You know that one colleague who never takes annual leave lets it accumulate so they can take out a giant payout when they resign? Well, the labour court has just popped that balloon. 

In June, it ruled against a car salesman in Durban looking for an R800,000 payout based on his annual leave accrual after another bought out the company he worked for. In the rather messy labour-related dispute that followed – which included the salesman finding out his salary had unilaterally been slashed by 67% – he tried to argue that his enormous annual leave accrual needed to be paid out to him in full. While the court found that his salary cut amounted to a breach of contract, he was less successful on the leave.  

The court’s decision reinforced the principle that annual leave must be taken within a specified period, as outlined in South Africa’s Basic Conditions of Employment Act (BCEA). According to the ruling, employees who fail to take their annual leave within six months after the end of the leave cycle risk losing their entitlement to that leave. This decision underscores the idea that annual leave is intended for rest and recuperation rather than being treated as a financial commodity that can be indefinitely banked and later cashed out.

South African labour regulations, particularly those in the BCEA, stipulate that employees are entitled to at least 15 working days of paid annual leave during each leave cycle. Importantly, this leave must be taken within six months following the conclusion of the leave cycle. The BCEA explicitly prohibits employers from compensating employees with pay instead of granting annual leave, except when the employment relationship is terminated.

These regulations aim to ensure that employees take the necessary time off work to rest, recharge, and maintain their overall well-being. By enforcing this requirement, the law promotes a healthier, more productive workforce while safeguarding employees’ rights to rest periods. Think about it. While you may imagine that never taking leave is “banking” some cash away, you’re giving away your labour rights. And that is just not kosher. 

Allowing annual leave to accumulate indefinitely can create a loophole that undermines the very purpose of these legal provisions. When employees are permitted to carry over leave indefinitely, or when leave is treated as a financial asset to be cashed out later, it can lead to situations where employees, driven by financial considerations, forgo taking their much-needed rest. 

So take your leave, people! It’s your right, and honestly, you will have earned it.