If a part-time employee works on an hourly basis (not fixed hours, but approximately the same number of hours per week) and they request to be paid in lieu of their annual leave, can we lawfully do so?

Under the Working Time Regulations (Northern Ireland) 2016, workers are entitled to four weeks’ annual leave in each leave year and, while leave may be taken in instalments, it may not be replaced by a payment in lieu except where the worker’s employment is terminated.

The European Court of Justice has further ruled in Federatie Nederlandse Vakbeweging v Netherlands [2006] that laws which allow workers to receive payment in lieu of annual leave carried over from the previous year breaches the Working Time Directive.

Therefore, it would likely be a breach of the Working Time Regulations for an employer to pay an employee in lieu of their annual leave entitlement.