Entitlement to Accrued Annual Leave Upon Termination in Ireland

In Ireland, under the Organisation of Working Time Act 1997, employees are entitled to receive payment for any accrued but untaken annual leave upon the termination of their employment, whether it ends voluntarily or involuntarily. The entitlement is based on the amount of time the employee has worked during the leave year. If an employee departs before using all their entitled annual leave, they must be compensated for the unused leave days at the same rate they would have received had they taken the leave.

Employers are required to ensure that such payments are made, including any accrued leave that may have been carried over from previous years. Failing to compensate employees for their accrued annual leave upon termination can lead to complaints being filed with the Workplace Relations Commission (WRC), potentially resulting in legal action for breach of employment rights. It is crucial for employers to correctly calculate and pay out these entitlements to comply with Irish labour laws.

Case Study: Dispute Over Payment Timing for Accrued Leave at an IT company

In a case involving an employee of an IT services & consulting company, who held the position of Platform Experience New Associate, a complaint was raised regarding the timing of payment for outstanding accrued holiday entitlement. The complainant argued that the payment should have been made immediately upon termination, based on his experiences with previous employers who settled such entitlements promptly.

The company explained that its standard procedure, due to the vast number of employees managed globally, involves processing payments for outstanding annual leave in the payroll cycle of the month following an employee's departure. In this instance, the complainant resigned on July 6, 2022, and received payment for his accrued annual leave on August 26, 2022.

The adjudicator concluded that the Organisation of Working Time Act 1997 does not specify an exact timeframe for the payment of outstanding annual leave. The company's practice of handling these payments in the payroll cycle following termination was deemed acceptable under the Act. As a result, the complaint was dismissed, with the adjudicator finding no breach of the Act since the respondent fulfilled its obligations by paying the due amount in accordance with its established procedure.