Accumulation of leave

Accumulation of leave

“Is an employee entitled to accumulate all leave that they do not take for the full duration of their employment with one employer?  This is a question which has bothered many an employer and employee.

The first place to look is Section 20 of the Basic Conditions of Employment Act 75 of 1997 (BCEA).

Section 20 of the BCEA provides that an annual leave cycle means the period of 12 months employment with the same employer immediately following an employee’s commencement of employment or the completion of that employees prior leave cycle.  An employer must grant an employee at least 21 consecutive days annual leave on full remuneration in respect of each annual leave cycle.  Section 20 (4) of the BCEA states that an employer must grant annual leave not later than six months after the end of the annual leave cycle.

Section 40 of the BCEA regulates payments on termination of employment.  It states, inter alia, that on termination of employment an employer must pay an employee remuneration calculated in accordance with Section 21(1) for any period of annual leave due in terms of Section 20(2) that the employee has not taken.

In the matter of Ludick v Rural Maintenance (Pty) Ltd [2014] 2 BLLR 178 CLC) the court was faced with the following scenario.

During the 27 months during which the employee was employed by the employer, he took no annual leave.  On the termination of his employment, he claimed he was entitled to payment for the accrued leave for two years.  The employer claimed that in terms of its leave policy, the employee had forfeited all leave.  The court noted that for purposes of establishing accrued leave under the BCEA, each leave cycle commenced on the date that the employee entered the employer’s services.  The employee was entitled by contract and statute to 15 working days leave for each completed year of service.  The employee’s contract required him to take leave by no later than 30 March of each year.  The employee had been paid only leave for the last three months on a pro-rata basis.

The court held that the employee’s claim that the entitlement to payment of accrued leave is unlimited was not supported by the purposes of the BCEA, one of which is to ensure that employees take the leave to which they are entitled.  The purposes would be frustrated if employees were permitted to accumulate leave indefinitely and claim payment on termination.  The court, accordingly, found that the applicant was not entitled to be paid for the leave not taken in this first leave cycle (in other words, for the first twelve months of his employment).  As to the second leave cycle, the court noted that annual leave should be taken six months after the end of a particular leave cycle.  However, the employee’s contract stipulated that leave had to be taken within one month of the end of his particular leave cycle, otherwise it was forfeited.  While the BCEA permits employers to determine the time in which leave is taken, this does not mean that employers may declare forfeit leave not taken within that period.  The employee was accordingly entitled to payment for the leave accrued during the second leave cycle.

Essentially, what the above judgment holds is the following 5 points:

1. The BCEA establishes a clear floor of rights (all basic conditions).
2. A leave cycle is 12 months, starting from when an individual employee commences employment.  The employee is entitled to his or her 21 consecutive days leave during that 12 months.  If he or she does not take it, but wants to take the full complement of leave within that the period of six months after the end of the twelve month cycle, the employer cannot refuse that request.
3. The BCEA assumes employees will take their leave during a leave cycle, or within six months after the leave cycle.
4. The judgment deals with the specific case of an employee whose services terminated, and the learned judge held that the employee was not entitled to be paid for the leave that accumulated during a leave cycle which had run its 18 months (12 month cycle, 6 months extra time to take leave which the employer cannot refuse), and a new cycle had been completed (cycle two).  The employee was only entitled to payment for the period of cycle two.
5. Although the judgment dealt with a case of an employee whose services terminated, it is submitted that the accumulation of leave, whether for payment of its value on termination or to use as accumulated leave, is still the accumulation of leave.  No more than what the employee is still entitled to from the previous leave cycle ought to accrue to an employee.

For more information please contact Pagdens Attorney 041 502 7200.

This article is for general information should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact an attorney for specific and detailed advice. Errors and omissions excepted (E&OE)