There seems to be much confusion regarding various aspects of annual leave. The following are the ground rules – as per section 20 of the Basic Conditions of Employment Act. Except where indicated otherwise, every employer must follow these ground rules unless a Main Agreement or Collective Agreement contains different conditions. The following are a few guidelines:

* the employee is entitled to 21 consecutive days annual leave on full pay in every leave cycle.
* a "leave cycle" means a period of 12 months commencing from the first day of employment or commencing from the end of the previous leave cycle.
* whatever number of normal working days falls within that 21 consecutive days is the number of working days that the employee must be paid for.
* annual leave is accrued – meaning that the number of days to which the employee is entitled starts at zero and increases with the passage of time as the leave cycle progresses.
* therefore, at the start of the leave cycle the employee would have zero days leave due to him/her.
on the 17th day of the leave cycle, the employee would have accrued 1 day annual leave. (section 20 (2) (b))
* on the passage of every 17 days after that, another 1 day annual leave accrues to the employee's benefit.
* the accrual may also be allowed at 1,25 days per month in the case of a 5-day week worker, or 1,5 days per month for a 6-day week worker and so on.
* annual leave can only be taken by agreement between employer and employee.
section 20 (10) (a))
* in the absence of any other agreement, annual leave must be taken at a time to suit the employer. (section 20 (10) (b))
* annual leave may not be taken during any other period of leave that the employee is entitled to in terms of this Act. The employee's excess sick leave requirement must be taken as unpaid leave. Similarly, if an employee is on annual leave and he/she falls sick, visits a doctor and obtains a medical certificate to certify that from xxx date to xxx date the employee was medically unfit for work, then upon return from annual leave, and upon production of the above mentioned valid medical certificate, the employee is entitled to convert those sick days from annual leave to sick leave, and his annual leave entitlement must be credited accordingly. It is important to note that in such cases, the medical certificate must stipulate that the employee was unfit for work from (date) and will be fit to resume work on (date) If the medical certificate does not so stipulate, it means that although the employee was ill, he/she was still fit for work and is therefore not entitled to sick leave if not declared unfit for work.
* annual leave may not be taken and the employer may not permit it to be taken during a period of notice.
So is the employee has 30 days leave due to him and he resigns or is dismissed, he may not take his notice month as annual leave – the employer must pay him out for that leave.
annual leave may not be sold back to the employer, and the employer may not purchase annual leave days from an employee.
* the only circumstances under which the employer may pay the employee for annual leave due is upon termination of the employment contract for any reason, or upon the death or retirement of the employee.
* lastly, and this is important – an employee is entitled to take annual leave accumulated to him in an annual leave cycle on consecutive days. This means that if the employee requests to take his 11 accumulated days in one go as it were, then the employer cannot refuse that request. The employer can refuse to grant the leave until a later date if he can show good cause, but he may not stipulate that the employee can "only take 5 days" or "can only take 7 days" If the employee has 11 days accumulated to him, he is entitled to take the 11 days consecutively. (section 20 (3))
* should an employee request to take annual leave accrued to him in a leave cycle after the expiry of 6 months from the end of that leave cycle, then the employer must grant that request. (section 20 (4)) This does not mean that the employer must take the leave within 6 months of the expiry of the previous leave cycle. It simply means that should the employee request to take the leave, then the employer cannot refuse that request.
* If the employee does not request to take the leave then the leave days accumulated remain to the credit of the employee.

Annual leave and shutdown periods

Many employers have a shutdown period over December. If this is the case, the employer is entitled to stipulate that annual leave must be taken to coincide with the shutdown period.

Should an employee utilise his annual leave at another time during the year, then the shutdown period will be treated as unpaid leave. What happens in cases where an employee who commenced work in November last year, the employer shut down for a period of 12 days over the Christmas season, and the employee was allowed to take 12 days paid leave for the shut down period, even though he had not yet accrued that amount of leave?

On the 30th of January, the employee resigned and the employer wanted to know if he could deduct the period of leave taken by the employee from any final monies due to the employee upon expiry of the notice period.

The answer unfortunately is no – because in this particular case, the employee never “took the leave” - he went on paid leave with the consent of the employer. The only agreement (verbal) between employer and employee was that the employer agreed to allow the employee to take 12 days paid leave, although he had not yet accrued any annual leave to his credit. There was no agreement entered into whereby the employee agreed that he would “repay” the employer for the leave granted should he resign from the employment before having accrued sufficient annual leave days to cover up the "advanced leave."

Thus, since there was no agreement to that effect, the employer cannot now come along with a new condition - namely to deduct money - to that agreement without placing himself in breach of the original agreement.

Employers must be careful to ensure that whenever they permit an employee to do something or to receive a benefit whereby the position may arise where the employee “owes” the employer something, then a proper written agreement should be entered into to provide for the reimbursement by the employee to the employer for whatever must be repaid.

Annual leave entitlement

The BCEA states that the provisions for annual leave do not apply to an employee who works less than 24 hours per month for an employer, and also these provisions do not apply to leave granted to an employee in excess of the entitlement allowed in terms of the BCEA. An annual leave cycle is a period of 12 months with the same employer, calculated from the employee's commencement of employment, or from the completion of that employee’s previous leave cycle. The entitlement is 21 consecutive days annual leave on full remuneration, in respect of each annual leave cycle, and if an employee works a five-day week then this is equal to 15 working days, or if the employee works a six-day week then it is equal to 18 working days. In other words, whatever number of working days falls within the 21 consecutive days, is the number of working days on full pay that the employee must be granted for annual leave purposes.

Calculation of accrual of leave – 1,25 days per month or 1,5 days per month. If the employee is working a five-day week, then the annual leave will accrue at the rate of 1,25 days per month, and if the employee is working a six-day week then the annual leave will accrue at the rate are of 1,5 days per month.

Calculation of accrual of annual leave – 1 hour for every 17 hours worked

An alternative method of calculating annual leave has been provided for in the Act, and it would seem that the intention of the legislator, in providing this alternative method of calculation, was to provide for an easy means of calculating the annual leave for temporary employees, or fixed term employees.

This method makes provision that the annual leave may be calculated on the basis of one hour of annual leave on full remuneration for every 17 hours on which the employee worked, or was entitled to be paid, or it can be calculated on the basis of one day annual leave on full remuneration for every 17 days on which the employee worked or was entitled to be paid. This method of accrual may only be applied by agreement with the employee. If there is no such agreement, then the employer is obliged to apply the accrual at the rate are of 1,25 days or 1,5 days monthly, as the case may be.

As far as pay for annual leave is concerned, the following (BCEA section 21) should be noted:

21. Pay for annual leave.—(1) An employer must pay an employee leave pay at least equivalent to the remuneration that the employee would have received for working for a period equal to the period of annual leave, calculated—

(a) at the employee’s rate of remuneration immediately before the beginning of the period of annual leave; and

(b) in accordance with section 35.

(2) An employer must pay an employee leave pay—

(a) before the beginning of the period of leave; or

(b) by agreement, on the employee’s usual pay day.

A sectoral determination has been issued, regulating which amounts must be included in the calculation of annual leave pay, and which amounts must be excluded. The same the sectoral determination also regulates the method of calculation of the severance pay.

Calculation of Remuneration in terms of Section 35 (5) of the Basic Conditions of Employment Act, 1997 (Act 75 Of 1997)

The Minister of Labour issued a determination in Government Notice 691 dated 23rd May 2003, stating that the following method of calculating employee's remuneration for the purposes of annual leave in section 21, payment instead of notice in terms of section in 38 and severance pay in terms of section in 41 of the Basic Conditions of Employment Act. This determination became effective on the 1st July 2003.

1. The following payments are included in an employee's remuneration:

a) housing or accommodation allowance or subsidy; or housing or accommodation received as a benefit in kind. Any housing or accommodation allowance or subsidy paid in cash, or the value thereof of if paid in kind, is deemed to be part of remuneration.

b) car allowance or the value of provision of a company car. This does not apply in those instances where the employer provides a vehicle to the employee so as to allow the employee to travel to and from work, with no other private usage of the vehicle by the employee.

c) any cash payments made to an employee, except those listed as exclusions is in 2 below.

d) employer's contributions to medical aid, pension, provident or similar funds or schemes, must be considered as part of the employee's remuneration and must be included when making calculations in terms of this notice.

e) employer's contributions to funeral or death benefit schemes also form part of remuneration and must be included in the calculation of remuneration.

2. The following items do not form part of the employee's remuneration for the purpose of these calculations:

a) any cash payment or payment in kind that is provided in order to enable the employee to work (for example, equipment, tools or a similar allowance, or the provision of transport or the payment of a transport allowance to enable the employee to travel to and from work only.

b) a relocation allowance

c) gratuities, for example tips received from customers, and gifts received from the employer.

d) share incentive schemes.

e) discretionary payments not related to the employee's hours of work or performance, for example a discretionary profit-sharing scheme.

f) an entertainment allowance

g) an education or schooling allowance.

3. The value of payments in kind must be determined as follows.

a) a value agreed to in either a contract of employment or collective agreement, provided that the agreed value may not be less than the cost to the employer of providing the payment in kind; or

b) the cost to the employer of providing the payment in kind.

(Employers who provide accommodation to the employees, or any other benefits in kind, are advised to enter into a written agreement with the employee regarding the value of the accommodation or other benefits provided in kind.)

4. An employee is not entitled to a payment or the cash value of a payment in kind as part of remuneration if:

a) the employee received the payment or enjoyed, or was entitled to enjoy, the payment in kind during the relevant period.

b) in the case of a contribution to a fund or scheme that forms part of the remuneration, the employer paid a contribution in respect of the relevant period.

5. This schedule applies only to pay for annual leave accrued from the date of operation of this schedule.

6. If the payment fluctuates, it must be calculated over a period of 13 weeks or if the employee has been in employment for shorter period, over that period.

7. A payment received in a particular period in respect of a longer period (e.g. a 13th cheque) must be calculated pro rata.

8. This schedule applies only to the minimum payments that an employer is required to make in terms of the Basic Conditions of Employment Act, 1977.

Public holidays falling during a period of annual leave

Should a public holiday fall during a period whilst an employee is on annual leave, and the public holiday falls on the day on which the employee would ordinarily work, then the employee is entitled to an extra day annual leave for each such public holiday.

When may annual leave be taken?

The employee is entitled to take whatever leave he has accumulated in an annual leave cycle, on consecutive days. This means that if an employee has, for example, accumulated 11 days during an annual leave cycle, he is entitled to take those 11 days consecutively, and the employer may not refuse him permission to take those 11 days consecutively. Annual leave not taken during an annual leave cycle is automatically carried over to the next annual leave cycle, unless there exists any agreement to the contrary.

Section 20 (4) BCEA (Employer forced to grant leave)

Should the annual leave be carried over from one cycle to the next, and the employee has still not taken his annual leave from the previous cycle within six months of the new cycle, then the employee can demand to take that annual leave from the previous cycle, and the employer may not refuse such permission. This is the only condition under which an employer is forced to grant annual leave upon request by the employee. The employer may not require (force) or permit (allow) an employee to take annual leave during any other period of leave to which the employee is entitled. This means for example, that if an employee is on annual leave, and he falls ill during that period of annual leave, he can visit the doctor and if the doctor certifies that he is unfit for work for a certain period of time, then upon that employees return to work from annual leave he can hand the medical certificate to the employer, and the employer must credit that employee’s annual leave with the number of days sick leave, and debit the employee's sick leave. This also means that if an employee has sick leave days available to his credit, the employer cannot force the employee, nor can he allow the employee, to utilise annual leave instead of taking sick leave.

Annual leave during a period of notice

The employer may not force an employee to take annual leave during any period of notice, and the employee is prohibited from taking annual leave during any period of notice.

Who decides when annual leave can be taken?

Section 10 makes provision that the employee and the employer must agree on when annual leave can be taken, and if there is no agreement, then annual leave is taken at the time to suit the employer.

Can I exchange my annual leave for cash?

The employer is prohibited by section 20 (11) from paying an employee for annual leave except upon termination of employment.

For more information contact advice@labourguide.co.za

Article first published on The South African Labour Guide website