Legal provisions on forfeiting annual leave
6 years ago
It’s Friday afternoon, guys in the office are counting down the few hours left to the beginning of the weekend, when an email comes through from HR addressed to all staff, it reads: ‘This is a reminder that pursuant to Clause 7.8.9 of the Employee Handbook, those who will not have taken their accrued annual leave days by 31st March, will forfeit the days’… 31st March is four weeks away!
“This is why we need a Union in this place.”
“I have 30 accrued days, I’m I supposed to go on leave the whole of next month?”
“Is this legal?”
“I have 50 accrued days, my leave applications are always rejected because of the work load in this department.”
“I will be going on maternity leave next month and I want to take some of my accrued leave days after that.”
“I have 60 accrued days and we have the auditors coming next month, I can’t go anywhere”
…some of the comments and questions flying around.
Clause 7.8.9 provides that: –
You shall be entitled to 21 days annual leave. You may, with the consent of the Company, carry forward not more than 10 days leave to the following year. Any leave carried forward must be taken by 31st March of the following year failing which the leave shall be forfeited.
Section 28 of the Employment Act, 2007 deals with annual leave;
- An employee is entitled to not less than 21 working days of leave with full pay after every 12 consecutive months of service.
- The leave may, with the consent of the employee, be divided into different parts to be taken at different intervals and unless otherwise provided in an agreement between an employee and the employer or in a CBA, one part of the parts agreed upon shall consist of at least two uninterrupted working weeks.
- Section 28 further provides that the uninterrupted part of the annual leave shall be taken during the year the leave is earned and the remainder shall be taken not later than 18 months from the end of the leave earning period.
According to Clause 7.8.9, employees are entitled to 21 leave days. Out of the 21 days, 11 are to be taken in the year they are earned, leaving not more than 10 which may be carried forward but only up to 31st March of the following year; meaning, any accrued days not taken by 31st March are forfeited.
The problem with this Clause is the requirement that all leave days be taken by 31st March. Under Section 28, employees have 18 months from the end of the leave earning period to utilize accrued leave before we can talk of forfeiture.
The Employment & Labour Relations Court is divided on this matter. There are those judges who do not agree that leave should ever be forfeited (unless after the 3 year limitation period); there are those others who believe that leave may be forfeited 18 months after the end of the leave earning year; and there are those who are of the view that leave may be forfeited in accordance with the contractual terms. The divergent views in largely due to the poor wording of the section.
The employees should take up the matter with management through the company’s grievance handling procedures. In one case decided by our courts, the presiding judge decried the culture of employees remaining silent while their rights are trampled upon.
My advice – provide for forfeiture in the contract, manage it as HR to ensure compliance but be ready for whichever outcome if challenged.
Exigencies of work
Where the reason for not utilising accrued leave days before the expiry of eighteen months is an employee’s workload or what is popularly referred to as ‘exigencies of work’, the employer is unlikely to succeed in arguing that the accrued days stand forfeited.
The employee should be paid the cash equivalent of the accrued days prior to the lapse of the 18 months. For this to apply, there should be evidence of denial of leave on grounds of exigencies of work.
For those entitled to more than 21 days
Section 28(5) of the Act applies where the leave entitlement is more than 21 days, in such a case, the employer and the employee may agree on how to utilise the leave days. This sub-section is not clear. Since the parties are at liberty to agree, does it mean that contracts for such employee can legally provide for a shorter period of forfeiture? It is arguable because the provisions on forfeiture in Section 28 seem to deal only with employees who are entitled to the statutory minimum.
Section 28 is borrowed from The ILO Holidays with Pay Convention (Revised), 1970 (No. 132) Article 9 thereof provides that,
Any part of the annual holiday which exceeds a stated minimum may be postponed, with the consent of the employed person concerned, beyond the period specified in paragraph 1 of this Article and up to a further specified time limit.
It appears that the intention is to increase the period to forfeiture for those entitled to more than the statutory minimum but our Section 28 is not as clearly worded, leaving room for conjecture and confusion.
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