Question:
I have a question on the calculation of parental leave. I have come across a payroll provider that had advice from an employment lawyer about how the 12 month calculation should be conducted. What I have always done is once the employee has been back in the workplace for 12 months after being on parental leave any leave accrual that is now entitlement will reverse back to the standard two calculations from the Holidays Act the greater of AWE and OWP. Prior to 12 months back in the workplace only the AWE can be used.
What this payroll provider was advised and has set up in their system is that any leave accrued during parental leave only uses AWE forever. I have looked at the section 42 of the Parental Leave Act and I cannot see where it states this.
Answer:
Here’s our interpretation of this area:
s42 (2) of the parental leave act deals with this matter. The leave NEVER reverts back to OWP. It forever stays at AWE. It is only a convention that has arisen for it to ‘revert’, this most likely came about because of explaining after 12 months AWE looks like OWP and misinterpretation thereafter.
You may also like to note that s42 (2) (c) states that this change applies not only for the time of parental leave, but also for the 12 months upon return. This means that TWO entitlements of annual leave may actually fall under this modification.
(2) If an employee becomes entitled to an annual holiday on pay during-
(a) a period of parental leave under this Act; or
(b) a period of preference in obtaining employment; or
(c) the period of 12 months commencing with the date on which the employee returns to work after a period of parental leave under this Act or a period of preference in obtaining employment,-
the employee is, despite anything in section 21 of the Holidays Act 2003, ====>[entitled to holiday pay for that holiday only at the rate of the employee’s average weekly earnings for the 12 months immediately before the end of the last pay period before the annual holiday.]<====