Employer ordered to pay due holiday pay on cessation.

The Complainant held a senior role with the Respondent and was contractually entitled to 22 days’ annual leave per year. Between 2019 and 2023, due to heavy workload and business pressures, he was unable to take all his leave, resulting in 40 untaken days at the end of his employment in July 2024. The Complainant said leave discussions with his line manager were informal, and he was never advised that unused leave would be forfeited. He regularly updated his manager on days taken and carried forward, which were accepted without objection. Upon termination, he was not compensated for the accrued untaken leave. He argued that the Respondent had a statutory duty to ensure he could take his leave and, by failing to do so, his entitlement carried over and was payable on termination under the Organisation of Working Time Act 1997.

The Respondent accepted that the Complainant was entitled to 22 days’ annual leave annually but maintained that his contract required all leave to be taken within the calendar year. It argued that this clause excluded any entitlement to payment for untaken leave at termination. The Respondent contended that the contractual terms displaced the notion of accrued leave becoming payable and that no provision existed for payment in lieu of untaken leave. The Respondent argued that, under the Payment of Wages Act 1991 and Organisation of Working Time Act 1997, the Complainant was not entitled to compensation for prior untaken leave as it fell outside the permitted carryover period.

The Adjudicating Officer found the Payment of Wages Act 1991 complaint was not well founded, concluding there was insufficient evidence that payment for untaken leave from previous years was “properly payable” upon termination. However, under the Organisation of Working Time Act 1997, the Adjudicator determined that the Complainant had not been given a genuine opportunity to take his annual leave and was never informed that unused days would lapse. The Complainant’s untaken statutory leave was found to have carried over and remained payable at termination. Accordingly, the Adjudicator decided that the Organisation of Working Time Act complaint was well founded and directed the Respondent to pay €10,500 compensation for unpaid accrued leave and breach of statutory rights.

Employers should:                

• Actively ensure that employees are given a fair opportunity to take their statutory and contractual annual leave each year. Under the Organisation of Working Time Act 1997, paid annual leave is a fundamental right and cannot simply be lost at the end of the leave year unless the employer can prove that the employee was clearly informed of the risk of forfeiture and encouraged to take it. 
   
  
• A written contract alone is not sufficient protection if, in practice, employees are pressured not to take time off due to workload or business demands. Employers should maintain clear, documented records of leave entitlements, requests, and approvals, and issue written reminders before the end of each leave year.
  
  
• When employment ends, employers must calculate any untaken leave and pay the corresponding allowance in lieu. Failure to do so can result in significant compensation awards. 
  
  
• Train managers to handle annual leave proactively and communicate clearly about entitlements, carryover limits, and the “use it or lose it” policy. Proper record-keeping, transparency, and compliance with statutory obligations not only prevent disputes but also promote employee wellbeing and operational consistency.

The full case can be found here.