SECTION 28(1), ORGANISATION OF WORKING TIME ACT, 1997
ROYAL LIVER ASSURANCE LIMITED
(REPRESENTED BY MICHAEL J. KIRRANE SOLICITOR)
- AND -
SERVICES INDUSTRIAL PROFESSIONAL TECHNICAL UNION
Chairman: Mr Duffy
Employer Member: Mr Carberry
Worker Member: Ms Ni Mhurchu
1. Appeal against Rights Commissioner's Decision WT 3413/01/CW - WT3416/01/CW.
2. In December, 2000, the Union served a claim on the Company on behalf of 271 agents under the Organisation of Working Time Act, 1997, for holiday pay and public holiday pay. The Company rejected the claim and the issue was referred to a Rights Commissioner for investigation. It was agreed to process the claim on the basis of six individual test cases. The Rights Commissioner issued his Decision on the 3rd of May, 2001, as follows:
I decide that the complaints are well founded and I require the company to comply with the relevant Sections with effect from the 1st April 1999."
On the 23rd of May, 2001, the Labour Court received a notice of appeal of the Rights Commissioner's Decision from the Company under Section 28(1) of the Organisation of Working Time Act, 1997. The Court heard the appeal on the 31st of August, 2001.
The complaint to which this appeal relates is that the respondent/appellants (the employer) failed to grant the claimants paid annual leave in accordance with Section 19 of the Organisation of Working Time Act 1997 (the Act) and failed to afford them, in respect of public holidays, any of the entitlements specified in Section 21(1) of the Act.
In this appeal the employer accepts that the claimants are its employees and are encompassed by the provisions of the Act. The appeal is based on the contention that the claimants did receive paid annual leave and public holidays by operation of their system of remuneration. In the alternative and without prejudice to that contention, the employer claims that the Rights Commissioner erred in his construction of Section 27(4) of the Act in entertaining a complaint relating to the entire leave year commencing on the 1st April 1999 and ending on 31st March 2001.
The claimants are employed as agents who collect monies due to the employer as assurance premia from individual customers. Apart from some small fixed amounts, their main remuneration is derived from commission of 12.5% paid on the amounts which they collect. It is common case that the claimants do take holidays and do not normally work on Public Holidays. It is also accepted between the parties that the employer makes no specific payments in respect of the time spent on holidays. However, when arrears of premium accruing during those periods are collected the normal commission is paid. Arrangements are in place whereby staff loans are available to the claimants to cover their holiday period which are repaid after the holiday. Thus, it is argued by the employer that the claimants recover the full amount which they would have earned had they worked normally during the time spent on holidays.
This appeal raises two issues for determination by the Court, namely:
1. Can Section 27(4) of the Act be interpreted so as to allow the Rights Commissioner and the Court to investigate the complaints herein, which were presented to the Rights Commissioner on 11th December 2000, in so far as they relate to all annual leave and public holidays falling due in respect of the leave year 1999 – 2000?
2. Can the arrangement whereby the claimants obtain commission on the premia falling due during periods of leave or on public holidays, and which are collected either in advance of the holidays or in arrears after the holidays, be regarded as meeting the claimants’ statutory entitlement to paid annual leave and public holidays?
Section 27(4) of the Act provides as follows:
This provision is, however, qualified by Section 27(5), which provides as follows:
"(4) A rights commissioner shall not entertain a complaint under this section if it is presented to the commissioner after the expiration of the period of 6 months beginning on the date of the contravention to which the complaint relates."
"(5)Notwithstanding subsection (4), a rights commissioner may entertain a complaint under this section presented to him or her after the expiration of the period referred to in subsection (4) (but not later than 12 months after such expiration) if he or she is satisfied that the failure to present the complaint within the period was due to reasonable cause."
In the original hearing the Rights Commissioner was not asked to apply the extension of time allowed by subsection (5). The claimants did, however, make such an application to the Court.
Having considered the submissions of the parties on this point, the Court is not satisfied that the failure to present the complaints within the time limit specified by Section 27(4) was due to reasonable cause. Accordingly, the Court proposes to entertain the complaints herein only in so far as they relate to contraventions of the Act which occurred on or after 11th June 2000.
Date of Contravention to Which the Complaint Relates
In his decision the Rights Commissioner construed Section 27(4) of the Act as allowing him to entertain complaints relating to the alleged failure to grant the full entitlement of annual leave and public holidays falling due in respect of or during the leave year ending on 31st March, 2000.
The employer contended that the Rights Commissioner erred in this construction of the subsection. It argued that the Rights Commissioner should only have taken into account such annual leave and public holidays accruing to the claimants on or after 11th June 2000. For their part, the claimants support the interpretation placed on the subsection by the Rights Commissioner.
Section 19 (1) of the Act entitles the claimants to 4 weeks paid annual leave in respect of each leave year during which they work at least 1,365 hours. Section 20(1) provides that, subject to certain conditions, it is for the employer to determine the time at which annual leave is granted to an employee provided the leave is granted within the leave year to which it relates or, with the consent of the employee, within the 6 months thereafter. A leave year is defined by Section 2(1) as a year beginning on the 1st day of April.
It is clear that the employer’s duty to grant annual leave can be lawfully performed at any time during the leave year to which it relates, or with the consent of the employee, 6 months thereafter. It follows that an infringement of Section 19 of the Act cannot be held to have occurred until that time scale has expired without the paid leave having been granted.
In the present case the latest date on which the employer could have lawfully granted the paid annual leave due to the claimants in respect of the leave year ending on 31st March 2000 was 30th September 2000 (or 29 working days prior to that date so as to ensure that the full leave due could be taken). In the Court's view this was the operative date of the infringement of the Act to which the present complaints relate. Since these complaints were initiated on 11th December 2000, the full amount of annual leave due to the claimants in respect of the period 1st April 1999 to 31st March 2000 can be taken into account.
With regard to the claimants’ entitlements in respect of public holidays occurring in the leave year 1999-2000, the Court is of the view that the same operative date applies to any infringement of the Act as applies in the case of annual leave.
Section 21(1) of the Act provides that, subject to certain exceptions which are not here relevant, an employee shall, in respect of a public holiday, be entitled to which ever one of the following his or her employer determines, namely-
(a) a paid day off on the day,
(b) a paid day off within a month of the day,
(c) an additional day of annual leave,
(d) an additional day’s pay.
Subject to subsections 2 and 3 of this Section (which are not relevant in the present case) it is the prerogative of the employer to elect from amongst the modes of compliance listed in subsection (1). If the employer determines to grant a paid day off on the public holiday, a day off within a month or an additional days pay, that determination would have to be implemented on, or in proximity to, the public holiday. If, however, none of these options are applied, the employer may still comply with the Act by granting the employee an additional days annual leave. That option may be lawfully implemented at any time up to the expiration of the period allowed for the granting of annual leave.
In the Court’s view, an infringement of the Act cannot occur while the opportunity to lawfully comply with the provision in question subsists. It follows that where, as is alleged in the present case, an employer has failed to make a determination pursuant to Section 21(1) of the Act in respect of any public holiday, an infringement of that provision will occur six months after the end of the leave year if, by that time, the employee has not been granted an additional days paid annual leave in respect of each such public holiday.
The Court is, therefore, satisfied that the complaints, in so far as they relate to an alleged infringement of Section 21(1) of the Act in respect of each public holiday which occurred in the leave year 1999 to 2000, can be entertained.
The Right to Paid Annual Leave
In addressing the employer’s contention that the claimants have, in reality, received their entitlements under the Act, it is necessary to consider the nature and scope of the statutory entitlement of workers to paid leave and of the concomitant duty on employers to grant that leave.
While a right to paid annual leave has long been a feature of employment law in Ireland, it is now provided for by Article 7 of Directive 93/104/EC concerning certain aspects of the organisation of working time. Section 19 of the Act gives effect to Article 7 of the Directive and must be interpreted so as to achieve the result envisaged by the Directive.
The nature and scope of the right which Article 7 of the Directive was intended to confer was considered by the ECJ in caseC-173/99, Broadcasting, Entertaining, Cinematographic and Theatre Union (BECTU) v Secretary of State for Trade and Industry,  IRLR 560.In a wide ranging opinion delivered on 8th February 2001, Advocate General Tizzano traced the legislative history of Article 7 and concluded that the right to paid annual leave constitutes a fundamental social right which is characterised in the Directive as an automatic and unconditional right granted to every worker.
The term “paid annual leave” is not defined in the Act or in the Directive. It is, however, a term of common usage in industrial relations and is well understood as meaning a period of rest and relaxation during which a worker is paid his or her normal wages without any obligation to work or provide any service to the employer. In the Court’s view what is required by Article 7 of the Directive and by the Act, is not only that workers receive the requisite leave, but that they be unconditionally and automatically paid their normal weekly rate, specifically in respect of that leave.
In the present case the claimants do not receive any payments from the employer, which are specifically in respect of holidays. It is accepted that they do receive commission on money collected which accrues to the employer during holiday periods. However, it cannot be said that they are thus afforded an automatic and unconditional right to paid leave. Any such payments are made pursuant to their contracts of employment and are in consideration of the service which the claimants provide to the employer in collecting
money either before or after their holidays. They are also conditional on the money due actually being collected.
It is accepted that the claimants do receive leave from their duties on an annual basis although there is no evidence that they receive a full four weeks every year. In that regard the Court notes that whilst the form on which the claimants apply for leave is headed “Annual Leave” what is in fact applied for and granted is leave of absence.
For all of the reasons set out above, the Court cannot accept that the claimants are granted paid annual leave in accordance with the Act.
From the information provided to the Court it appears that the claimants do not work on public holidays and do not receive payments or other benefits specified by Section 21(1) in respect of such holidays. In many cases the collections which they would normally make on the day on which the public holiday occurs are then transferred to what would otherwise be the individual's day off in that week. Thus, the claimants would work the same number of days in a week in which a public holiday occurs, as they would work in any other week.
Having regard to the arrangements currently observed by the employer in respect of public holidays, the Court is not satisfied that the employer has complied with Section 21(1) of the Act.
The Court determines that the complaints herein are well founded and that the decision of the Rights Commissioner be affirmed.
Before the Rights Commissioner and in the appeal to the Court the parties did not offer any evidence as to the amounts claimed by individual claimants. Rather, the Court was asked to adjudicate on the principles to be applied in determining their entitlements, if any. On that basis the Court determines that each of the claimants is entitled to compensation in respect of 20 days annual leave in the leave year commencing on 1st April 1999 and a further 9 days annual leave in respect of public holidays which occurred in the same period. The rate of payment should be calculated by reference to The Organisation of Working Time (Determination of Pay for Holidays) Regulations 1997. In the case of annual leave the relevant provisions are at Regulation 3(3) (a) or (b). In the case of public holidays Regulation 5(1)(b) or 5(2)(b) contains the appropriate formula.
If the parties cannot agree on the amount due to any individual they may return to the Court.
Signed on behalf of the Labour Court
8th October, 2001______________________
Enquiries concerning this Determination should be addressed to Dympna Greene, Court Secretary.