SECTION 28(1), ORGANISATION OF WORKING TIME ACT, 1997
CEMENTATION SKANSKA (FORMERLY KVAERNER CEMENTATION) LIMITED
- AND -
Chairman: Mr Duffy
Employer Member: Mr Grier
Worker Member: Mr O'Neill
1. Appeal of Rights Commissioner's decision WT5919/01/MR
2. The worker claims that he did not receive any holiday/public holiday pay while employed by the Company. The Company states that the claimant was paid holiday pay and public holiday pay under revised contracts of employment which applied from 1st January, 2001.
The worker referred a claim to the Rights Commissioner service on the 6th September, 2001. The worker states that the reason he did not make a claim within the 6 months as specified in Section 27 (4) of the Organisation of Working Time Act, 1997, (the Act) was that he was waiting the results of a test case taken by a fellow employee.
The Rights Commissioner's Decision issued on the 31st December, 2002 as follows:
"In accordance with Section 27 of the Act, I hereby declare that this complaint is out of time."
The worker appealed the Rights Commissioner's Decision on the 23rd January, 2003, in accordance with Section 28(1) of the Organisation of Working Time Act, 1997. The Company's case is that the worker's claim is out of time. A Labour Court hearing took place on the 22nd April, 2003. The following is the Court's Determination:
In this case the respondent made no defence to the claim other than to contend that the complaint was presented out of time.
The factual background to this case, as admitted or as found by the Court, is as follows:
The claimant was employed by the respondent from 1st November 1998 until 28th September 2001. In common with other employees of the respondent he was initially employed on a contract of employment which purported to incorporate an element in his basic pay to cover payment in respect of annual leave and public holidays. On or about January 2000 an employee of the respondent, Mr Martin Treacy, referred a complaint to a Rights Commissioner, pursuant to section 27 of the Organisation of Working Time Act 1997 (the Act), in which he sought to challenge the validity of these arrangements having regard to the provisions of the Act.
By a decision dated 14th April 2000 the Rights Commissioner held with the claimant in that case and directed that he be paid in respect of the relevant periods of annual leave and public holidays. The respondent appealed that decision to the Court. By Determination DWT017, issued on 31st January 2001, the Court dismissed the appeal and affirmed the decision of the Rights Commissioner. In that Determination the Court held, inter alia, that the impugned contractual term was rendered void by the combined effect of section 37 of the Act and Article 7(2) of Directive 93/104/EC on the Organisation of Working Time.
In April 2001 the respondent issued amended contracts of employment to its employees, including the claimant herein, which conformed to the requirements of the Act in respect to holiday entitlements. However, the amended terms were expressly limited in their application to the period from the 1st January 2001 onwards. The contract did provide that the leave year for the purpose of granting leave would be the period specified in section 2(1) of the Act, namely, a period commencing on 1st April in any year and terminating on 31st March in the following year.
On 6th September 2001 the claimant presented a complaint pursuant to section 27 of the Act claiming redress in respect of alleged infringements of his statutory rights in relation to annual leave and public holidays. The complaint was heard by the Rights Commissioner on 1st August 2002.
In his decision issued on 31st December 2002, the Rights Commissioner took the view that the complaint before him was presented outside the time limit specified in section 27(4) of the Act. The Rights Commissioner further held against applying the extended limitation period provided for at section 27(5) of the Act. Accordingly, the Rights Commissioner declined to entertain the complaint. The claimant appealed to this Court.
Application of the Time–Limit.
The respondent contended that since the contract issued to the claimant in April 2001 provided for compliance with the Act from 1st January 2001, the contraventions of which he complains must relate to a period prior to that date. Consequently, they say, the complaint was made out side the time limit prescribed by section 27(4) of the Act.
It is now clear that the limitation period prescribed at section 27(4) of the Act starts to run from the date on which the contravention complained of actually occurs. This was made clear by the High Court inRoyal Liver Assurance Limited v Mackin & Others High Court Unreported Lavin J 15th November 2002.The rationale of that decision appears to be that where an employee is granted unpaid annual leave, and brings a complaint seeking payment for that leave in accordance with the Act (as was the nature of the complaint in the Royal Liver case) the limitation period runs from the date on which the payment should have been made.
However in the instant case the complaint predominatly relates to a failure of the respondent to provide the claimant with his full statutory entitlement to annual leave rather than a failure to pay for such leave. The respondent’s contention that the complaint in that regard is out of time appears to be based on the proposition that the revised conditions of employment issued in April 2001 created a new reference period for holiday purposes commencing on 1st January 2001.
The Court cannot accept that proposition. In advancing that line of argument the respondent is seeking to rely on the strict application of the Act in relation to the limitation period while at the same time seeking to depart from it in relation to the statutory time frame to which the limitation period should be applied.
Section 20 of the Act requires that the leave be granted during the currency of the leave year (except where there is express agreement to an extension). A leave year is defined by section 2(1) as a year commencing on 1st April. The claimant’s contract of employment further confirms that the leave year operated by the respondent is the same as that prescribed by statute. The timing of annual leave is, subject to certain qualifications set forth at section 20(1)(a), (b) and (c) of the Act, a matter for the employer and an employee has no general right to insist on holidays at any particular time during the leave year.
Against that background it appears to the Court that where a complaint relates to the failure of an employer to provide an employee with annual leave a cause of action accrues at the end of the relevant leave year (or possibly a number of working days earlier equal to the outstanding leave) in which the leave should have been given. It is from then that the limitation period starts to run.
On this construction the complaint herein, in so far as it relates to the failure of the respondent to provide the claimant with 20 days annual leave in the leave year ending 31st March 2001, is not out of time.
The Scope of the Complaint.
The complaint herein relates to alleged continuing contraventions of the Act extending over the entire duration of the claimant's employment with the respondent. Based on the date on which the complaint was presented, section 27(4) of the Act operates, subject to section 27(5), so as to place outside the jurisdiction of the Court all contraventions which occurred before 7th March 2001.
However, section 27(5) of the Act provides discretion to entertain complaints, which are otherwise out of time, in respect of contraventions of the Act which occurred up to 18 months before the date of complaint. That discretion is, however, only exercisable where it is first established that the failure to present the complaint within the 6-month time limit was due to reasonable cause.
Extension of the Time Limit.
Section 27(5) of the Act provides as follows: -
- “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 of such expiration) if he or she is satisfied that the failure to present the complaint within that period was due to reasonable cause”.
It is noted that the standard required by this subsection is that of “reasonable cause”. This may be contrasted with the higher standard of “exceptional circumstances preventing the making of the claim” which is provided for in other employment related statutes. The Act gives no guidance as to the type of circumstances that can constitute reasonable cause and it would appear to be a matter of fact to be decided by the Rights Commissioner (and by extension the Court on appeal) in each individual case.
It is the Court's view that in considering if reasonable cause exists, it is for the claimant to show that there are reasons which both explain the delay and afford an excuse for the delay. The explanation must be reasonable, that is to say it must make sense, be agreeable to reason and not be irrational or absurd. In the context in which the expression reasonable cause appears in the statute it suggests an objective standard, but it must be applied to the facts and circumstances known to the claimant at the material time. The claimant’s failure to present the claim within the six-month time limit must have been due to the reasonable cause relied upon. Hence there must be a causal link between the circumstances cited and the delay and the claimant should satisfy the Court, as a matter of probability, that had those circumstances not been present he would have initiated the claim in time.
The length of the delay should be taken into account. A short delay may require only a slight explanation whereas a long delay may require more cogent reasons. Where reasonable cause is shown the Court must still consider if it is appropriate in the circumstances to exercise its discretion in favour of granting an extension of time. The Court should consider if the respondent has suffered prejudice by the delay and should also consider if the claimant has a good arguable case.
Has the Claimant shown Reasonable Cause?
The claimant told the Court that the question of holiday entitlements became a live issue amongst the respondent’s workforce after the decision of the Rights Commissioner in Mr Treacy’s case. The claimant became aware that other employees had discussed the matter with Mr Steve Barber and Mr Mark Sanky (both of whom are managers with the respondent) and had been advised that Mr Treacy’s case was a test case and that when this was finally determined the outcome would be applied to all employees.
In April 2001 the claimant was presented with a new contract, which provided for paid holidays with retrospective effect to 1st January 2001. However the respondent was still refusing to pay for holidays prior to that date. The claimant said that he became aware that a number of his colleagues had made complaints under the Act in respect of the period prior to 1st January 2001. He told the Court that he contacted the offices of the Labour Relations Commission with a view to making a similar complaint. He received advice which he understood to be that he should await the outcome of the cases already referred.
The respondent denied that they regarded Mr Treacy’s case as a test case or that the claimant had been told that his holiday entitlements would be determined by its outcome. Mr Barber did give evidence to the Court in which he said that he believed that the outcome of the Treacy case would affect other employees and that he may have so indicated to the claimant. He did emphasise that this was a personal view and that he was not authorised by the company to give any such assurances to employees nor did he purport to do so. Mr Sanky did not give evidence.
The company accepted that it was not prejudiced in its defence by the delay in the presentation of the claim.
Conclusions of the Court.
The Court is satisfied that when Mr Treacy succeeded in his claim before the Rights Commissioner, his colleagues, including the claimant, would have pursued similar claims had they not been deflected from so doing by the belief that the final outcome of that case would be of general application.
All parties viewed Mr Treacy’s case as a test case in the sense that it would decide whether the respondent could fulfil its statutory obligations under the Act by incorporating an element in basic pay to cover holidays. The Court is satisfied that this view was held by some members of management and was conveyed to the workforce including the claimant.
Whilst the appeal in Mr Treacy’s case was pending, it was perfectly reasonable for the claimant to suppose that the respondent would comply with the law when its import was finally decided. Thereafter, there was confusion amongst employees, including the claimant, as to whether or not it was necessary for them to make individual claims under the Act or whether a number of cases then in progress would decided the matter. The Court is further satisfied that the claimant was not to blame for this confusion.
Finally, the Court notes that the claimant did not have the benefit of independent professional advice in relation to his rights or on the procedures for the making of complaints under the Act.
In all the circumstance of the case the Court is satisfied that in respect of those contraventions of the Act which occurred up to 12 months after the expiry of the time limit at section 27(4), reasonable cause has been shown for the claimants failure to present the complaint within that time limit. The Court is further satisfied that the respondent has not suffered any prejudice by reason of that delay and that the claimant has a good arguable case which ought be heard.
The Court therefore determined to entertain all complaints appertaining to contraventions of the Act alleged to have occurred on or after 8th March 2000 (hereafter the relevant period).
The Claimant’s Holiday Record.
The respondent’s records show that the claimant took annual leave and Public Holidays in the relevant period as follows:
Leave year 2000 – 2001
The claimant was granted 14 days annual leave during the leave year. However he was only paid in respect of one of them which he took in the week commencing on 18th March 2001. He took 6 Public Holidays but was only paid for two of them (New Years Day 2001 and St Patrick’s Day). On the other Public Holidays, on which he worked, he was paid double time.
The claimant was entitled to 20 days in the leave year. On foot of the revised contract issued to him in April 2001, he was paid in respect of leave accruing after 1st January 2001. Hence, he was paid in respect of one-quarter of the leave year and is now entitled to redress in respect the remaining three-quarters of the year. He is therefore entitled to claim redress in respect of the loss of 15 days annual leave and 4 Public holidays.
Leave Year 1999 – 2000.
This leave year ended on 31st March 2000 and any contravention of the Act arising from the respondent’s failure to provide the requisite statutory leave accrued within the relevant period. However, in so far as the complaint relates to the respondent’s failure to pay the claimant in respect of annual leave actually taken on dates prior to the relevant period, it is statute barred and, to that extent, it is not cognisable by the Court.
The records provided to the Court show that the claimant received 5 days annual leave between week commencing 4th April 1999 and Week commencing 26th March 2001. As all but one day of this leave (that taken on w/e 26th March 2001) was taken outside the relevant period, the claim in so far as it related to payment for leave taken on those earlier dates is statute barred and cannot be taken into account. The claimant also received a day off in respect of a number of Public Holidays, all of which fell outside the relevant period. He worked on the remaining Public Holidays and received payment at double time.
However at the close of the leave year there was 15 days leave due to the claimant which he did not receive. He is now entitled to redress in respect of that loss.
It is clear from the foregoing, that the claimant did not receive his full entitlements in respect of both annual leave and Public Holidays throughout the relevant period. His complaint is, therefore, well founded. Accordingly the decision of the Rights Commissioner is set aside and the appeal herein is allowed.
Where a claimant has not received his or her statutory period of leave a claim cannot be made nor can an award be formulated as being for payment in lieu of holidays. Article 7 of the Working Time Directive expressly prohibits the payment of an allowance in lieu of annual leave except where the employment relationship has ended. In such cases the proper award should be in the form of compensation for loss of annual leave. Such an award need not be limited to the value of the lost holidays.
The obligation to provide annual leave is imposed for health and safety reasons and the right to leave has been characterised as a fundamental social right in European Law (see comments of Advocate General Tizzano inR v Secretary of State for Trade and Industry, ex parte Broadcasting, Entertainment Cinematography and Theatre Union  IRLR 559which were quoted with approval by Lavin J in the Royal Liver case). InVon Colson & Kamann v Land Nordrhein – Westfalen  ECR 1891the ECJ has made it clear that where such a right is infringed the judicial redress provided should not only compensate for economic loss sustained but must provide a real deterrent against future infractions.
In this case the Court is satisfied that the appropriate form of redress is an award of compensation. In considering the element of its award to cover the economic loss suffered by the claimant the Court has had regard to the rate of pay applicable to the claimant at the material time and the average bonus calculated in accordance with Regulation 3(3)(a) of the Organisation of Working Time (Determination of Pay for Holidays) Regulations SI No. 475 of 1997.
Having regard to all relevant considerationsthe Court measures the quantum which is fair and reasonable in all the circumstances at €7,300 and directs the respondent to pay to the claimant compensation in that amount.
Signed on behalf of the Labour Court
Enquiries concerning this Determination should be addressed to Jackie Byrne, Court Secretary.