Annual Leave – keeping records

 

Keeping employee annual leave records is a responsibility placed on employers by the BCEA as well as many Bargaining Council Collective Agreements. During the festive season, this becomes very important, as companies close over December and accurate records will show which employees are entitled to what.

This post aims to show in short, what is important to keep:

Leave Records MUST include:
• the name, surname and clock number of the employee
• the date employment commenced
• the days on which an employee works, if the
information is relevant to entitlement or payment
• the employee’s current entitlement to annual
leave
• the dates any annual leave was taken
• the amount of payment for any annual leave taken

In South Africa, the BCEA rule for annual leave is that an employee accrues 1 day for every 17 days’worked. This can be further broken down to say that an employee accrues 1 hour’s leave for every 17 hours’ worked.

The way this is set up on payrolls is usually that it amounts to 1.25 days per month, and if you take 1.25 days and multiply it by 12 (months), you will get the required 15 annual leave days as required.

The following is a list of 3 pitfalls we have identified in companies’ approach to annual leave:

  1. Employers mistakenly think that employees are entitled to 21 paid annual leave days. This is not true – the requirement is for 21 consecutive days, but only 15 paid days. This is because in a period of 3 weeks, there are only 15 (possibly 18 – if employees work a 6-day week) working days for which an employee applies for annual leave.
  2. Employers award all their staff 3 weeks’ annual leave days at the beginning of each year, instead of accruing it throughout the year. The risk here is massive, firstly because the rule is completely misinterpreted. Annual leave is meant to be accrued, and if you just make it available at the beginning of each year, keeping the annual leave records becomes a nightmare. Also – when employees leave the company, the calculation of their termination leave is also much more complicated.
  3. Employers do not ensure that employees go on 3 weeks’ leave and the leave ends up accruing until it becomes unaffordable. It is important to have a leave policy / clause in employees’ contract of employment that makes it compulsory for employees to go on leave once a year, or else forfeit such leave. This then places the obligation on both parties to ensure that the employee starts on a zero balance each year.

It is easy to set up the annual leave accrual on most payroll software packages. It is also good if you use an excel template in order for your records to contain all the information it needs.

We use SAGE payroll software and have acquired the leave module in order to keep records more efficiently.

You should ensure that you keep records as well. 🙂

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