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You snooze you lose! Forfeiture of accumulated leave

For the few companies whose employees have managed to accumulate leave despite the past year of lockdowns and riots, it is prudent to undertake the exercise of monitoring leave accumulation. This can become a burdensome and onerous liability for an enterprise, if not managed appropriately.

The catalyst of the debate over whether employees forfeit accumulated leave automatically emerged in a 2003 Labour Court case in the matter between Jardine vs Tongaat-Hulett Sugar Limited. In this matter the Labour Court held that employees retain claims for leave not taken during earlier leave cycles, even if the contract contains a forfeiture clause. The Jardine case was however not followed in several subsequent judgments of the Labour Court.

Recently, in a 2020 reported judgement, in the matter between Bronner versus Alpha Farm (Pty) Ltd and another, the Labour Court confirmed the principles established in Jooste v Kohler Packaging Limited (2003) and Ludick v Rural Maintenance (Pty) Ltd (2014). The law, as it now stands, is that section 20 of the BCEA contemplates payment only in respect of leave not taken in the final leave cycle preceding the termination of employment.

The Court held that the BCEA imposes an obligation on an employer to grant leave before the expiry of the six-month period. There is no right on the part of the employee to take leave at any time in that period because section 20 (10) is clear that the timing of leave, once accrued, ought ideally to be subject to an agreement between the parties. Section 20 (10) (b) provides that in the absence of agreement, the employer may determine the time at which leave should be taken.

The Court held that there cannot be any objection in principle to a provision in any employment contract that entitles the employer, ultimately, to dictate the timing of annual leave. But the timing of leave is one thing: the forfeiture of leave is quite another. The BCEA does not contemplate that an employee who does not take leave accrued in an immediately preceding leave cycle at an agreed or determined time during the six-month period following that cycle is necessarily denied that leave, or on termination of employment, its value.

In short, section 20 of the BCEA contemplates that claims for the value of accrued leave are limited to statutory annual leave accrued in the current and immediately preceding leave cycle. An employee does not forfeit that leave or any claim to its value if, for whatever reason, the leave is not taken in the six-month period contemplated by section 20(4) of the BCEA.

Section 20 (10) manifests a clear indication that the BCEA envisages that the timing of leave, once accrued, should ideally be the subject of agreement, between the parties. For that reason, it means within the parties’ powers to attach a consequence that might flow from a failure of any one of them to comply with the terms of the agreement. Such a consequence could very well be the forfeiture clause, only to the extent that it does not fall foul of the terms of the BCEA. The very fact that section 20 (4) provides that the employer must grant annual leave not later than six months after the end of the annual leave cycle mans that a failure to do so may be visited by a consequence, such as enforcement measures.

Similarly, an employer should be entitled to curb an unlimited accrual of leave by an employee, who while having a right and an opportunity to take such leave, for whatever reason, shuns it.

Accordingly, it is important to ensure that contractual clauses and company policies dealing with annual leave clearly address the issue of any limitations to leave accumulation and the potential for forfeiture of leave not taken.

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