Complainant

Respondent

Parties

Ioan Marius Crisan

EDA Fitting Services Limited

Representatives

Represented himself 

 Hanan Solicitors

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-00059017-001

25/09/2023

Mr Crisan started working as a window fitter with EDA Building Services Limited in February 2020.  In his evidence, he said that he was paid €568 net per week.  He was unsure of his gross wages, explaining that he was never issued with a payslip.  Mr Crisan had to have surgery in October 2021 and he was out of work for about eight weeks.  When he returned, his employer had changed to EDA Fitting Services Limited and he worked for that company until he resigned in July 2023.  For the duration of his employment with EDA Building Services and EDA Fitting Services, Mr Crisan didn’t take holidays and he was not rostered for holidays.  He is claiming pay for holidays accrued and not taken since February 2020. 

In his evidence, Mr Crisan said that there were occasions between February 2020 and April 2023 when there was no work, and he had time off, but he didn’t get paid for that time off.  He was never scheduled for paid holidays while he was employed by EDA Building Services or EDA Fitting Services. 

In July 2021, Mr Crisan said that he was out sick for two weeks and his doctor referred him to have an operation for a hernia.  He had surgery in October that year and he was then out sick for about eight weeks.  When he returned to work, his employer had changed to EDA Fitting Services and he continued on working with no changes to his hours of work or his wages.  He worked with the same people and, over time, more people were employed.  He said that he was not dismissed by EDA Building Services and he was not made redundant.  Mr Alex Damoc was at the hearing of this complaint and Mr Crisan said that he worked for Mr Damoc’s father when the company was EDA Building Services and when he came back from sick leave in October 2021, he worked for him.  

In response to questions from Mr Ur Rahman, Mr Crisan agreed that he never asked his employer for holidays.  He agreed that, on one occasion when there was no work, he went to Romania for two weeks.  He also went on another holiday abroad for a weekend.  He said that he didn’t get paid for these breaks. 

On behalf of EDA Fitting Services Limited, Mr Ur Rahman said that the employer’s position is that Mr Crisan is entitled to pay for holidays not taken from January 1st 2022 until his resignation at the end of July 2023.  This is a timeframe of 19 months.  He submitted that EDA Fitting Services was established in December 2021 and that this employer is liable only for holidays accrued from January 2022.

Transfer of an Undertaking

Council Directive 2001/23/EC, often referred to as “the Acquired Rights Directive,” was transposed into Irish law in Statutory Instrument 131 of 2003 (SI 131/2003).  Article 3 of the opening preamble of the Directive makes its objective clear:

It is necessary to provide for the protection of employees in the event of a change of employer, in particular, to ensure that their rights are safeguarded.

Regulation 3(1) of SI 131/2003 provides that,

These Regulations shall apply to any transfer of an undertaking, business, or part of an undertaking or business from one employer to another employer as a result of a legal transfer (including the assignment or forfeiture of a lease) or merger.

In Regulation 3(2), a “transfer” is defined as “the transfer of an economic entity which retains its identity.”  An “economic entity” is defined as,

An organised grouping of resources which has the objective of pursuing an economic activity whether or not that activity is for profit or whether it is central or ancillary to another economic or administrative entity.

In his evidence, Mr Crisan said that, when he returned to work after recovering from surgery in October 2021, he was working for the son of his employer and the name of the company changed to EDA Fitting Services Limited.  He said that there was no change in the type of work carried out, which was window fitting, and that all the employees transferred to the new company, carrying out the same work that was carried out when they were employed by EDA Building Services Limited.

I note from the register of the Companies Registration Office that EDA Fitting Services Limited was registered on August 10th 2021.  In the absence of evidence to show that the business of EDA Building Services Limited did not transfer to EDA Fitting Services Limited, I am satisfied that Mr Crisan’s employment did, in fact, transfer.

Article 4(1) of SI 131/2003 provides that,

The transferor's rights and obligations arising from a contract of employment existing on the date of a transfer shall, by reason of such transfer, be transferred to the transferee.

Section 7 of the First Schedule of the Minimum Notice and Terms of Employment Act 1973 provides that,

Where the whole or part of a trade, business or undertaking was or is transferred to another person either before or after the passing of this Act, the service of an employee before the transfer in the trade, business or undertaking, or the part thereof so transferred -

(a) shall be reckoned as part of the service of the employee with the transferee, and

(b) the transfer shall not operate to break the continuity of the service of the employee,

unless the employee received and retained redundancy payment from the transferor at the time of and by reason of the transfer.

It follows from these legal provisions that EDA Fitting Services Limited is responsible for Mr Crisan’s employment rights from the date of his commencement with the transferor on February 11th 2020.

Entitlement to Annual Leave

Article 31 of the Charter of Fundamental Rights of the European union addresses the entitlement of employees to annual leave.  Under the heading, “Fair and Just Working Conditions,” it provides that,

1.       Every worker has a right to working conditions which respect his or her health and 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.

There is no dispute between the parties that Mr Crisan was not rostered for holidays and that he did not take holidays when he was employed by EDA Building Services Limited and EDA Fitting Services Limited.  He claims therefore, that he is entitled to compensation for holidays not taken for the duration of his employment from February 11th 2020 until he resigned on July 28th 2003.  The entitlement to annual leave is set out at s.19 of Organisation of Working time Act (“the OWT Act”) and provides that an employee who works full-time is entitled to four weeks’ holidays.

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. 

Mr Crisan was absent from work for two weeks in July 2021 and then for about eight weeks in October that year when he was recovering from surgery.  To bring the treatment of holidays in Ireland into line with the jurisprudence of the CJEU, a new section 19(1A) of the OWT Act changed the law in relation to the accrual of annual leave.  Section 19(1A) 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.”

This insertion of s.19(1A) into the OWT Act means that the absence of Mr Crisan due to illness has no effect on the accrual of his holidays.

Mr Crisan gave evidence that he occasionally had to take time off when his employer had no work.  I consider these periods of unpaid time off as lay-off.  Section 10 of the Second Schedule of the Minimum Notice and Terms of Employment Act 1973, provides that periods of lay-off of less than 26 weeks will count as service.

Compensation for Holidays Not Taken when the Employment Ends

The next issue for consideration is what happens to holidays not taken when an employee resigns or when their employment is terminated.  Simply put, s.23(1)(a) of the OWT Act provides that, when an employee ceases to be employed and they have not received their full entitlement to annual leave, they are entitled to be compensated for that leave.  Section 23(1)(b) provides that the maximum compensation is pay for holidays not taken in the leave year in which the employment is terminated and, if the employment ends in the first half of a year, for holidays not taken in the previous year.  The effect of this provision is to limit the compensation for holidays not taken to the days not taken in the current and previous leave years.

Article 7 of Directive 2003/88 provides that,  

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.

There is no provision here for a limit on the annual leave not taken for which an allowance in lieu may be paid.  However, some conditionality on the right to compensation for accumulated leave is acknowledged at paragraph 65 of ruling of the Court of Justice of the EU (CJEU) in King v Sash Window Workshop Limited[1], where it was held that,

“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 Mr Crisan’s case, his employer did not instruct him to take paid annual leave and when he had time off when there was no work, he wasn’t paid.  The Directive specifically refers to “paid annual leave of at least four weeks” which provides the opportunity to take a break from work to spend time and money on social and family pursuits.

In Max-Planck v Shimizu[2], the CJEU reaffirmed the findings of the Court in previous decisions that national law may impose a limit on an entitlement to annual leave which is not taken when the employee was in a position to take the leave but did not do so.  However, the Court concluded that a national court 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.”

On the same day in November 2018 that Max-Planck was handed down, the CJEU issued its decision in Kreuziger v Land Berlin[3].  Mr Kreuziger was a legal trainee and he didn’t take any holidays in the two years of his traineeship with Land Berlin.  Concluding that national legislation may provide for circumstances in which annual leave not taken may be lost, paragraph 42 of this Judgement set out a condition under which holidays are not lost: 

“…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 of the same Judgement, the CJEU held that the responsibility for ensuring that an employee takes their leave rests with 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.”

In Max-Planck v Shimizu and in Kreuziger v Land Berlin, when the employment of Mr Shimizu and Mr Kreuziger was terminated, their respective employers did not pay them for the holidays they didn’t take outside the reference periods in German labour law.  This is the position being relied upon by Mr Crisan’s former employer, and it has been found to be a breach of Article 7 of the Working Time Directive. 

The jurisprudence to which I have referred points to the importance of the Working Time Directive as an important social statute, with the objective of promoting the safety and health of workers.  Article 7 sets out the entitlement of employees to four weeks’ holidays.  The mandatory nature of this entitlement is underscored by the provision that the leave “may not be replaced by an allowance in lieu.”  The decision in Kreuziger emphasises the requirement of the employer to consult with employees regarding the timing of the leave and to ensure that consideration is given to the need for rest and to manage family responsibilities. 

It follows that, unless an employer can show that every effort has been made to enable an employee to take the paid annual leave to which they are entitled, the loss of the right to such leave at the end of the employment relationship and the failure to pay compensation for annual leave not taken, constitutes a failure to have regard to Article 7(1) and (2) of the Working Time Directive.

Conclusion

In Mr Crisan’s case, I am satisfied that he did not refuse to take his holidays and that his employer never gave him an opportunity to take holidays.  Based on this conclusion, I find that he is entitled to compensation for holidays not taken from the commencement of his employment on February 11th 2020 until he resigned on July 28th 2023.  In accordance with s.19 of the OWT Act, Mr Crisan was entitled to 20 days’ holidays in each leave year.  This is equivalent to 0.385 days for every week.  I find that he is entitled to compensation based on the following calculations:

2020:  February 11th to December 31st: 46 weeks x 0.385 = 18 days

2021:  January 1st to December 31st:  20 days

2022:  January 1st to December 31st:  20 days

2023:  January 1st to July 28th:  30 weeks x 0.385 days = 11.5 days

Total:  69.5 days, which is equivalent to 12 weeks (69.5 ÷ 5)

I decide that this complaint is well founded.  Mr Crisan’s net weekly pay was €568 and I estimate therefore, that his gross weekly pay was €620.  I direct the respondent to pay him compensation of €7,500, equivalent to approximately 12 weeks’ gross pay.  As this is compensation for breach of a statutory right, in accordance with s.192 of the Taxes Consolidation Act 1997, this award is not subject to deductions for PAYE, PRSI or USC.

Compensation for holidays not taken at termination of employment