Absence Management

Irish Employers Hit Hard: Sick Leave Doesn't Stop Public Holiday Pay and Annual Leave Accrual

In the Republic of Ireland, under the Organisation of Working Time Act 1997, employees who are absent from work due to illness are entitled to be paid for a public holiday if it falls during their absence. Regarding the accumulation of annual leave entitlement, an employee who is absent from work due to a GP-certified illness will continue to accumulate their statutory annual leave entitlement as if they were working.

While employees are not entitled to receive their regular salary during sickness absence, many employers mistakenly assume that this means they do not have to pay anything else, this is not the case in the Republic of Ireland. Employers must pay for public holidays and accrued annual leave when the employee returns to work, which can be financially challenging for small businesses.

The key takeaway is to manage absences regularly and not assume that employees on sick leave are not accumulating other statutory leave entitlements.

Public Holidays

Entitlements in respect of public holidays are governed by Section 21 of the Organisation of Working Time Act 1997 which states that employees in the Republic of Ireland are entitled to nine statutory public holidays. Good Friday and Christmas Eve are not public holidays, and there is no legal entitlement to be paid for these days, which are Bank holidays and not public holidays.

All full-time employees automatically receive public holiday benefits. Part-time and casual employees who have worked at least 40 hours in the five weeks leading up to the day before the public holiday are also entitled to these benefits.

If an employee is out sick when a public holiday occurs, they are entitled to be paid for that public holiday.

Employers can choose from the following entitlements for each public holiday:

      a) a paid day off on the public holiday,

      b) a paid day off within a month,

      c) an extra day’s annual leave, or an extra day’s pay.

If an employer does not respond to an employee’s request regarding the payment for a public holiday entitlement within 14 days of the holiday, the employee is automatically entitled to a paid day off in the pay run immediately after the public holiday.

Annual Leave

Since August 1, 2015, employees in the Republic of Ireland who are absent from work due to medically certified illness have been entitled to accrue annual leave as if they were working. The key term here is “certified.” Only certified sick leave counts towards the accrual of annual leave; uncertified sick leave does not qualify.

However, whilst employees continue to build up annual leave entitlement whilst they are off sick, annual leave does not continue to accrue indefinitely during periods of sick leave.

Section 86 of the Workplace Relations Act 2015 inserted a new section into the Organisation of Working Time Act 1997 as follows.

    –  “19(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 [at work]”

Section 20(c) of the Organisation of Working Time Act 1997 as amended provides that where the employee –

   –   is, due to illness, unable to take all or any part of his or her annual leave during that leave year or the 6 months thereafter, and

   –   has provided a certificate of a registered medical practitioner in respect of that illness to his or her employer.

   –   then the leave must be taken within the period of 15 months after the end of that leave year.

This last point is very important as it stops an employee from carrying over endless amounts of accrued sick leave entitlements from year to year if they are on Long Term Absence. This means that an employee can only accrue or carry over annual leave entitlement accrued whilst on certified sick leave for 15 months following the end of the year in which it was accrued.

For example, if an employee has been out sick for a long time… say since January 2021, and it is now December 2023, and they want to come back to work.

If they comply with the rules, then they will accrue annual leave for all of 2021 and for 3 months into 2022 – up to March of 2022 (15 Months).

They will now only be entitled to accrued leave for the period after March 2022 for another period of 15 months (which brings them up to June 2024). 

Calculate annual leave entitlement

There are several ways to calculate an employee’s right to annual leave, however many employers use the percentage of hours calculation to calculate annual leave entitlement. Simply calculate 8% of the hours worked in the leave year, subject to a maximum of 4 working weeks.

Payment of Public Leave entitlement and Annual Leave

Most employers will pay the Public leave entitlement in the payroll immediately after the public holiday, and this is recommended. However, the payment of accrued annual leave does not need to be paid on an ongoing basis and can build up whilst the employee stays out sick. The accrual of annual leave means that an employee could return to work with the legal right to be paid for annual leave (holidays) during their first few weeks/months back at work – and it must be paid.

Long Term Absence Management

If the absence lasts longer than the initial medical certificate (usually 5-10 days), the employee must submit weekly or monthly certificates to the manager. Regular contact during the absence is encouraged to maintain the employee’s connection to the workplace. However, this contact should be limited to essential needs, such as ensuring that regular certificates are submitted.

When the absence extends beyond 3–4 months, the employer is in a better position to take a more detailed look at the situation. This may involve requesting a face-to-face meeting to discuss the likelihood of the employee’s return to work.

The employer should arrange for a consultation with an Occupational Physician (OP), paid for by the company. The employee should be informed that the OP will write a report, which will be shared with both parties. This report should provide the company with a clear understanding of the circumstances.

Potential accommodation, such as a period of reduced working hours, lighter duties, support in managing a grievance, or an alternative role, should be explored.

If the OP recommends a further period of absence, the company must consider whether this period is excessive and constitutes a frustration of the employment contract, or if alternative arrangements can be made to facilitate the employee’s return to work. The company may consider temporary and phased options to help the employee gradually resume their normal role and hours over a 1 to 3-month period, or as directed by the doctor.

Close up on a file tab with the word employees plus a note with the text sick leaves, blur effect at the background. Concept image for illustration of sick leave entitlement.

If, after exploring alternative options, the contract is found to be frustrated, each party is discharged from future obligations under the contract, and neither party may sue for breach. If it is determined that the employee cannot return to work and no alternative roles are available, the employee can be terminated under Section 6 (4) of the Unfair Dismissals Act 1977, as they are unable to perform the role for which they were employed.

Key Learning Points

Certified Sick Leave: Ensure that employees provide regular medical certificates to ensure accurate recording of statutory accrual of annual leave entitlements during periods of illness.

Regular Contact: Maintain necessary communication with the employee to keep them connected to the workplace.

Long-Term Absence Review: After 3-4 months of absence, conduct a detailed review and consider a face-to-face meeting.

Occupational Physician Consultation: Arrange and pay for a consultation with an OP to understand the employee’s situation better.

Explore Accommodations: Consider options such as reduced hours, lighter duties, or alternative roles to facilitate the employee’s return.

Contract Frustration: Be aware of the implications of contract frustration and the procedures for termination if the employee cannot return to work.

Record all leave: Make sure procedures are in place for logging and tracking periods of certified and uncertified sickness absence. Carry out an annual leave audit at the end of each year, ensuring certified and uncertified sickness is considered.

If you have a question about this article/blog or are interested in knowing more, get in touch: rayhoare@careerdynamics.ie