The Basic Condition of Employment Act states that an employee must be paid an equivalent of the remunerations he/ she would receive for a working period equal to the annual leaves. However, the matter of leave pay on the termination of employment in South Africa has been the most puzzling.
But no worries, as I will take you through all conditions and payments subjected to the employer on the employment agreement termination.
Cases for Payment on Termination of Employment
Here are the following payments an employer is subjected to pay on the termination of the employment.
- For any paid time off/ leave that the employee has not used and possesses the right to be paid.
- Remunerations are calculated for any period of annual leave, in accordance with Section 21 (1) and Section 20 (2) of the Basic Conditions of Employment Act BCEA.
If the employee is working under the employer for longer than four months and is entitled to annual leave as defined in Section 20 (1). According to this section, one-day remuneration is made respective to every 17 working days or remunerations are calculated on the basis, which is least as favorable to the employee as the one calculated in the subparagraph of the section.
Section 21 (1) of the BCEA deals with cases where the employee has resigned or his/ her employment agreement was terminated, though the decision still remains debatable. The section states that the employee must pay the employee remunerations on termination of the employment and these remunerations are calculated for any period of annual leaves unused by the employee.
Therefore, “any period of annual leave” in this section implies that the employer is subjected at all costs to pay the employee for the unused annual leave. Please note that the unused annual leave will even include the days accrued last year or a year before.
How is the Leave Pay Calculated on Termination of Employment?
According to Section 21 (1), the remunerations for the annual leave are paid at the rate of remunerations earned while the leave was accrued. For instance, if the employee still has unused leave accrued three years ago, it will still be included in the payment. And, the payment would be made at the rate of remunerations earned by the employee at the time leave was accrued.
Severance Pay
The employer is also required to pay for the employees dismissed for the reason based on the employer’s operational requirements. According to Section 38 of the Insolvency Act, the operational requirements refer to the economic, technical, and infrastructure needs of the employer. Typically, the severance pay is equal to at least one week of remunerations for each year completed in service for the employer.
Final Words
As suggested by the labor laws, the employer is obligated to pay the due share of unused annual leaves at the termination of the employment agreement. I hope this article clarifies all your queries regarding the payment of the unused annual leaves.