The question always arises where employers have a financial liability in terms of leave being accrued or rolled-over by employees. It is not a secret that the BCEA and OHSA requires an employee to have a specific rest period and in order for that rest period to be sufficient, leave must be taken within a period of 12 months.
An employee is entitled to legally provided leave which is referred to as Statutory Leave, which is given by the law in the BCEA e.g. if you work a 5-day work week, you are entitled to 15-working days paid leave per year (12 months) or a 6-day work week = 18 days per year.
Some companies or employers will allow as a long service reward or for certain senior or critical positions additional leave (above the legal indications), which is then called Non-Statutory Leave. This leave type can be forfeited in terms of the Company policy and Contract of Employment.
We all have been used to the saying that you cannot forfeit a law provided benefit such as statutory leave, however the Labour Court has provided us with some guidance in this matter and yes you can forfeit statutory leave!
In terms of the BCEA, the employer is obligated to grant annual leave not later than six months after the end of the annual leave cycle, therefore and explained – An employee has 18 months from the start of the leave cycle (when they started with the company or alternatively a calendar year e.g. Jan to Dec, depending on the Company policy), to take such leave or stand a change to forfeit the leave.
It is normally upon termination of employment that disputes arise about what leave pay-out an employee is entitled to.
The Labour Court judgment on the issue is Ludick v Rural Maintenance (Pty) Ltd (JS 633/07) [2013] ZALCJHB 291 (30 October 2013).
1. The court referred to the conflicting approaches adopted by the Labour Court in Jardine v Tongaat-Hulett Sugar Ltd [2003] 7 BLLR 717 (LC)(forfeiture not permitted); and
2. Jooste v Kohler Packaging Ltd (2004) 25 ILJ 121 (LC) (section 40 of the BCEA contemplates payment only in respect of leave immediately preceding that during which the termination takes place).
The court applied the approach adopted in the Jooste-case and found that leave not taken within 6 months after the end of the most recent leave cycle, could be forfeited.
How can the Employer effect this in the Company?
The employer is to ensure that the policies of the Company is duly updated in terms of this forfeiture of leave terms.
The employee has the freedom to take or apply for leave throughout the year, with the agreement of such period with the employer. Once the end of the cycle (e.g. 12th month or December) arrives and there are left to be accumulated to the next cycle or rolled over to the next cycle, the employer must require the employee to submit such leave credit to be taken within the next 6-months. Such leave applied or indicated, may not be cancelled by the employer and if the employee does cancel or refuse to submit the application, then the leave is forfeited on the 6th month – last day.
Employers should not cancel or cause the employee not to be able to take the days to which such forfeiture would be deemed unfair labour practice.
