It is common practice for companies to align their annual leave cycles with either their financial year or the calendar year. However, in order to do so, companies need special ministerial variation.
Is this news to you? What does the law say?
Section 20 of the Basic Conditions of Employment Act, 75 of 1997 (BCEA), which governs annual leave, provides as follows:
"(1) ‘‘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."
The wording of section 20 thus envisages that each employee's annual leave cycle runs for a period of 12 months following the commencement of his employment and each anniversary thereafter. This means that, potentially, each employee may have a different leave cycle.
The practical nightmare: multiple leave cycles
Having a myriad of different leave cycles can be challenging to manage, more so where the employer operates a payroll system which cannot run more than one leave cycle. As a result, employers frequently align all their employees' annual leave cycles with either the calendar year or their financial year, often inadvertently flouting the provisions of section 20 of the BCEA.
How to remedy the problem
The BCEA requires an employer to make a specific application for variation where it seeks to vary the conditions of employment contained in the Act. Variation is obtained through application to the Minister of Labour, on notice to or with the consent of any registered trade union or the employees themselves, as applicable.
Section 50 of the BCEA provides the Minister of Labour with the power to, if it is consistent with the purpose of the BCEA, make a determination to replace or exclude any basic condition of employment in respect of-
- any category of employees or category of employers; or
- any employer or employee in respect of whom an application is made by-
- the employer;
- the registered employers' organisation;
- the employer and the registered employers' organisation.
Accordingly, an employer desirous to either align their leave cycle with the calendar or financial year or remedy their previous non-compliance must make an application to this effect to the Minister in terms of section 50 of the BCEA. Non-compliance with the provisions of the BCEA may result in the Department of Labour approaching the Labour Court for the imposition of a penalty on the employer of up to R1500 per affected employee.