ANNUAL LEAVE
1. What is an employee's entitlement to annual leave?
The Employment Act 1955 (EA 1955) sets the minimum entitlement (which means employers are free to give more, but not less than these provisions) in stating that -
"An employee shall be entitled to paid annual leave of -
(a) eight days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of less than 2 years;
(b) eight days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of 2 years or more but less than five years; and
(c) sixteen days for every twelve months of continuous service with the same employer if he has been employed by that employer for a period of 5 years or more.
Simply put :-
The employee is entitled to at least 8 days a year for the first and second year. For years 3,4 and 5, the employee should be entitled to 12 days for each year, and thereafter the employee is to be given at least 16 days for each year of service.
{ Where to Look : Section 60E(1) }
2. When can an employee start taking annual leave?
If you read #1 above carefully enough, you will notice the phase "for every twelve months of continuous service" which I have emboldened just like this. So it means the employee has first to serve out the 12 months before he can enjoy the leave to which he is entitled.
Again, simply put, the employee accrues the leave in the first year and enjoys it during the second year and so on. That's right, to be enjoy the minimum 16 days, the employee would be doing his 6th year in service.
The concept is sort of like the salary paid to an employee. He earns it during the month and gets paid at the end of the period. Then he spends it after that.
{ Where to Look : Section 60E(1) }
3. What happens if an employee urgently needs leave, but has not served the qualifying period yet?
If your company policy is to follow the provisions of the law, then the employee cannot be given annual leave. Grant him Unpaid Leave then, if it is urgent enough and he agrees to it.
4. Can an employee be given advance annual leave?
Look at it this way. Items 1,2 and 3 assumes that the company is providing the bare minimum of annual leave, i.e. 8 days, 12 days or 16 days respectively. That being the case, if you give the new employee one day advance leave, it means the next year when he starts taking his leave he is entitled only to 7 days, which is less than the minimum provision - so you break the law technically.
But if your annual leave provision goes above the minimum, then you may use the extra provision as advance leave with the agreement of the employee.
5. Why do some companies allow employees to enjoy annual leave from the first year on?
Why? They are generous! Or maybe it is traditional in that industry! Maybe because of competition!
If you want to be competitive, you may also have to start thinking about being a little bit generous, if you are not already doing it. But if you do choose to stick to the minimum level of benefits - then by all means, it is your right to tell employees "Look - serve one year first. That's what the law say!"
6. Can annual leave be carried forward to the next year?
As with the issue of providing advance leave - I would say "no" if you are providing the bare minimum according to the law. However, if you may carry forward the days which are over the minimum, provided the employee agrees.
{ Where to Look : Section 60E - Read between the Lines }
7. What is the right of employee to demand for annual leave?
An employee who wants leave must apply for it and obtain approval. He cannot demand to be given leave. Annual Leave is granted at the discretion of the Employer. But the employer must exercise that discretion fairly.
If the employee applies for leave, and the employer continues rejecting the leave in such a way that eventually the employee has no chance to enjoy the leave due to him within the period of eligibility, then the employer subjects himself to the risk of both being prosecuted for breaking the law as well as being in breach of contract of service with the employee.
{ Where to Look : Section 60E (2)- Read between the Lines }
8. What happens if an employee fails to apply for and consume his leave?
An employee is required to consume the annual leave due to him during the period eligibility. Where any such balance can be carried forward (see #6 above) then it should be done in accordance to mutual consent or by the established policy.
In the rare event that an employee persistently refuses (or fails) to consume his leave and did not arrange to carry forward the leave, then the employer has the right to forfeit the balance not consumed.
I would normally advise employers to ensure that the employee has officially been reminded, and be given the sufficient opportunity to apply for the leave before taking any action to forfeit what is not consumed.
{ Where to Look : Section 60E(2) }
9. How about paying off for the annual leave that has not been consumed?
Taking this course is of course better than forfeiting the leave not consumed. Some employers are pretty happy to pay off annual leave if employees agree, but others may not be so happy to do so for reasons best known to them.
It is to be remembered again here - No employer may force any employee to accept payment in lieu of annual leave, just as no employee can demand to be paid in lieu of annual leave. It has to be by mutual consent In most instances, it is not a difficult consensus to reach anyway, except in the case of hard heads and bad relations between superior and subordinate. Right?
Take note also that the employee's agreement not to take any or all of his annual leave entitlement must be given IN WRITING
{ Where to Look : Section 60E(2)}
10. What if an employee goes on annual which has not been approved?
Charge him for being absent without prior approval as a misconduct.
11.When can an employer forfeit the annual leave of an employee?
One instance in where the employee fails to consume his annual leave during the period of eligibility (see #8 above)
Another situation i in the case of an employee who has been dismissed for misconduct after due inquiry and he happens to have annual leave not yet taken {refer to Section 60(E)(3A)}. This option appears to be quite well-used.
A third situation is See Section 60E(1) Last Para} where an employee "absents himself from work with the permission of his employer and without reasonable excuse for more than ten percentum of the working days during the twelve months of continuous service in respect of which his entitle to such leave accrues....". Hey..... have any of you guys ever been so tolerant of an employee who has been absent for more than 10% of the working days????
12. Can the employer schedule an employee's annual leave?
Sure you can, as long as you got employees tame enough not to complain to the Labor Office.
13. What happens if an employee falls sick a period that he is on annual leave?
Sick Leave is given priority over Annual leave and therefore the corresponding annual leave is considered as not taken and to be credited back to the employee's account.
But if you have unkind thoughts about the employee really being sick, then you can make life a little difficult for him by asking him to explain to you why the leave should be acceptable, e.g. the leave was granted by your own company doctor for instance
14. What happens when a female employee becomes entitled to maternity leave during a period that she is on annual leave?
As with Sick Leave, the maternity leave comes first and the annual leave is considered not taken. Of course I don't think you need to ask the employee to prove she really gave birth, eh?
15. Can the employer offset the days that an employee has been absent against his annual leave balance?
I would say no. For one, you cannot do it without the employee's consent. If the employee agrees, then who is there to stop you? Will it be a wise decision to have such a practice? If you are thinking only of not losing working days, you might think that's the brightest idea you ever have had. On the other hand, you may be also signaling to your employees that it really isn't important to apply for leave and wait for permission. Just do it first, the boss will take it off the annual leave anyway.
16. If an employee agrees to receive payment in lieu of annual leave, how is the value of the leave derived?
In the case of a monthly rated employee, the rate is obtained by dividing the monthly rate of pay by 26 days. Of course you remember that this 26 day denominator is used for computing the benefits stipulated by Part XII of the Employment Act as well as in respect of maternity benefits.
In the case of weekly rated employees, it is weekly rate of pay divided by 6 days, although I have yet to know of any company in Malaysia which uses weekly rate for employees. Have you?
And, for daily rated or piece-rate employees, it is the total wages earned by such employee during the preceding wage period divided by the actual number of days worked (but excluding rest days and public holidays)
{ Where to Look : Section 60(I) }
17. What happens to the annual leave balance when an employee resigns?
When an employee resigns, he is entitled to take such leave before the termination takes place (which really means he can use the annual leave to offset the Notice Period requirement).
If you want him to work through the notice period, then he has to agree.
As for the computation of the leave balance, he is entitled to the balance outstanding from the previous 12 months service, plus the pro-rated leave in respect of the current period immediately preceding the resignation.
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