Where there has been a transfer of employment, what happens to an employee's accrued but untaken annual leave? Below we consider the position across Australia, New Zealand, Singapore, Malaysia and Indonesia.
There are no issues with paying out all accrued but untaken annual leave. If the employees are moving between two unconnected entities, the business the employees are moving to can chose not to recognise any accrued but untaken annual leave, in this situation the business the employees are moving from would be under an obligation to pay out.
There are no issues with paying out all accrued but untaken annual leave. It is the default position that because the transferring employee's employment will be terminated, any accrued annual leave must be paid out on termination.
For Employment Act covered employees whose employment is automatically transferred, annual leave may not be cashed out without consent. Non-Employment Act covered employees enter into new employment on a transfer and therefore the previous employer will be obliged to pay out on accrued annual leave on termination.
There is no principle of automatic transfer and the previous employer will be obliged to pay out on accrued annual leave. If the employee is covered by the Employment Act (earns less than RM 2000 per month) the new employer must provide annual leave for the employee from the date of transfer going forwards. The total period of employment will be relevant when determining how many days annual leave the employee is entitled to.
If there is a termination and re-hire, the previous employer is obliged to pay out the accrued but untaken annual leave and the new employer must provide annual leave from the employee from the date of transfer going forwards. If the move between businesses is conducted as a transfer then it is best practice for the previous employer to make severance payments so that all accrued but untaken annual leave is paid out by the previous employer.