• Aadil Patel

Covid-19’s accumulated leave crisis - How banked leave is burdening company balance sheets


Covid-19 lockdown regulations have placed strict limitations on both domestic and international travel. With the restriction of movement employees have either cancelled their annual leave or are holding onto their days with the hope of taking a break after the Covid crisis. As a result of this, companies are faced with the challenge of accumulated unused leave which presents a financial risk. A recent survey by Wills Towers Watson shows that one-third of local companies have had to change their staff holiday policy due to Covid-19, with a further 25% thinking of doing so in response to the leave crisis.


According to Aadil Patel, Director and National Head of commercial law firm Cliffe Dekker Hofmeyr’s Employment practice, often, employers allow employees to accumulate leave in excess or the statutory leave of 15/21 days during an annual leave cycle. If employees have unused accumulate leave, this will increase the financial burden on the employer if they have a "cash-in" policy or should they embark on a retrenchment exercise. “Employers may request employees to go on statutory leave. This is obviously dependent on their operations needs despite their leave credit. The most preferred option would be to negotiate the exercise of employee benefits especially if there is a financial component such as in the case of "cash-in" policies.”


FREQUENTLY ASKED QUESTIONS: EMPLOYEE LEAVE AND COVID 19:


  • Can an employer place a worker who presents symptoms of COVID-19 on sick leave?

Yes, the employer must place this employee on sick leave in terms of section 22 of the Basic Conditions of Employment Act, 75 of 1997 (BCEA). If the employee’s sick leave entitlement is exhausted, the employer must make an application for an illness benefit in terms of COVID-19 TERS.


  • Is there a TERS claim where the employer required the employee to take annual leave during the lockdown in terms of section 20 (10) of the Basic Condition of Employment Act?

An employer, who has required an employee to take annual leave may set off any amount received from the UIF in respect of that employee's COVID-19 benefit against the amount paid to the employee in respect of annual leave provided that the employer credits the employee with the proportionate entitlement to paid annual leave in the future.


In addition, in terms of a TERS Directive published on 26 May 2020, the purpose of the TERS directive has been extended to include providing a benefit to workers who have been directed to take annual leave in terms of the relevant provisions of the BCEA.


  • What about employees placed on annual leave during the lockdown - do they get paid for public holidays and, if not, may they claim under TERS?

Employees on annual leave must be paid for the Public Holiday as under normal circumstances. There is a TERS claim in respect of the annual leave provided an employee is credited with the proportionate leave entitlement.


  • Employees are on a Fixed Term Contract ending March 2020. Business closed. They have no annual leave to utilise while on lockdown. Must the employer implement unpaid leave or pay a prorated salary? Is there a TERS claim?

If the end date is clearly stipulated in the fixed term contract, the contract must end, even during the lockdown. While the company can use their discretion regarding negative leave, it is recommend that an agreement is reached between the employer and employee regarding negative leave.


  • In the case of an employee diagnosed with COVID-19, will they first be entitled to the normal sick leave instead of claiming the illness benefit in terms of TERS or COIDA?

COVID-19 has recently been declared an occupational disease in terms of COIDA. This means that if an employee is absent from work due to contracting the virus during the course and scope of his/her employment, such leave will be covered in terms of COIDA.


If the employee contracted the COVID-19 virus outside of the course and scope of employment, the employee must take sick leave. If the employee is diagnosed with COVID-19 and is quarantined they will qualify for the Illness benefit under the directive first. The reasonable approach is to conserve the employee’s right to sick leave as provided by the BCEA.


  • Does an employee accrue leave during the lockdown when the employee is not working?

Based on section 20(2) of the BCEA, employees can accrue leave during the lockdown period whether they work or not unless they accrue the leave on a daily basis (in other words per agreement of 1 day of leave for every 17 days worked).


  • Employees must take their annual leave within 6 months after the leave cycle. If their leave was scheduled during the lockdown, can it be cancelled and moved to another later date in the year even after the 18 month period?

When leave has been granted to an employee the employer cannot unilaterally cancel the leave. The leave may, by agreement, be rescheduled for a later time.

ENDS

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