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The Cost of Untaken Annual Leave

Employees who do not take annual leave could cost an employer thousands of Rands.

There are many instances when employees do not take their annual leave for various reasons and on the other hand the employer does not allow the employee to go on annual leave for various reasons. Whatever the case may be, either way, untaken annual leave over time could be costly.

The truth is, annual leave that employees do not take is a huge hidden expense for an employer. Leave that accrues into the following financial year increases the employer’s leave bill. The more the employer allows employees to accumulate leave, the heftier the leave bill becomes.

Three ways to ensure employees go on annual leave

#1: Do not wait for employees or managers to decide to take annual leave. Instead, be hands on and meet with each manager to schedule leave for employees who rarely take it. Remind managers that annual leave that employees do not take is an unnecessary cost to the company.

Also tell them that it is not just about money. Sending employees on leave is a legal requirement.

Each employee must go on leave for at least 15 working days’ in every leave cycle. If not, an employer can face hefty fines and penalties from the Department of Labour. If managers do not schedule leave within a reasonable time, take the matter to senior management, or schedule compulsory leave for the employee.

#2: Break up big leave balances into smaller chunks within the current leave cycle or send employees with big outstanding leave balances on extended leave.

For example, to deal with big leave balances:

  • The employee can be told to take the full days outstanding in one go. A temp can be organised to do the work or the workload could be reshuffled during the time the employee is away.
  • Send the employee on leave and then arrange a period of shorter work weeks until the employee has used up all the outstanding leave. An employee for example can go on leave for two weeks, for instance and only work Monday to Wednesday until he has used up all his leave.

#3: Tackle smaller outstanding leave balances as soon as possible.

This way, they would not have a big effect on daily business activities. For example, to deal with an employee’s four day outstanding leave balance, you can:

  • Send her on annual leave for the full four days in one go. A temp could be brought in to do her work or reshuffle her workload during the period she is away;
  • Extend her leave for an extra four days when she takes her current leave entitlement; or
  • Arrange for four long weekends where she will take a Friday or a Monday off over the next few months.

By managing outstanding annual leave or leave not taken in this manner, it would not become costly.