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Staff accumulating leave can be a headache for employers

Date: 27/09/2017

Ryanair, Europe’s largest budget airline carrier, has announced that it is embarking on a six-week programme of cancelling flights so that it can offset a backlog of annual leave that its crew have accumulated but not used. The result of this is that approximately 40 to 50 flights will be cancelled each day until 31 October.

400,000 passengers have been written to by the company and advised that their flights have been cancelled. A further 18 million have been left wondering whether their travel plans over the next six weeks will be impacted.

Ryanair’s decision was the result of the Irish Aviation Authority mandating that it needed to bring its staffs' leave entitlements into line with the calendar year, before 1 January 2018. To achieve this the company has had to rapidly direct its pilots and cabin crew to take a considerable backlog of annual leave at very short notice.

Ironically, Ryanair also seems to have had the opposite issue in respect of a number of its pilots, who had planned on taking four weeks holiday in the coming months, but who have now been told that one of those weeks will need to be deferred in light of the significant rostering changes.

Ryanair’s Chief Marketing Officer has acknowledged that they “have messed up in the planning of pilot holidays and [they’re] working hard to fix that.”

 This is a quite extraordinary situation, and is in many respects is a complete disaster for Ryanair. However, it highlights just how badly things can go wrong where employers don’t make proper provision for staff to take annual holidays.

In New Zealand employees are entitled to a minimum of four weeks annual holidays at the end of each 12 months of continuous employment. The exception to this is when an employee is on a fixed-term agreement for less than 12 months, or has an unpredictable pattern of work, in which case they can be paid holiday pay on a pay as you go basis, instead of taking annual holidays.

The timing of when annual holidays are taken is for an employer and employee to agree. That means that if an employee wants to take their annual holidays but the timing is not good for the business, the employer can say no. However, the employer must at least allow the employee the opportunity to take their four weeks of annual holidays within 12 months of the entitlement arising.

Furthermore, the employee must be allowed the option of taking at least two weeks of that annual leave in a continuous period. The fact that the timing may never be great for the employer is no excuse.

That is not to say that employees have to use their annual holidays within a 12 month window if they do not wish to do so. Many employees prefer to let their leave accumulate for a longer period for a variety of reasons such as saving it up for travel. However, employers do have the ability to intervene where employees accumulate high annual holiday balances.

If an employer asks an employee to take some or all of their annual holidays, and they do not agree, the employer can then require the employee to take annual holidays on 14 days’ notice. In Ryanair’s case, its requirement that staff take leave at short notice would be permissible in New Zealand so long as the 14 day notice period was allowed for.

However, Ryanair’s decision to unilaterally reduce the amount of leave that had been pre approved for other staff, would not be permissible in New Zealand. Put simply, once the timing of annual leave has been agreed between the employer and the employee, any changes to this will also need to be agreed.

In most instances, the expectation and reality is that the parties will take a pragmatic approach and look to come up with a workable solution if circumstances change for either the employer or employee. This may involve the employer compensating the employee for sunk costs where travel plans have to be cancelled. 

The Ryanair crisis is not your ordinary kind of employment issue. Certainly in New Zealand, most employers tend to be reasonably good at ensuring staff use their annual leave. As with many things, good communication and good planning remains key.