Our views are requested on which wage / salary rate should be used to calculate leave pay during the implementation of “wage / salary reduction”.
Our views are discussed below:
Applicable Legislative on Annual Leave
The Employment Relations Promulgation 2007 makes the following provisions in respect of annual leave:
Employer to give paid annual holidays
58.—(1) An employer must give to a worker paid annual holidays in accordance with this
(2) An employer may give to a worker paid annual holidays in excess of those required to be
given by this Promulgation.
Paid annual holidays
59.—(1) After each year of employment with an employer, a worker must be given 10 working days holiday
and must be paid in respect of such holiday the wages the worker would have been paid for the time the worker
would normally have worked during that period.
(2) Notwithstanding subsection (1), a worker is not entitled to the paid annual holidays in respect of any year
during which the worker attended work if the worker has been absent from work for more than 20 normal working
days during that year, except where the absence has been due to sickness certified by a medical practitioner, or the
worker is excused from work by the employer or is prevented from attending work by any other cause acceptable to
(3) If a worker is entitled to a paid annual holiday under this section, the employer must permit the worker to
take the annual holiday in one unbroken period or, at the request of the worker, in two or more periods, one of which
must be a continuous period of one week.
It is clear from Section 59 of the ERP that the legislation not only mandates minimum 10 working days leave for workers but requires employer to pay the worker during the leave.The only exception disentitling a worker to annual leave would be when a worker is absent without cause from work for more than 20 working days in the year that he is entitled to take annual leave.
Payment of Annual Leave Pay
Section 59 (1) states that “After each year of employment…a worker must be given 10 working days holiday and must be paid in respect of such holiday the wages the worker would have been paid for the time the worker would normally have worked during that period.”
Thus a worker who proceeds on annual leave should be paid what he or she would normally earn if he/she was at work.
It is thus our view that where a worker has already accrued leave, prior to the implementation of wage reductions, the leave pay should be calculated on the workers’ original base salary.
However for those workers who may not have accrued leave prior to the wage reduction implementation but are requested to take leave after the wage reduction, the Resort can calculate annual leave pay based on the new / reduced base wage rate.