Annual leave and its accrual thereof has always been subject to misunderstanding and controversy. Employers in the past have allowed staff to accrue an indefinite amount of leave. In some instances, employers allowed employees to sell leave days as same may have benefited the business.
The differing views and the application of the provisions in the Basic Conditions of Employment Act 75 of 1997 has lead us to answer the question mentioned above: how much annual leave is an employee allowed to accumulate, and what portions thereof can be forfeited?
Annual leave is regulated by Section 20 of the BCEA. Section 20 of the BCEA sets out the minimum “statutory” entitlement of an employee, and nothing precludes an employer from affording an employee more annual leave than the minimum as set out in the BCEA.
Section 20 (1) “Annual leave cycle” refers to the 12 months of employment with the same employer following the employee’s engagement.
Section 20(2)(a) stipulates an employer must grant at least 21 consecutive days’ annual leave regarding each annual leave cycle or;
- by agreement one-day annual leave for every 17 days worked or;
- by agreement, one-hour annual leave for every 17 hours worked.
Section 20 (4) states that an employer must grant annual leave not later than six months after the annual leave cycle.
Section 20(11) states that an employer may not pay an employee instead of granting paid leave in terms of this section except; (a) on termination of employment; and (b) in accordance with Section 40 of the Act.
The question now arises as to what happens when an employee does not use the leave within six months after their annual leave cycle ends. This question came before the labour courts, and I will refer to two cases in particular that endorsed the view that leave cannot be accumulated for an indefinite period.
In the case of Jooste vs Kohler Packaging Limited (2004) 25 ILJ 121 (LC), Franklin AJ, postulated that the very purpose of the BCEA is to ensure that an employee takes annual leave. The Labour Court indicated that annual leave not taken within six months immediately following the annual leave cycle in which it was accumulated is forfeited. Lastly, upon the termination of employment, the employee is only entitled to payment for annual leave in respect of the annual leave cycle immediately preceding the termination, as well as a pro-rata entitlement for the cycle wherein their services were terminated.
In the case of Ludick vs Rural Maintenance (Pty) Limited [2014] 2 BLLR 178 (LC), the court preferred the reasoning and conclusion reached in Jooste. Van Niekerk J held that the employee was only entitled to payment for the statutory annual leave from the current and immediately prior annual leave cycle.
It is apparent from above that employers need to ensure that they have a fine-tuned annual leave policy that addresses the issue at hand. These policies must clearly articulate how much leave may be accumulated during an employee’s annual leave cycle. The policy must also stipulate what happens to annual leave that has not been utilised. As stated in Ludicks case, annual leave is for rest and relaxation and not a savings plan.
Want to know more about annual leave and the accumulation thereof? Kindly contact your nearest SEESA Labour Legal Advisor. Alternatively, please leave your contact details on our website, and a SEESA representative will contact you.
About The Author:
Atish Panday started his career at SEESA in 2008. He is a legal advisor and Branch co-ordinator at the SEESA Richardsbay branch. He obtained his LLB degree at the University of Kwa-Zulu Natal in 2006. Atish completed articles at the Legal Aid Board of South Africa.
Resources:
- Basic Conditions of Employment Act 75 of 1997;
- Jooste vs Kohler Packaging Limited (2004) 25 ILJ 121 (LC);
- Ludick vs Rural Maintenance (Pty) Limited [2014] 2 BLLR 178 (LC).