premiums in lieu or same or allowances cannot be paid in lieu of the employee taking their legal entitlement and that Article 7 of the Directive and the Organisation of Working Time Act provides that the prescribed minimum period of annual leave may not be replaced by an allowance in lieu except where the employment relationship is terminated. 

Having considered the evidence before me and the circumstances of this case, I find that a payment of an allowance in lieu of statutory annual leave entitlements is not acceptable under the Act. Accordingly, the complaint is well founded.  Therefore, I find that this claim succeedsand direct the employer to comply with the relevant provisions of the Act.  I will now also consider the relevant redress in this case.

Pursuant to Section 41(6) of the Workplace Relations Act 2015, I have jurisdiction to investigate any complaint under the Organisation of Working Time Act 1997 for a period of six months from the date of the referral of complaint.

This complaint was presented to the WRC on 20 December 2021 and therefore the cognisable period that may be investigated is 19 July 2021 to the date of termination.

I note that Section 2(1) of the Act stipulates that “leave year” means a year beginning on any 1st day of April”. Therefore, I may adjudicate on the period from 1 April 2021 to 20 August 2021 her termination date.  I find that the Complainant worked 400 hours in total in the cognisable period.

Taking all the factors of this case into account the Respondent is directed to pay the Complainant compensation of €1,600 which I deem to be just and equitable having regard to all the circumstances of this claim.