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What is the value of an employee’s leave?

What is the value of an employee’s leave?

The concept of annual leave and the accrual thereof is often well understood by employers, however, some employers have trouble calculating the actual amount of leave owed to the employee in Rand value, upon termination of employment.

Employees working 5 days per week should get 15 working days of annual leave, which accrues at 1,25 days per month. Employees working 6 days per week should get 18 days of annual leave which accrues at 1,5 days per month. It is clear from the above that the starting point of any leave calculation would be to obtain the daily wage of the employee.

The daily wage calculation for an employee working 5-day work week:

Example: If the employee’s salary is R 5 000.00 per month:

To calculate the weekly salary divide R 5 000.00 by 4,333 (average weeks in a month). This gives you R 1 153.93. If the employee works a 5-day week, the weekly salary is simply divided by 5, giving you a daily wage of R 230.79. Thus R 3 461,85 would be paid out should the employment be terminated and the employee had 15 days due to them.

The daily wage calculation for an employee working 6-day work week:

Example: If the employee’s salary is R 5 000.00 per month:

To calculate the weekly salary divide R 5 000.00 by 4,333 (average weeks in a month). This gives you R 1 153.93. If the employee works a 6-day week the weekly salary is simply divided by 6, giving you an average daily wage of R 192,32. Thus R 3 461,76 would be paid out should the employment be terminated and the employee had 18 days due to them.

Should you wish to calculate the hourly rate, you may simply divide the weekly rate by the number of ordinary working hours per week – usually 45 hours per week, but it could differ from sector to sector, or it could be amended to be less by way of an employment contract.

It should be noted that the above calculations differ only by a few cents as the numbers were rounded off to the second decimal for ease of reference. The above is useful when calculating outstanding annual leave for the purposes of negotiated settlements and severance packages, where a payroll system is not on hand.

ABOUT THE AUTHOR

Dyllan Jankielsohn is a SEESA Labour legal advisor at SEESA Bloemfontein. He obtained his LLB degree from the University of the Free State. He is an admitted attorney of the High Court of South Africa and has approximately 4 years of experience in the field of labour law.

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