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The Forfeiture Of Annual Leave

The Forfeiture Of Annual Leave

Employers are often faced with a situation where an employee has not taken leave over a prolonged period of time and demands payment in respect of the accrued leave upon termination of the employment contract which often amounts to large sums of money.

The Basic Conditions of Employment Act 75 of 1997 (BCEA) affords an employee 21 consecutive days of annual leave for each leave cycle. A leave cycle is defined as a period of 12 months’ employment with the same employer. As per the BCEA, the aforementioned leave must be granted no later than 6 months after the end of the annual leave cycle and in terms of Section 40(b) all annual leave not taken by the employee should be paid over to the employee upon termination of the employment contract.

What happens to the employee’s leave if it was not taken within 6 months after the leave cycle?

This question is an issue that has resulted in conflicting Labour Court judgments and was finally settled in the case of Ludick v Rural Maintenance (Pty) Ltd (2014) 2 BLLR 178 (LC) in which the court held the following:

  1. Any leave which is not taken by an employee within the 6 months preceding the annual leave cycle will be forfeited.
  2. The above mentioned only applies to statutory leave (ie the 21 consecutive leave days prescribed by the BCEA). Any other leave granted to an employee does not fall subject to this determination.
  3. In the event that an employer refuses an employee’s annual leave within the 18-month leave cycle, the employee is entitled to approach the Labour Department to enforce his right to annual leave.

If an employee accordingly fails to take and/or apply for annual leave within 6 months after the completion of the leave cycle, they will forfeit the leave.

It is, however, advisable that employers keep track of the employee’s leave taken during the 12-month cycle and inform and/or force the employee to take their leave prior to the 18 months lapsing. It is further advised that employers implement a leave policy in this regard.

ABOUT THE AUTHOR

Carla Pauw obtained her LLB degree from Stellenbosch University 2015 and got admitted as an attorney of the High Court in July 2016. She is currently doing her LLM (Labour Law) at the University of Stellenbosch. Carla is a SEESA Labour legal advisor working at our Cape Town office.

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