Annual leave accrues to an employee on the basis of the hours and days worked by that employee. The Organisation of Working Time Act 1997 sets out three ways the entitlement to annual leave may be calculated:

• four of the employee's normal working weeks in a leave year in which the employee works at least 1365 hours
• 1/3 of a working week per calendar month in which the employee works at least 117 hours
• 8% of the total hours worked by an employee in a leave year (but subject to a maximum of four working weeks)

Employees covered by two or more of these methods are entitled to rely on whatever reference period results in the greater amount of annual leave.

The 8% method is normally used for calculating the annual leave entitlements of part-time or casual employees. On this basis, employees who work irregular hours will have their annual leave entitlement calculated by reference to actual hours worked as opposed to contracted hours.

The Act clearly states that "references to a working week shall be construed as references to the number of days that the employee concerned usually works in a week." A 'working week' is therefore not a calendar week, but is dependent on the employee in question. Calculating the number of days that an employee "usually works" is not an exact science. The employer is obliged to simply look at the employee's pattern of work and calculate what the employee's average or usual working week is.

It is suggested that an employee's working week is determined by looking at what an average working week is over a particular reference period - bearing in mind that the reference period should not disproportionately or negatively impact on the employee's entitlement.  At the end of each reference period, the hours worked by part-time employees should be totalled and an average taken to calculate the average working week for that particular period.

For example, where a part-time employee is consistently working additional hours outside of their normal contracted hours, such that their normal working week can no longer be deemed to be their contracted hours, they should accrue annual leave based on what their working week is for that specific work cycle. Their entitlement is not, however, to accrue leave up to the full time equivalent. It is to accrue annual leave up to a maximum of four of their normal working weeks.