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Bonuses And Annual Leave

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Dear Reader. 

It is very hard to believe that the holiday times are upon us, but indeed it is.  This time of year brings with it many questions surrounding the payment of bonuses (13th cheques) and annual leave.  Below you can find a short summary on each.  
We would like to thank you for your support throughout the year and wish you, health, wealth, peace and prosperity for 2010.

a.    Bonuses / 13th cheques
•    It is important to note that there is not one single piece of labour legislation that regulates the payment of bonuses or 13th cheques.  Therefore it is very much at the discretion of the employer.
•    Employer’s who don’t usually pay bonuses can therefore relax as nothing compels them to pay a bonus or a 13th cheque, unless the employment contract stipulates that a bonus/13the cheque is payable inter alia without the employee having to meet certain performance or production targets.  
•    In any event a bonus is just that, something extra, a bonus.  In the scope of the employment relationship it will be something extra for going that extra mile throughout the year for the employer.  
•    Those employers who usually pay bonuses, but in the light of the recession we faced, won’t be able to do so this year, should be careful.  If it is normal practice at a company, that bonuses are paid, the employer should consult with the employees with regards to the non-payment or the changing of the timing of payment of bonuses.  There must be consultation, as failure to pay bonuses, as before, can amount to the unilateral changes to the terms and conditions of the employee’s employment.  Thus if the employer has reasonable grounds not to pay a bonus or to change the timing of the payment of the bonus, and after consulting with the affected employees, the employer can go ahead and implement the non-payment or time change, even if the employees don’t agree thereto.
•    It is also courteous of the employer to at least let the employees know well in advance if bonuses won’t be paid as many budget for the holiday period taking their bonus into consideration.  It is submitted that 6 months before bonuses are normally paid, will be a reasonable timeframe within which an employer should be able to establish whether bonus will be payable or not.

b.    Annual Leave
     In terms of the Basic Conditions of Employment Act 75 of 1997 (BCEA), section 20 an employee is entitled to 21 consecutive days of annual leave on full remuneration.  This however does not apply to individuals who work for less than 24 hours per month for a specific employer.
    Most employment contracts stipulate that the employee is entitled to 15 or 18 working days annual leave, instead of 21 consecutive days.    An employee who works for 5 days per week is entitled to 15 working days annual leave per annual leave cycle and similarly an employee who works 6 days a week will be entitled to 18 working days annual leave per annual leave cycle.  This is arrived at as an employee accumulates 1.25 days annual leave per month if he/she works 5 days a week and 1.5 days annual leave per month if he/she works 6 days a week.
    An employee is entitled to take his accrued leave on consecutive days, thus you can take all 15 days at once, instead of taking one day here and three days there.  Annual leave must be taken as agreed between the employer and employee.  The employer is not entitled to decline your request for unpaid leave.
    A leave cycle is 12 months.  Leave accrues, which means that at the beginning of each leave cycle (the month in which you started with the company) your leave balance will be 0.  As the year progress you will accumulate leave at either 1.25 or 1.5 days per month as discussed above.  Therefore in month 1 you will have 1.25 days annual leave available, in month 6 you will 7.5 days annual leave available and in month 12 you will have 15 days annual leave available.
    Many employers shut down for a period in December.  Employees are then forced to take annual leave.  As an employee you should always ensure that you have enough annual leave available to cover this period of shut down.  Should you not have enough the employer is entitled to treat the period that you do not have enough leave available for, as unpaid leave.
    It is important to note that you should you fall ill during any period of annual leave, and you have sick leave days available, you should be credited for any annual leave days that are covered by a medical certificate.  Similarly should a public holiday fall on any of your taken annual leave days, you should also be credited for that public holiday.
    Further to the above it is to be noted that an employer is not allowed to pay out any annual leave unless an employee has resigned, were dismissed, retrenched or died.  Your employer is also not entitled to grant you any amount of annual leave should you be serving your notice period.  Equally your employer is not permitted to request you to do any work during your annual leave.  

That is annual leave and bonuses in a nutshell.  Please look out for our new exciting Blog and Face book page that will be up and running in the New Year.  Our website will also be undergoing a facelift in the near future; the new website will be a one stop information centre, where you will be able to find all the answers to your burning labour law questions.
We are looking forward to communicating with you in the New Year!
Yours in fairness.
Me. L Bouwer
General Manager: Legal Assistance


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