Change the world

National Tertiary Education Union

12/02/2016

Employers are well advised to ensure that leave is taken and that employees enforce their right to take leave. In the recent case of Ludick v Rural Maintenance (Pty) Ltd¹ the Labour Court revisited the effect of the annual leave provisions of the Basic Conditions of Employment Act, No 75 of 1997 (BCEA). The employee forfeited untaken leave and the employer was ordered to pay the employee in respect of part of the accrued leave. 

The former employee, upon termination of his employment, claimed payment in respect of the value of accrued statutory annual leave. He was employed from 5 January 2004 to 1 April 2006 and never took any leave. 

He relied on s28 (read with s40) of the BCEA to claim payment of the value of the accrued leave that was accrued in respect of the two leave cycles - the first from 5 January 2004 to 4 January 2005, and the second cycle from 5 January 2005 to 4 January 2006. 

The employer relied upon the same sections and argued that, in terms of the employee's contract of employment, he had no claim as the contract specified that any leave not taken within 30 days of the financial year end would lapse. The company's year-end was 28 February and, because the employee left more than 30 days later, he forfeited any and all accrued leave. 

The court referred to the Jardine v Tongaat-Hulett Sugar judgement where it was held that leave not taken within six months after the end of a leave cycle is not automatically forfeited nor is any right to payment in respect of that leave. A different view was expressed in Jooste v Kohler Packaging where it was held that s40 of the BCEA contemplates payment only in respect of the leave cycle immediately preceding the uncompleted leave cycle during which the termination takes place. The rationale of this judgement was permitting payment in respect of prior leave cycles would allow both the employer and the employee to circumvent the Act. 

The court preferred the Jooste reasoning which it followed. On a proper interpretation of the Act, the former employee was entitled to payment of the value of accrued leave pro rata in respect of the leave cycle from 5 January 2006 to 1 April 2006 and the prior leave cycle from 5 January 2005 to 4 January 2006, but not the first leave cycle.

The court held that the BCEA contemplates an agreement between the parties regulating when annual leave should be taken. But a provision in a contract that deprives an employee of accrued leave in the current and immediately preceding leave cycles is less favourable than the provisions of the Act and invalid. 

This judgement only affects statutory leave and may well impact on existing leave policies and contracts of employment and signals to employees to take their leave or suffer the consequences. 

By Faan Coetzee, Director, Employment, Cliffe Dekker Hofmeyr

 ¹ Unreported JS 633/07 dated 30 Oct 20132

 For more information contact Faan Coetzee Faan.coetzee@dlacdh.com