Annual Leave – The issues facing business in 2020 and 2021

The COVID -19 global pandemic has caused great disruption to business in every sector all over the world. Companies have been scrambling to put policies in place to allow their staff to work from home as a temporary measure, but now, it seems that remote working may be the new way of work with no signs of the virus abating.

Companies have been working hard to pivot their business model to adapt to new online strategies. Many have found that with the right procedures in place, remote working can increase productivity and lead to a better working environment. However, Covid-19 has thrown up some unexpected HR issues especially around the subject of annual leave. Employees have been waiting to see how Covid-19 restrictions would play out and opted not to take holidays, which has led to an unprecedented amount of untaken leave in many companies across Ireland.

The Statistics

Earlier this month, HRLocker compiled a report from over 400 companies in the system for a recent Business Post article. It found that many businesses are facing a huge backlog of annual leave for the coming quarter. During the height of the coronavirus lockdown in April and May, employees made only 26,000 annual leave requests in comparison to 41,000 last year.
The data for May 2020 showed that employees used 39% less paid time off compared to the same month in 2019.

This is a real problem for a lot of businesses, as a high proportion of workers are heading into September with four weeks of annual leave remaining. Clients have contacted HRLocker looking for advice in relation to this.

Employers Discretion

Quoting from the article, “Employers should know that if somebody is cancelling leave because their holiday has been cancelled, it doesn’t mean you, as an employer, have to let them cancel the leave,” says Crystel Rynne, Head of Product Marketing. “It’s at an employer’s discretion.”
Rynne also said clients have faced instances of workers not accruing enough annual leave days to take holidays later in the year. “Workers who were laid off short-term and were on the Covid-19 pandemic unemployment payment have not been accruing any annual leave.”

Do employees accrue annual leave during lay-off?

Employees do not accrue annual leave during a period of a temporary lay-off. However, they may still be entitled to their full annual leave entitlement if they manage to complete their full working hours during the leave year, i.e. when they return to work. If you are availing of the Temporary Wage Subsidy Scheme but your employees are not actually working, they will not accrue statutory annual leave for the duration of the scheme. The issue of contractual annual leave is slightly more complicated and will depend on the wording of your employment contracts.

Legal standpoint

The Business Post also spoke to Ger Connolly, an employment law partner at Mason Hayes & Curran, who said the firm’s clients had also sought advice on annual leave in recent weeks.

He said employers had asked if they can ensure that a certain number of days are not carried over to next year.

“An employer can request that an employee take leave,” Connolly said. “The Organisation of Working Time Act (1997) provides that the timing of an employee’s annual leave can be determined by the employer ‘having regard to work requirements. We believe this gives employers the right to compel their employees to take annual leave, however, employers are obliged to consult with their employees 30 days before the start of the annual leave in order to avail of this provision.”

How to mitigate problems with annual leave going forward

The advice is to check your HR system, check the backlog of annual leave and talk to your employees. It is important to take into consideration any specific circumstances that may be legitimate reasons for your employees not taking time off. We recommend that employers should, where possible, be flexible and reasonable and lead with empathy when it comes to annual leave requests. This is a difficult time for a lot of people and a little understanding can go a long way.

HRLocker is a people management system built by HR professionals and offers support to scaling businesses. We offer easy-to-use tools for managing annual leave, absence management, performance management and much more.