“Use it or lose it” is a policy adopted by a great number of employers in respect of annual leave. But are they legally entitled to do so?
Two recent decisions from EU law clarifies the position.
In Kreuziger v Land Berlin the employee, Mr. Kreuziger, a legal trainee, never took annual leave. When his traineeship came to an end he sought payment in lieu of the leave he had not taken. Land Berlin refused this request and Mr. Kreuziger took legal proceedings in the German Courts.
A similar case came before the German courts in Max Planck v Shimizu. The employee had accumulated 51 days annual leave over a 2 year period and requested that he be paid for this untaken leave when his employment ended.
The German Courts referred the issue to the European Courts in the form of the Court of Justice of the European Union (CJEU) and asked the question whether an employee who fails to take annual leave is entitled to be paid in lieu of the leave foregone, even in a situation where there was nothing preventing the employee from taking the leave.
The Court of Justice of the European Union (CJEU) held that it was acceptable for employers to adopt a “use it or lose it” policy in circumstances where there is nothing preventing the employee from taking the leave and the employer encourages the employee to take the leave. But the employer must be able to show that he encouraged the employee to avail of the annual holidays.
It also held that Article 7 of the European Working Time Directive only provides an entitlement to be paid for leave accrued but not taken where the employment is terminated.
In the normal course of employment the employee has no entitlement to give up the annual leave and expect to be paid instead.
Takeaway for employers and employees
Employers do not have to force employees to take annual leave but they should certainly encourage them and document those efforts.
The employee cannot let the leave go untaken and accumulate and expect to be paid.
If the employee is not encouraged or permitted to take leave she will be entitled to be paid in lieu of all untaken leave.
It has long been the case that at common law an employee could have her employment terminated for good reason, bad reason, or no reason. Any remedy then open to the employee would be a statutory claim-that is, a claim under unfair dismissal legislation such as the Unfair Dismissals Act, 1977.
But once the employer had terminated in accordance with the contract of employment and had given the contractual notice period the employee had no cause of action in the Courts for breach of contract.
Two decisions from the High Court on this point at the end of 2018 appear to be inconsistent, however. Both cases involved the employees seeking an injunction to prevent their dismissal by way of a no fault termination-that is, dismissal for good, bad or no reason.
Obtaining an injunction in employment cases
The normal standard for obtaining an injunction is set out in the principles in the ‘Campus Oil v Minister for Industry and Energy ’ as follows
That there is a fair or bona fide issue to be tried-in other words the claim must not be frivolous or vexatious;
If there is a bona fide issue to be tried the Court must then consider whether damages would be an adequate remedy or not. If so the Plaintiff will be required to give an undertaking as to damages, that is, in the event of the injunction being refused the Plaintiff will pay damages to the person injuncted;
That the balance of convenience favours the granting of the injunction rather than its refusal.
The test for an injunction in an employment case is higher, however, and the applicant must show “that at least he has a strong case and that he is likely to succeed at the hearing of the action” (Supreme Court, Maha Lingham v Health Service Executive).
Two High Court Decisions
In Whooley v Merck Millipore Limited and Merck KGaA  IEHC 725 the company terminated the employee’s employment on ‘no fault’ basis and gave her the contractual notice. The High Court refused her application for an injunction preventing her dismissal as her contract had already been terminated. The Court opined, however, that she may have succeeded in an injunction application prior to the termination of her contract.
In Grenet v Electronic Arts Ireland Limited  IEHC 786 the employee succeeded in the injunction application as the Court accepted the employee’s argument that a later no-fault termination was merely an earlier faulty termination dressed up in different clothes and the earlier termination would have had serious reputational consequences for the employee and would have prevented him from vindicating his good name.
So, two High Court applications seeking an injunction to prevent a dismissal from employment; one successful, the other unsuccessful.
I have represented a good deal of clients in the Workplace Relations Commission and Labour Court over the last 10/12 months. In that time period I have observed what I consider to be 3 significant mistakes at those hearings.
You might learn something from them; I know I have.
Let’s take a look, shall we?
1. Asking too many questions in cross-examination
I acted for a client-an employee-in the WRC who had a great story to tell.
I took him through direct evidence and this was his opportunity to tell his story. My job was to ensure he got to tell all his story in the most sympathetic light to his case.
I did an average job but did leave out two very important questions. These 2 questions were vital pieces of evidence and left a couple of gaps in my client’s evidence.
I need not have worried for too long, however, because the HR representative for the other side (the employer) did my job for me when he was cross examining. He asked the questions that I had forgotten and my client took the opportunity with both hands and plugged the holes in his original evidence.
It is arguable that this was even better than if I had asked the questions because the fact that the answers came out in cross examination may have given the evidence even more credibility.
The big mistake? The HR representative for the other side asking too many questions.
Sometimes the best thing you can do in cross examination is shut up and sit the hell down.
Don’t pay any heed to Rumpole of the Bailey setting a fiendishly clever trap for a witness; don’t mind the cross examination scenes you see in TV crime dramas or Top Gun when Tommy Lee Jones cross examines Tom Cruise.
These pieces of storytelling or theatre are just that and should be recognised as such.
The lesson? Don’t ask questions in cross examination for the sake of hearing your own voice; sometimes the best thing you can do is shut up.
2. A stray document
Another mistake I encountered was being given a bunch of documents by the representative for the other side and finding a document-a letter-which was of immense value to my client’s case and which we did not know existed.
And even if we knew it existed we would not have had any right to it as the other side could have claimed it was entitled to legal privilege.
But here it was amongst a huge bunch of the usual stuff like a diamond in a pigsty.
The value of the document was that it showed the other side-the employer-was told something by a professional advisor, did not act on it and this failure to act ultimately led to my client’s job loss.
This went to the heart of our claim for unfair dismissal.
The mistake? We should never have know of the existence of this document, never mind come into possession.
3. Failing to settle a case
This case involved a number of employment related claims at the WRC (Workplace Relations Commission). But there was also a personal injury claim in being.
The HR representative for the other side (the employer) recognised that our case was a very strong one and the signals from the Adjudicator was that they would be well advised to talk to us with a view to settling. We were well ahead.
We took a break and negotiated for a little bit and there was not a huge difference between us in the end about the money stuff but we did not agree.
The mistake, in my view, was the the HR representative failed to recognised that if the case was settled it would have been on the basis that all claims arising from the employment were settled.
This would have included the Personal Injury claim. This is very significant.
This would have been a great piece of work for his client, the employer, and would have given him a great deal of comfort and certainty. Personal injury claims, if they go against you, can be expensive.
But the HR person seemed unable to recognised this value, or did not have the competence or confidence to do so.
A relatively small amount of extra money would have settled the whole shooting match-that is, all claims arising from the employment, including the personal injury claim.
Instead the hearing went ahead and we won a decent award. And the Personal Injury claim is still in being and will be pursued.
We all make mistakes but the best thing we can do is learn from them, file away the lessons, and move on with confidence that we will not make the same mistakes again.
Hopefully I will avoid these 3 mistakes that I came across in the last 10/12 months.
If you are you will probably be aware of Aidan O’Brien’s problems
with the WRC (Workplace Relations Commission) and then the Labour Court
concerning breaches of the Organisation of Working Time Act 1997.(You
can read about those cases here).
The exemptions arising from the 1998 regulations applied to:
1. An activity in
which the employee is regularly required by the employer to travel distances
of significant length, either from his or her home to the workplace or from
one workplace to another workplace.
2. An activity of a
security or surveillance nature the purpose of which is to protect persons or
property and which requires the continuous presence of the employee at a
particular place or places, and, in particular, the activities of a security
guard, caretaker or security firm.
3. An activity
falling within a sector of the economy or in the public service—
(a) in which it is foreseeable that
the rate at which production or the provision of services, as the case may
be, takes place will vary significantly from time to time,
(b) the nature of which is such that
employees are directly involved in ensuring the continuity of production or
the provision of services, as the case may be,
and, in particular,
any of the following activites—
(i) the provision of
services relating to the reception, treatment or care of persons in a
residential institution, hospital or similar establishment,
(ii) the provision
of services at a harbour or airport,
(iii) production in
the press, radio, television, cinematographic, postal or telecommunications
(iv) the provision
of ambulance, fire and civil protection services,
(v) the production,
transmission or distribution of gas, water or electricity,
(vi) the collection
of household refuse or the operation of an incineration plant,
(vii) any industrial
activity in which work cannot, by reason of considerations of a technical
nature, be interrupted,
(viii) research and
Neither the WRC nor the Labour Court accepted this argument
and O’Brien appealed the case to the Civil Courts.
This problem had arisen as a consequence of the Industrial Relations
(Amendment) act 2015 defining ‘agriculture’ as
(a) (i) the production of animals, including the
production of meat and other animal produce intended for human consumption,
(ii) the sorting and packing of meat and other animal
(iii) the production, sorting, and packing of crops, including
fruit and vegetables, intended for human or animal consumption,
clarify that the term “agriculture” in the Schedule to the Organisation of
Working Time (General Exemptions) Regulations 1998 (S.I. No. 21 of 1998),
includes, inter alia, “the caring for or the rearing or the breeding or
training of racehorses” for the purpose of those Regulations.
This means that the exemptions from certain sections of the
Organisation of Working Time Act 1997 now apply to workers who are engaged in
the “the caring for or the rearing or the
breeding or training of racehorses”.
Are you an employer? How would you feel about having to pay
a dismissed employee’s salary from the date of dismissal to the date of the
hearing? Or even to the date of the decision of the adjudication officer?
And how would you feel about accepting the employee back into
his old job?
That is what happened in the case involving a part time
school bus driver (ADJ-00013201 An Employee v a Bus Company).
In this case the employee who was dismissed for alleged
theft not only won his claim for unfair dismissal, but it was ordered by the adjudicator
that he be reinstated in his previous job and paid all his salary from the time
of dismissal (August 2017).
The back story to the case is the part time bus driver was
accused of theft in the workplace; he allegedly removed used wheel rims from
the employer’s premises. The employee’s position was that he had permission
from the Garage Foreman.
The employer’s services manager carried out an investigation
and following this investigation the employee received a letter telling him
that his employment was being terminated.
The Employee’s Case
The employee’s case was the investigation and disciplinary parts
of the procedure which led to his dismissal were carried out by the same person,
the Services Manager, and this rendered the termination unfair by reason of the
absence of fair procedures-that is, the same person carried out the
investigation and disciplinary parts of the process.
The employee also relied on the letter he received which
stated that “following an investigation” he was being terminated as evidence of
the 2 stage (investigation and disciplinary) procedure.
He also argued that his appeal was never heard.
The Employer’s Case
The employer’s case was that the employee was brought to a
disciplinary meeting concerning the alleged theft of property-in excess of 20 wheel
rims-and admitted taking the property but claimed to have permission. The
employer found that this was not the case and decided he would be dismissed within
7 days and given the right to appeal.
The employer did concede that his appeal had not been heard
up to the day of the WRC hearing due to the large volume of appeals to be dealt
with by the appeals board and the illness of some members.
The Adjudicator’s Decision
The Workplace Relations Commission Adjudicator stated that
his job was not to assess the innocence or guilt of the employee in respect of
any allegations against him; the job of the adjudicator was to decide whether
the decision of the employer was reasonable. In this context he stated the employer
must prove the dismissal was fair.
In this regard he held that the involvement of the Services
Manager in both the investigation stage and disciplinary/decision making stage
of the procedure was lacking in fair procedures.
“Having purportedly conducted a preliminary investigation, I find it inappropriate that the Services Manager would have then participated as the disciplining officer, on whose decision the Complainant was dismissed.”
He also referred to a Labour Court finding on this issue of
separating the investigative stage from the decision making stage in the case Joseph
Brennan Bakeries v Rogers (UDD1821). In that case the Labour Court held:
“The Court considers that the multiplicity of roles undertaken by TG [ the General Manager] in the process calls into question the fairness of the procedure. TG was the person who initiated the investigatory procedure and he oversaw the procedure himself. That procedure resulted in a disciplinary procedure which TG also oversaw. The Court is satisfied that the within enterprise is of a nature which afforded the Respondent the opportunity to ensure a clear separation of investigation and disciplinary processes by selection of available management level personnel to carry out the different stages of the procedure.”
He also found that there was a lack of objectivity and pre-judgment
as he accepted the statement of the employee as follows:
“According to the Complainant, the Services manager stated, inter alia, that he (the Complainant) had been “caught stealing rims” and that “they are looking for your head upstairs”.”
The adjudicator also found that there was no written note of
he investigation carried out and none had been given to the employee prior to
the disciplinary hearing. This was fundamentally lacking in fair procedures.
In summary, the Adjudicator found:
“Taking all of the issues into consideration, I find there to be a distinct lack of objectivity and independence in the carrying out of the investigation and disciplinary processes which ultimately led to the Complainant’s dismissal. In this regard, I find that, in the circumstances, the Respondent’s decision to dismiss the Complainant must be considered as unfair.
This view is further undermined by the fact that the Complainant’s appeal of the dismissal decision has not been heard. While I note the rationale presented by the Respondent in relation to the delays with regard to the conducting of the Appeal Hearing, I find that it has compounded the shortcomings of the disciplinary process up to that point.
I find that the Respondent’s decision to dismiss the Complainant is unfair. In that context and taking into consideration the fact that an Appeal Hearing has not been conducted, I direct that the Complainant be reinstated, with effect from the date of dismissal, 25 August 2017, with full salary retrospection to apply.”
Note: this hearing was held on the 24th July,
2018 and the decision is dated 28th December, 2018. I do not know
whether the salary retrospection is from the day of the hearing or the day of
the decision. Nor do I know whether the employer has appealed to the Labour Court.