There is little doubt that the measures taken by Government to reduce the transmission of the COVID-19 virus have had a profound impact on employer-employee relationships. Many of our members have been asking whether annual leave accrues during the lockdown period. At face value, the question seems unproblematic, however, through legal analysis of the relevant statutory provisions, it becomes clear that various challenges exist when dealing with the question.
The point of departure in answering this question will be to look at the applicable provisions of the Basic Conditions of Employment Act (BCEA). Section 20 of the Act provides as follows:
20. (1) In this Chapter, “annual leave cycle” means the period of 12 months’ employment with the same employer immediately following-
a) an employee’s commencement of employment; or
b) the completion of that employee’s prior leave cycle.
(2) employer must grant an employee at least-
a) 21 consecutive days’ annual leave on full remuneration in respect of each annual leave cycle; or
b) by agreement, one day of annual leave on full remuneration for every 17 days on which the employee worked or was entitled to be paid.
c) by agreement, one hour of annual leave on full remuneration for every 17 hours on which the employee worked or was entitled to be paid.
Section 20(2) essentially creates two different circumstances under which annual leave accrues.
Firstly, S20(2)(a) creates a default provision whereby annual leave will accrue by virtue of the existence of an employment relationship. Under this provision, the annual leave cycle is the period of 12 months calculated from the first day of employment or from the end of the previous leave cycle and leave will accrue as long as the employment contract exists.
Secondly, the BCEA permits an arrangement between the employer and the employee whereby annual leave will accrue at a rate of 1 day/hour for every 17 days/hours either worked or where the employee is entitled to payment. In order for this provision to apply, it must be specified in writing in an agreement between the parties, usually in the form of a written contract of employment.
We will discuss the first provision and its possible application. Where employees render essential services during the lockdown or are working remotely, leave will continue to accrue in accordance with section 20(1) by virtue of the contract between the parties with reference to the leave cycle of one year.
If the employee is unable to work remotely, and the principle of no work, no pay applies, annual leave will accrue as the employer-employee relationship still exists. Therefore, regardless of the duration of the lockdown, the employee will be entitled to 21 consecutive days annual leave regardless of whether the employee has worked or earned a salary during lockdown. The employee will still be entitled to his leave for as long as he remains in the service of the same employer.
In the above circumstances, should the employee’s salary fluctuate significantly, the provisions of S35(4) apply when determining the amount of remuneration that must be paid for the leave period:
“If an employee’s remuneration or wage is calculated, either wholly or in part, on a basis other than time or if an employee’s remuneration or wage fluctuates significantly from period to period, any payment to that employee in terms of this Act must be calculated by reference to the employee’s remuneration or wage during-
(a) the preceding 13 weeks; or
(b) if the employee has been in employment for a shorter period, that period.”
The BCEA presents the parties with an alternative to how leave is accrued when concluding an employment contract, namely one day’s leave for every 17 days worked or for which the employee was entitled to be paid, or one hour’s leave for every 17 hours worked or for which the employee was entitled to be paid. This implies that where the parties have agreed to this in the contract of employment, the employee who does not render services during this time will not accrue any leave.
Should parties have concluded an employment contract, and the contract contains a provision that leave will accrue in terms of the above entitlement, then should the employee not be tendering a service during the lockdown or be rendering a reduced-working hours arrangement, then leave will either not accrue or accrue at a rate of 1 day for every 17 days actually worked.
In circumstances where employers have agreed to pay employees during the lockdown although the employee is not tendering a service, the law is silent on whether leave will accrue. It is our submission that under these circumstances, provided that there is a leave agreement in the contract as stated above, then leave will not accrue as the employee will not be entitled to the payment received, but received such payment ex-gratia from the employee.
The above article only attempts to deal with the accrual of the leave benefit and not all aspects relating to annual leave. Should you have any questions regarding this topic or any other question relating to the employer-employee relationship, kindly contact our offices, and we will be happy to assist.