28 Nov, 2021

Is Your Business facing an Annual Leave Backlog?

Reluctance to take holidays due to Covid-19 travel restrictions has left many businesses with an annual leave backlog writes Marcie Green our HR Services Manager.

Many employees found it difficult to plan holidays or had to cancel their plans due to Covid-19 restrictions this year. For employers, the question now arises as to what to do where employees have not used their full annual leave entitlement. Whatever you decide, keep in mind that it is important to comply with employment legislation.

Entitlement to Annual Leave

The Organisation of Working Time Act 1997 affords employees the right to paid annual leave regardless of whether they are full time, part-time, temporary, or casual workers. This entitlement begins to accrue as soon as an employee starts work and is calculated as follows:

  • Four working weeks in a leave year where the employee works at least 1,365 hours (unless the employee changes employment during the year),

  • One-third of a working week per calendar month where the employee works at least 117 hours,

  • The equivalent of 8% of hours worked in a leave year (subject to a maximum of four working weeks).

Employers must ensure that their employees receive their annual leave entitlement and can decide when an employee takes annual leave.

Frequently asked questions

Can I set the amount of annual leave my employee gets in a leave year?

While you cannot change an employee’s statutory annual leave entitlement, you can agree to provide additional annual leave (‘contractual annual leave’).

Can I pay my employee in lieu of annual leave?

While your business can set its own policy for payment of any unused contractual annual leave, employment legislation only permits payment for unused statutory annual leave if an employee’s contract is terminated.

Can my employee carry forward annual leave into the following year?

While you can agree to allow an employee carry over unused annual leave into the following leave year, you should specify that it must be taken within the first six months of the year.

Does an employee continue to accrue annual leave during periods of sick leave or protected leave?

Employees on protected leave such as maternity, paternity, adoptive, and parental leave, continue to accrue annual leave. Employees on carers leave accrue annual leave for the first 13 weeks. Employees on sick leave continue to accrue annual leave while they are medically certified.

Need help?

Many employers find that managing annual leave entitlements can be stressful and time consuming to manage. Remember, help is always available from ifac's HR & Payroll Services Team. If you have questions or concerns, please get in touch.