Home Knowledge Labour Court Confirms that Annual Leave Should be Excluded from the Calculation of ‘Banded Hours’

Labour Court Confirms that Annual Leave Should be Excluded from the Calculation of 'Banded Hours'

The Labour Court (LC) recently upheld the Workplace Relations Commission decision in Cliona O’Leary v Aer Lingus Ireland Limited, DWT207. The LC ordered that the employee be placed on an appropriate band of hours under section 18A (Section 18A) of the Organisation of Working Time Act 1997 (Act). This is the first appeal decision on the new statutory right to be placed on a banded hours contract which was inserted into the Act by section 16 of the Employment (Miscellaneous Provisions) Act 2018.

What happened? 

The complainant was employed as a guest services agent since April 2015. In March 2019, the complainant requested to be placed on banded hours in line with Section 18A. Her employer did not dispute her request and in response, placed her on “Band F” (average working week 26-31 hours exclusive of all breaks). In placing her in this band, the employer included the complainant’s annual leave entitlement when calculating her average hours worked per week over the statutory reference period (52 weeks). This resulted in her average hours appearing lower than what she actually worked in an average week. 

The complainant submitted that the method of calculation used by her employer was in breach of section 19 of the Act, which deals with an employee’s entitlement to annual leave. She sought an order for her to be placed on “Band G” (average working week 31-36 hours exclusive of breaks). Her employer contended that: 

  • Section 18A is a stand-alone provision which is not connected to section 19 of the Act.
  • There is nothing in the Act to suggest that time spent on annual leave cannot be treated as hours worked for the purpose of determining the average number of hours worked per week over the reference period.  

Labour Court Decision 

The LC considered that the purpose of the entitlement granted to employees under Section 18A was to ensure that the number of hours specified in the contract of employment reflects an employee’s actual working week. The LC considered that should annual leave be included in this calculation, then “as a matter of mathematical certainty” the objective of the Oireachtas would be defeated as it would consistently result in an average which does not reflect the reality of the number of hours worked per week by the complainant in any week where she is at work. 

However, the LC accepted that there is ambiguity in Section 18A as the Act does not provide a definition for the term ‘hours worked‘ nor does it clarify how time spent on annual leave is to be treated when calculating the average. The LC stated that it “cannot simply import the treatment required of annual leave in Section 19 of the Act into Section 18A and neither can it apply the meaning of the term ‘annual leave’ set out in Section 2 to the provisions of Section 18A which does not use that term at all.”

The LC held, in considering the ambiguity of section 18A(4) of the Act where a literal interpretation of “average number of hours worked by the employee per week during the reference period”  would clearly not reflect the intention of the Oireachtas, it was reasonable to rely on section 5 of the Interpretation Act 2005 which allows for a construction of the provision which would reflect the “plain intention of the Oireachtas”. Consequently, the LC concluded that annual leave should be excluded from the reference period. As such, if an employee spends 4 weeks on annual leave the reference period is 48 weeks (52 minus 4). As a result, the LC ordered the employer to move the complainant to the relevant band.

The full decision can be accessed here.

Key takeaways for employers 

Employers are advised, where they receive a request from an employee under Section 18A to be placed on an appropriate band of hours, to exclude annual leave from the requisite calculation of the ‘average hours worked per week over the reference period’.
If you require advice in relation to the above, please contact Ailbhe Dennehy, Catherine O’Flynn, or your usual William Fry contact.


Contributed by Aimee Carroll & Richard Smith