Ireland: Significant Labour Court decision on the inclusion of overtime in the calculation of annual leave pay

In a recent Labour Court decision (Eamonn Ryan v Carlow County Council (DWT2312)), the Court determined that regular and rostered overtime should be included in the calculation of pay during annual leave.  This decision is significant as it marks a change in the approach adopted previously by the Court on this issue.  A particularly relevant factor in the Court’s decision is that the employee’s overtime was regular and predictable and therefore accounted for a significant portion (more than 22%) of his total pay.

Whether or not overtime should be included in the calculation of pay during annual leave has given rise to a significant body of case law at domestic and EU level in recent years.  While the current statutory regime in Ireland (namely, the Organisation of Working Time (Determination of Pay for Holidays) Regulations 1997) explicitly excludes overtime from the calculation of pay during annual leave, this is arguably inconsistent with more recent EU case law on this point which was considered by the Court its decision.

Key Action Points for Human Resources and In-house Counsel

This decision is important for employers in Ireland whose employees work regular and rostered overtime, and that overtime is not reflected in the calculation of the employees’ pay during annual leave.