In a previous article we looked at whether statutory annual leave can be forfeited. Thanks to recent case law, the position is clearer today, though some aspects remain controversial.
Summary
Case law supports the idea that statutory annual leave can be forfeited, but not all judges agree it happens automatically. Employers should protect themselves by regulating how leave may be accumulated and forfeited in the contract of employment, or by setting out clear policies or rules and communicating them to staff.
Statutory vs Non-Statutory Leave
Annual leave beyond the statutory minimum (non-statutory leave) is not governed by the Basic Conditions of Employment Act (BCEA). Instead, it’s regulated by the employment contract. Employers and employees can agree on how much extra leave may be carried over, when it lapses, and other conditions that regulate such extra leave.
The situation is more complex when it comes to statutory annual leave i.e. the minimum guaranteed by law. For years, conflicting judgments created uncertainty. That changed with the Labour Court’s decision in Ludick v Rural Maintenance (Pty) Ltd (2013), which suggested that statutory leave could indeed be forfeited.
Forfeiture “As a Matter of Law”?
A more recent case, Hartley v SMD Trading Group CC (2024), reinforced Ludick. The court emphasised that the purpose of statutory leave is to ensure rest and recovery, which protects both employees and workplace safety. Employees must take their leave, or risk losing it.
However, the judge went further by stating:
“Any statutory leave not taken by the applicant prior to the expiry of six months after each and every succeeding leave cycle, would be forfeited as a matter of law.”
This raises an important point: if forfeiture happens automatically “as a matter of law,” then contracts and policies may not need to spell it out. In practice, this would mean that unless an agreement offers more favourable terms, statutory leave not taken within six months after the end of a cycle simply falls away.
But would such an interpretation be universally accepted?
Agreement and Communication
In Misra v Ithatla Ltd (2014), the court adopted a more nuanced approach. It noted that the BCEA expects the timing of leave to be agreed between employer and employee. While forfeiture clauses can be valid, they should be part of that agreement and must not be in conflict with the Act.
This judgment supports the principle that statutory leave may be forfeited, but stops short of saying it happens automatically. Instead, it highlights the importance of agreements and clear communication about when leave must be taken and what happens if it isn’t.
Practical Advice for Employers
Given these differing approaches, employers should not assume that statutory annual leave is automatically forfeited six months after the end of an annual leave cycle. For the sake of clarity and fairness, and to avoid disputes:
- Include clear terms in contracts or policies about how annual leave accumulates and when it lapses.
- Communicate proactively, for example – through circulars or leave policies – to remind employees of the consequences of not taking annual leave.
- Encourage leave-taking to meet both legal obligations and workplace health objectives.
Jan Truter for www.labourwise.co.za
Thanx, I like more case law references.