Annual leave and Shutdown Periods
Every year at this time, we remind employers of certain “ annual” happenings in terms of labour law, not the least of which is the question of the employer's shutdown and how this is related to the employee's annual leave entitlement.
I receive many e-mails at this time of the year from employees, asking the question “ is it fair that the employer can deduct the shutdown period from my annual leave ?”
The question really should not deal with fairness - but rather with the legality of it. The answer is that it is certainly legal. Some employees may not consider it to be fair, but then nobody ever promised us that the laws of the country would be fair.
The following are the ground rules on this question, 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 varied conditions, or perhaps a contract of employment or company policy.
- The employee is entitled to 21 consecutive days annual leave on full pay in every leave cycle. This equates to 15 working days per annum if the employee works a 5 -day week, and 18 working days per annum if the employee works a 6 -day week.
- A "leave cycle" means a period of 12 months commencing from the 1st 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. Public holidays falling within a period of annual leave are granted as an extra day of paid annual leave.
- 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.
There are two methods of calculating the accrual of annual leave as the leave cycle progresses. The first may only be applied with the prior agreement of the employee:
- On the 17th day of the leave cycle, the employee would have accrued 1 day leave (section 20 (2) (b)). It should be noted that this method of accrual may only be applied by agreement with the employee.
- On the passage of every 17 days after that, another 1-day annual leave accrues to the employee's benefit.
If there is no other agreement with the employee, then the accrual is 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. No employee agreement is required to apply this method of accrual.
- Annual leave may only be taken by agreement between the employer and employee. (Section 20 (10) (a)).
- In the absence of any such agreement, annual leave must be taken at a time to suit the employer. (Section 20 (10) (b)).
This means that the employer is entitled to have a policy stating that a certain period will be regarded as a shutdown period, and employees are required to take annual leave for the period of closure. Another question are often get from employers is “ how do we calculate annual leave payment?” It is fairly simple arithmetic - the monthly salary is divided by 4.33, which gives you a weekly salary. The weekly salary is divided by 5, which gives you a daily salary.