First published: April 16th, 2019
Last updated: March 3rd, 2022
Annual leave in Ireland is part of the employer and employee relationship — you can explain your business’s policy in your employment contract.
However, it’s quite a complex issue. In this guide, we explain all you need to know about the Irish employment laws and other essential details behind this issue.
What is annual leave?
So, what is annual leave?
Annual leave is where an employee takes paid time off from work to rest and recuperate. So, having an annual leave policy is good business practice as it helps you to manage employee time off.
All employees have a paid annual leave entitlement in Ireland. Paid annual leave was in fact introduced under EU law to protect the workplace employee health and safety.
Who's entitled to paid annual leave?
You have a statutory obligation to provide paid annual leave to all employees under the Organisation of Working Time Act 1997 (OWTA). It applies to all employees under a:
- Contract of employment
- Contract of apprenticeship
- Public sector employees (save for the Gardaí and the Defence Forces)
- Those from an employment agency
Do all employees receive the same annual leave entitlement?
No. You can calculate the amount of paid annual leave an employee receives by checking the amount of work they complete during a leave year.
So, how do you calculate annual leave? You can work out the statutory minimum paid annual leave using these calculations:
- An employee who works at least 1,365 hours in a year receives the full entitlement of four working weeks of annual leave.
- An employee who works at least 117 hours in a month receives one-third of a working week for each month in the leave year.
- Part-time employees have entitlement to 8% of the hours worked in a full leave year (but subject to a maximum of four working weeks).
Also, an employee who works for eight months or more in the annual leave year has an entitlement to an unbroken period of two weeks’ annual leave.
An employee’s contractual entitlement
You can’t offer annual leave entitlements below what’s set out in the OWTA. However, you can provide for a greater amount under your employment contract.
If the contractual entitlement to annual leave is greater than the statutory minimum, you must provide the contractual amount to avoid claims for breach of contract.
If you operate a discretionary contractual annual leave entitlement over the statutory minimum, you must ensure annual leave entitlements for part-time staff members are pro-rated to the amount full-time employees have.
But can an employer cancel annual leave? Yes, if you provide the right notice to your employee. You need a justifiable reason to do so. Cancelling annual leave is likely to upset employees and should only be a last resort.
Similarly, can an employer refuse annual leave? Yes, employers have discretion to decide when an employee takes their annual leave, but you again need a justifiable reason to reject the request.
Does annual leave accrue on sick leave?
Yes, employees continue to accrue annual leave while they're absent on medically certified sick leave. So, the accrual of annual leave during sick leave is a legal entitlement.
However, the rules for annual leave and long-term sickness aren’t quite the same. Employees absent on long-term sick leave — spanning more than one leave year — can’t continue to accrue leave indefinitely.
And the amount accrued in any given leave year expires 15 months after the relevant year comes to an end.
But can an employee use annual leave when sick? In theory, yes. But whether this satisfies the requirement that annual leave is used for rest and recreation is questionable.
Also, if staff are not taking annual leave, you must ensure they take their statutory four weeks’ paid leave during each leave year. This is why it’s important to remind staff to take holiday time or have a policy on carrying over untaken contractual leave.
Holiday carryover rules and timing
An employee must take their statutory minimum annual leave entitlements within the business’ annual leave year — or within six months of the next leave year.
Many businesses have a policy stipulating all employees must take all their annual leave within a certain time.
The legal obligation is on you to ensure employees take all of their statutory minimum holiday entitlement within this period.
You’ll need to agree on any days carried forward with the employee. They must take these within the first six months of the new holiday leave year.
Ultimately, you determine the timing of the holiday, but you must also take account of the need for employees to have rest, recreation, and family time.
You must ensure employees take their minimum entitlement. It's a health & safety requirement, so the burden is on you to ensure employees take their annual leave.
Payment in lieu of annual leave
You can’t pay employees in lieu of providing them with their statutory minimum annual leave time off.
That’s except upon termination of their employment. You can set company-specific rules about pay in lieu of any contractual leave as long as it doesn't apply to the statutory minimum paid leave entitlement.
How does holiday pay work in Ireland?
All employees have an entitlement to holiday pay. And they receive this:
- In advance of the employee taking their leave.
- At a rate equivalent to the employee’s normal weekly pay.
- Inclusive of compensation for board and lodgings where the employee receives it during their employment.
If an employee works on a time-rate, fixed-rate, or salary then their normal weekly pay is equal to the weekly remuneration they receive when they last worked before the time off.
For employees who work on commission or on a piece-rate, calculate the normal weekly rate as the average weekly pay over the 13-week period preceding the annual leave.
Include the following as time worked when calculating an employee’s holiday entitlement:
- Annual leave
- Maternity leave
- Parental leave
- Force majeure leave
- Adoptive leave
So, yes, annual leave whilst on maternity leave continues to accrue for female staff’s statutory 52 weeks' maternity leave.
While Irish employment law states that you’re not obliged to include overtime pay received in calculating an employee’s holiday pay entitlement in Ireland, you’ll need to include the pay when it’s regular and rostered.
However, it’s not acceptable to pay an employee a “composite rate” — this is where you provide their holiday pay in segments through their weekly, fortnightly, or monthly pay.
You should keep records of annual holidays and pay for three years to ensure you’re in a position to defend any claims by employees.
Public and Church holidays in Ireland
Are Bank Holidays included in annual leave? Yes. You have a statutory obligation to remunerate employees on bank holidays.
But where a public holiday falls on a Sunday, you have the legal right to transfer the holiday to the next working weekday.
You can also, with the right notice, substitute any day of public holiday with the Church holiday falling immediately before — or after — the public holiday.
Employees who don’t receive payment for public holidays
This can happen under the following circumstances:
- In the case of part-timers if they don’t work 40 hours in the previous five weeks.
- If the employee is absent for more than 52 weeks due to an occupational illness or injury.
- If the employee is absent for more than 26 weeks due to non-occupational illness or injury.
- A period of lay-off that exceeds 13 weeks. An absence due to strike. Where the employee is on health & safety leave.
Accrual of public holidays
All full-time employees have entitlement to remuneration for the public holiday or substituted Church holiday, irrespective of their length of service.
Part-time employees also receive remuneration for the public holiday or substituted Church holiday where they have worked at least 40 hours in the five weeks preceding the holiday.
An employee will begin to accrue public holiday entitlements from the moment they start working for you.
They’ll continue to accrue public holiday entitlements during the following periods:
- Maternity leave and additional maternity leave
- Adoptive leave and additional adoptive leave
- Parental leave
- Force Majeure leave
- The first 13 weeks of carer’s leave
- Annual leave
- Time spent on jury service
- The first 13 weeks of any absence authorised by the employer (e.g., career break)
- The first 13 weeks of any period of a temporary lay-of
Non-accrual of public holiday entitlements
An employee won’t receive public holiday entitlements where:
- In the case of part-time employees, if they haven’t worked at least 40 hours in the five weeks preceding the holiday.
- If the employee has been absent from work for more than 52 weeks due to an occupational illness or injury.
- If the employee has been absent from work for more than 26 weeks due to a non-occupational illness or injury.
- If the employee has been absent from work because of temporary lay-off for more than 13 weeks.
- If the employee is absent due to strike action.
- If the employee is on any period of health & safety leave.
Public/Church holiday remuneration
You can work out the remuneration for these types of holidays in four ways:
- A paid day off on the relevant holiday
- A paid day off within one month
- An extra day’s annual leave
- An extra day’s pay
Employees who work on public holidays have an entitlement to receive pay at their basic rate for any hours they work (unless their terms and conditions provide for a higher rate of pay) as well as benefiting from the public holiday by way of one of the methods outlined above.
You can choose between any of the four methods. You’ll typically provide an additional day’s pay or a paid day off. Below, we explain how to perform the calculations.
Variable hour, fixed-rate, and salaried employees
There are two parts to this to follow:
- If the public/Church holiday falls on a day the employee has worked, or would normally have worked, the employee has entitlement to such payment that's equivalent to the hours they worked (excluding overtime) on their last working day before the holiday.
- If the public/Church holiday falls on a day the employee didn't work, and wouldn’t normally have worked, the employee has entitlement to such payment that’s equivalent to one-fifth of the hours they worked (excluding overtime) on their last normal working week before the holiday.
Piece rate and commission-based employees
There are two parts to this to follow:
- If the public/Church holiday falls on a day the employee has worked, or would normally work, the employee has an entitlement to payment that’s equivalent to the average daily rate of pay (excluding overtime) they received in the 13-week period ending before the holiday.
- If the public/Church holiday falls on a day the employee didn’t work and the employee wouldn’t normally work on that day, they have an entitlement to remuneration equivalent to one-fifth of their average weekly pay over the 13-week period prior to the public/Church holiday.
Need expert guidance on how to calculate holiday entitlement in Ireland?
If you would like further advice on annual leave and how to calculate holiday pay in Ireland, our HR consultants are available day and night. Call us on 0818 923 923.