It may be time to review your policy on Accrued Annual Leave Payments

There are three possible instruments that regulate the payment of accrued annual leave upon an employee’s termination of employment.  The first is the Basic Conditions of Employment Act (BCEA)[1], second, an employment contract and the third, a leave policy.

The BCEA does not stipulate the minimum amount of statutory accrued annual leave that ought to be payable to an employee upon the termination of employment.  The Labour Court however, in Ludick v Rural Maintenance (Pty) Ltd [2014] 2 BLLR 178 (LC) held that the payment of untaken statutory leave is limited to the current and immediately previous leave cycles.[2]

That being said, the employee in Bester v Selfmed Medical Scheme (C171/2015) [2018] ZALCCT 25 (31 July 2018) (unreported decision), successfully claimed inter alia 213.5 days of accrued annual leave from Selfmed, following the termination of her employment, totalling an amount in excess of R1.4 million.  Mrs Bester argued that her annual leave of 213.5 days accrued in terms of a policy that the Trustees of Bestmed adopted in 2005 and which was never rescinded. Even though Bestmed was of the view that Mrs Bester should not be paid the above amount of accrued annual leave, it was unable to gainsay Mrs Bester’s evidence that the policy applied. Accordingly, the Labour Court ordered Bestmed to pay Mrs Bester inter alia 213.5 days of accrued unpaid leave, totalling an amount in excess of R1.4million (less an amount of R281 422.08, which equated to 45 days of accrued leave that Bestmed paid to Mrs Bester upon the termination of her employment).

TOP TIPS

  1. It is advisable for employers to assess their leave policies against applicable employment contracts.
  2. Generally, it is not advisable for employers to regulate the payment of accrued leave in employment contracts because the employee’s consent is required before amending the contract.
  3. If the BCEA regulates the minimum amount of annual leave payable upon the employee’s termination of employment, as held in Ludick, employers may not pay employees less than the minimum statutory accrued annual leave entitlement, even if this is agreed between the parties.
  4. If an employer wishes to curtail the payment of possible excessive accrued leave, it is important to ascertain whether the payment for the accrued leave is due in terms of an employment contract or a policy.
  5. If it is due in terms of an employment contract, as mentioned above, the employee’s consent is required before amending the contract.
  6. If the leave is due in accordance with a policy, an employer should assess whether grounds exist to reduce the number of accrued days payable in terms of the policy, to safeguard against potential unfair labour practice disputes.

 

 


[1] Although it does not necessarily apply to all employees – see section 19 read with section 40 of the BCEA.

[2] A ‘leave cycle’ in terms of the BCEA, means 12 months employment with the same employer immediately following an employee’s commencement of employment or the completion of that employee’s prior leave cycle.

IRSHAAD SAVANT

Senior Associate
Commercial Attorney

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