As a business owner, your employees work hard throughout the year. So, they deserve some paid time off to relax and maybe go on holiday - this is known as annual leave.
It's vital you understand how much leave your employees are entitled to, and your other legal obligations. Failure to provide your workers with their statutory annual leave entitlement is against employment law. This could lead to claims being raised against you to an employment tribunal.
In this guide, we'll discuss annual leave entitlements, how to calculate them, and if your employees are entitled to holiday pay.
What is annual leave?
Annual leave is paid time off provided to employees by their employer. It is typically used for holidays, spending time with family, or simply relaxing from work.
You have a legal obligation to provide your employees with annual leave. Failure to do so can lead to claims being raised against you at an employment tribunal.
Who is entitled to annual leave?
Under the Organisation of Working Time Act 1997 (OWTA), all employees working under an employment contract are entitled to paid annual leave.
Alongside this, the following employees are also entitled to statutory annual leave:
- Apprentices.
- Public sector employees.
- Workers employed through an employment agency.
Now you understand who is entitled to receive annual leave, you need to understand how much leave your employees can take.
How much annual leave are employees entitled to?
The Working Time Act outlines the statutory annual leave entitlement for employees in Ireland. Under the act, most employees are entitled to four weeks paid annual leave each leave year.
If an employee works for eight months or more in an annual leave year, they are entitled to an unbroken period of two weeks leave.
What's an annual leave year?
An annual leave year is the period in which holiday entitlement can be taken. The statutory annual leave year in Ireland is 1st April to 31st March. However as an employer, you can decide when the annual leave begins and ends in your company.
You must make clear in your employment contract which period your company uses.
Are public holidays included in annual leave entitlement?
No, the ten public holidays in Ireland aren't included in the annual leave entitlement. The public holidays in Ireland are:
- January 1st.
- February 1st or the first Monday of the month (this is new for 2023).
- St Patrick's Day (March 17th).
- Easter Monday.
- The first Monday in May.
- The first Monday in June.
- The first Monday in August.
- The last Monday in October.
- Christmas Day.
- (26th December).
If an employee has to work during a public holiday, you must provide them with an additional day of annual leave or an additional day's pay.
Are church holidays included in annual leave entitlement?
No, the six church holidays in Ireland aren't included in your employee's entitlement. They are:
- January 6th.
- Ascension Thursday.
- The Feast of Corpus Christi.
- August 15th.
- November 1st.
- December 8th.
How to calculate annual leave entitlements
There are two ways in which you can calculate annual leave. It's done via one of the following methods:
- An employee who has worked at least 1,365 hours in a year receives the full four-week annual leave entitlement.
- An employee who has worked for at least 117 hours in a calendar month receives one-third of a working week for each month in the leave year.
- Find 8% of the hours worked by staff in the leave year. However, if this figure comes to more than four working weeks, you are still only required to provide four weeks of paid annual leave.
When calculating annual leave you should include all hours worked. This includes time spent on annual leave, maternity leave, parental leave, force majeure leave and, adoptive leave.
Whichever method you choose to use, you must calculate annual leave correctly.
Are part-time employees entitled to annual leave?
Yes, part-time employees are entitled to annual leave. They receive 8% of the hours worked in a full leave year (this is subject to a maximum of four working weeks).
As an employer, you must ensure your employees receive their annual leave entitlement. Failure to do so can lead to claims being raised against you at an employment tribunal.
Are all employees entitled to holiday pay?
All employees are entitled to holiday pay. However, it must be paid in advance of the employee taking their leave.
You must be aware of how much holiday pay is in Ireland. Failure to pay your staff correctly can lead to them raising claims against you.
How much is holiday pay?
In Ireland, holiday pay is the employee's normal weekly rate (their average weekly pay). This pay must also include any regular overtime or regular bonus allowance.
As an employer, you're not legally obliged to include overtime in an employee's holiday pay. However if the overtime is regular and on the roster, it must be included.
For employees who work on commission or on a piece rate, you need to calculate their weekly rate correctly. This is done over the 13 weeks before the annual leave.
Can an employee be paid for unused annual leave?
An employee can be paid for unused annual leave if they leave their job. Under the Organisation of Working Time Act, employees can only be paid for untaken leave if the employment relationship is terminated, this is known as payment in lieu.
You should always try and encourage your employees to take their annual leave entitlements. There are a range of benefits in doing so, such as allowing them to relax and switch off from work.
Can employers force employees to take annual leave?
Yes, employers can force their employees to take annual leave. However, you should avoid doing this as much as possible. If an employee feels you're constantly forcing them to take their annual leave, this may lead to unhappiness.
However, you may need your employees to take their annual leave at certain times throughout the year. For example, before a busy period such as Christmas.
Do employees accrue annual leave whilst on sick leave?
Yes, if an employee is on sick leave their annual leave entitlement continues to build up. However, the employee should provide you with a medical certificate.
You cannot make your employees take annual leave whilst they are on certified sick leave. If they provide you with a certificate, their sick days do not count as annual leave.
As well as sick leave, employee's annual leave builds up during the following periods:
- Maternity leave.
- Adoptive leave.
- Parental leave.
- Force Majeure leave.
- The first 13 weeks of carer's leave.
- Time spent on jury service.
- The first 13 weeks of any authorised absences (for example a career break).
- The first 13 weeks of a temporary lay-off.
Can you carry over annual leave until the following year?
Yes, if an employee is on long-term sick leave meaning they can't take their annual leave - it can be carried over. This was following changes being made to the Workplace Relations Act 2015.
The leave can be carried over for up to 15 months after the year it was earned. If the employee leaves their role within the 15 months, they should be paid for the unused leave.
How to request annual leave
You should make it clear in your employment contracts or employee handbook how employees should request annual leave. You should include a clear and concise annual leave policy.
When creating the policy, you must include the following:
- Who the request should be made to. For example, their line manager or another senior member of staff.
- How much notice must be given before making an annual leave request
- The maximum amount of annual leave that can be taken at one time.
Can employers refuse annual leave?
Yes, employers can refuse a leave request from an employee. However, they must take into consideration their family responsibilities.
You may have to refuse an annual leave request for a number of reasons, such as being low-staffed. You should include the reasons why you may refuse requests within your annual leave policy.
Can an employer increase annual leave entitlements?
Many employers choose to provide their employees with a chance to increase annual leave above the statutory entitlement. These are usually through performance-based achievements.
For example, hitting a certain sales target within the first quarter may lead to a greater entitlement of annual leave.
Get expert advice on annual leave from Peninsula
Your employees work hard throughout the year. So, annual leave is their chance to relax and switch off from work for a few days.
You need to be aware of how much annual leave your workers are entitled to. Failure to provide your employees with the correct amount is against the law and could lead to claims being raised against you.
Peninsula offers 24/7 HR advice which is available 365 days a year. Want to find out more? Contact us on 0818 923923 and book a free consultation with one of our HR consultants.
