Annual Leave Pay Calculation

As part of our membership benefits, we provide legal opinions on many areas of concern for clarification and interpretation

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
Promulgation.

(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
the employer.

(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.

DETERMINATION OF THE EMPLOYMENT RELATIONS TRIBUNAL 27 SEP 2019, REGARDING RETIREMENT AGE

As part of our membership benefits, we provide legal opinions on many areas of concern for clarification and interpretation

An FHTA member has kindly allowed the following ruling to be shared with other members:

The following employment dispute was reported to the Permanent Secretary on 19 Feb 2019 and concluded on 15 th November 2019. The dispute reported noted that:

1. The Employer breached the provision on retirement benefit in the Collective Agreement (CA) Clause 10.1 on a staff wrongful retirement”.
2. Breach of Clause 10.1 of the Collective Agreement (CA) on wrongful retirement of the workers since 2012″.

Position of the Union:

  • That per the CA signed between the two parties, an amendment on “retirement age” covered that the normal retirement age for an employee covered by the agreement shall be on completion of fifty-five (55) years
  • The Union asserted that “on completion of fifty-five years (55)” means the age reached by a covered employee once he completes twelve months from the fifty-fifth (55 th ) birthday.
  • The Union claimed that the Employer had breached Clause 10.1 of the CA by retiring their member, the employee on his fifty-fifth (55th) birthday.

Position of the Employer:

  • The Employer submitted that Clause 10.1 (a) (1) of the CA “D” must be given in its plain and ordinary meaning. Accordingly, “on completion of fifty-five years (55)” means the fifty-fifth (55th) birthday of a covered employee. The Employer claimed that this approach was adopted since 2011.

Determination:

  • The Parties agreed that the Workers date of birth of 02 Jan 1964 meant that the Worker fifty-fifth (55th) birthday was on 01 Jan 2019.
  • The Magistrate concluded that on 02 Jan 2019, the Worker had reached the “normal retirement age” as set out in Clause 10.1 (a) (1) of the CA marked “D”

In his Final Orders, the Magistrate dismissed the claim of the Union, that the Employer had breached Clause 10.1 (a) (1) of the CA by retiring the Worker from service on 01 Jan 2019.