Buying extra annual leave: A win or not?

You’ve almost reached the end of year and you are planning to take that long-awaited and much deserved vacation. But soon after you submit your leave application you find that you have run out of available leave days. However, you do have the option to buy extra leave. What are the rules around this? And is this in fact a legal practice?

Buying leave: In short, it is legal.

Employers that wish to demonstrate a commitment to helping employees achieve a better balance between work and personal life or to allow them greater flexibility, could offer the option of buying annual leave days.

Such a policy should however be within the bounds of the Basic Conditions of Employment Act (BCEA) Section 20, which outlines the conditions for annual leave, says labour law specialist Preston Sheldon.

How does it work?

Buying: The process may differ from company to company, but normally a maximum number of leave days are made available that can be bought each year. To be able to buy leave, a formal leave application or request must be submitted. The application will also only be approved if the employees’ leave is depleted and if it is not against the company’s interests or during its busy period.

When it comes to paying for the leave, again, there are numerous ways in which a company may structure this.  One option is to subtract the leave from the salary at the end of the month in which the employee plans to take the leave. Other employers allow for the purchase to be settled at any stage within that year or spreading the cost out over a few months, ensuring that it is settled by the 31^st of December. Further, purchased leave cannot be carried over into a new year.

How is this regulated?

“Within the BCEA are guidelines for issuing and processing leave within a business.  But when it comes to a practice like buying leave - for which there is no BCEA detailing - the responsibility to regulate this is left up to the employer and the company’s human resources department. While this practice does not affect your legal allocated amount of leave days or your salary, it could affect your internal benefits,” Sheldon says.

Another crucial element in leave regulation is the use of a proper digital leave management system like Sage ESS or Easyleave.com.

What are the pros and cons?

The pros range from an overall happier, healthier staff to the allowance for more staff flexibility.

“As soon as employees feel valued, they are inclined to work harder and smarter and be more productive. It might also contribute to retention of employees because they’re better able to manage their work responsibilities and less likely to leave the organisation. It signals to an employee they care about you, not only as an employee but as an entire human being.” adds HR Zone.

The cons however are that if the process is not managed correctly, a company may find itself understaffed. This can especially be a problem during high season. Strain is then placed on the remaining employees and this could see them eventually being unable to manage and potentially resigning.

While this has become a popular practice and concept especially within developed economies globally, South Africa has only in recent years introduced this concept into the workplace.

With countless studies and a bigger focus on employee wellness, businesses like Media 24 and KPMG have taken steps to improve the working experience of their employees such as flexible working hours and buying annual leave.

This also tend to attract millennial employees because this group is typically interested in quality of life, not just compensation.

While a bold practice to implement, if a business is rooted in good communication and trust, there is no reason this cannot work.