With skills in short supply and the level of unemployment in South Africa rising, the issue of how best to manage people in business continues to gain traction.
Aspects like leave and leave policy often makes the critical difference as to whether a business can retain talent or not.
The various forms of leave accrual, and entitlements as set out in the Basic Conditions of Employment Act (BCEA), provide for the minimum – however no limit is placed on maximum amounts which a business may decide to make available to employees.
However, they should remain within the confines of objectivity, consistency, transparency, ethical practice and good governance – or risk becoming subject to discrimination and complaints of unfair labour practice.
This is the reality of the market today.
The four main types of statutory leave are enacted in the BCEA; including annual leave, sick leave, family responsibility leave and maternity leave, but these do not in any way limit additional leave types and entitlements which the employer may wish to offer – such as study leave, paternity leave, cultural leave and marriage leave.
It should be noted that even though employers may offer the above additional leave types at their own discretion they should have appropriate reasons for approving or declining the applications or they could be at risk of having an unfair labour practice or a discrimination complaint leveled against them.
Another challenge facing most businesses is how best to manage issues such as accrued leave, leave encashment and additional paid leave.
Accrued Leave is the amount of leave time that an employee has accrued as per the BCEA, Bargaining Council, Sectoral Determination, Company Policy or any other reason recognised by legislation, but which has not yet been used or paid. This is a financial liability for the employer.
In terms of the BCEA the accrual of leave is only applicable to annual leave, the employee is entitled to 15 working days per annum on full pay. The Act states “21 consecutive days” and reference to a calendar will show that 21 consecutive days equals 15 working days based on a five day week, or 18 working days based on a six day week. ‘Consecutive’ means that an employee has an entitlement to take the accrued leave in successive days.
This doesn’t mean that an employee immediately has 15 days leave due to him/her from the first day of employment, this leave has to be accrued before it comes due and it is accrued by a simple formula, as follows: 15 days divided by 12 months’ equals 1.25 days leave accrued per month. In other words, this leave is only available to the employee once it has been accrued.
However, other statutory leave types become immediately available, with two variations, during the first six months of employment – sick leave, which is accrued at one day paid sick leave for every 26 days worked, where after the employee’s full entitlement becomes available and is not subject to accrual. Family Responsibility Leave becomes available after four months of employment.
Leave Encashment is a term used to describe what is in effect the selling of one’s leave and amounts being paid out for the financial value of leave days.
The BCEA is quite clear on this based on section 21, employers may not pay workers instead of granting leave, except on termination of employment.
However, many companies do still encash leave without terminations taking place. In terms of the BCEA this is not allowed, or is it?
Yes, within certain conditions it is allowed. The BCEA makes provision for minimum leave entitlements either 15 or 18 paid days depending on a five or six day work week. If, as per company policy, employment contract or mutual agreement, an employee receives a leave entitlement larger than the minimum, it is not regulated by the BCEA because this is a benefit over and above what is provided by the BCEA.
This means that additional paid leave over and above the statutory minimum, can be regulated by the company policy, and may be paid out.
The MEIBC provides for additional paid leave over and above the minimum entitlement provided for by the BCEA.
The issue of leave management in general is one that many businesses will have to grapple with as staff satisfaction and retention are major issues in the digital age.
Alternatively, those that are intent on growth and for whom issues like digitisation and agility remain challenges, will have to come to terms with and understand these issues thoroughly if they are to successfully evolve.
Nicol Myburgh is the Head of HR Business Unit at HR and HCM specialist services provider at CRS Technologies.