9th October 2018

Question: Can annual leave be forfeited?

(a) Non-statutory annual leave (i.e. leave granted in excess of the minimum statutory leave) can be forfeited.
(b) The forfeiture of statutory annual leave is more controversial, but the most recent labour court judgement indicates that it can be forfeited.

Non-statutory annual leave:

Leave in excess of the statutory minimum is not regulated by the BCEA, but by the contract of employment. The parties can therefore determine by agreement how much leave may be accumulated, when it would be forfeited, etc.

Statutory annual leave:

In terms of the BCEA an employee is entitled, in respect of every 12 months leave cycle, to 21 calendar days’ leave (The number of working days’ leave to which the employee is entitled is equivalent to that which the employee would normally work in a three week period). The employer is obligated to grant annual leave not later than six months after the end of the annual leave cycle.

It is normally upon termination of employment that disputes arise about what leave pay-out an

Employee is entitled to;

The most recent Labour Court judgment on the issue is Ludick v Rural Maintenance (Pty) Ltd (JS 633/07) [2013] ZALCJHB 291 (30 October 2013). Here 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 in 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.

The effect of the Ludick-case is that it shifts the primary responsibility to ensure that leave is taken from the employer to the employee. The employee should apply for all the annual leave accrued in the most recent leave cycle, and this must be taken within the 6 month period after the end of the leave cycle. If the employer refuses to grant such leave, the employee may approach the Department of Labour to assist with enforcement. If the employee fails to apply for leave or the employee does not go on leave, such leave would be forfeited. (The forfeiture is subject to more favourable provisions that may be contained in the contract of employment or the employer’s leave policy).

K. Cowley
(Chairperson – (CEA – LBD)