HR DESK: What you need to know about annual leave
with
Moruf Kolawole Nasir
(Experienced HR professional)
A company’s ability to attract and retain employees with the expertise it requires depends largely on the “human” side of the day-to-day working experience of such a company. Leave and leave allowances are part of the day-to-day working experiences that say a lot about a company.
However for a minimum standard to be attain, at least to allow employees rejuvenate from a long period of work, some of the leaves (especially annual leave) have been mandated by Labour Laws all over the world. To make annual leave achieve its intended purpose, a pre-determined allowance is attached to it.
Although leave are of various types: Annual leave; Sick leave; Bereavement leave; leave of absence etc, our concern in this article is the annual leave and to advice Eninwase (of our last case study) on the way out of her predicament.
Despite the importance of annual leave to employees and by extension to the employers, some small businesses still find it hard to embrace it fully. One of such companies is Arenije Nigeria Ltd (of last week case study).
Annual leave is simply the number of days employees of an organization is permitted to be away from their employment position within a year’s time without consequences. This time off is paid by the company and employees are allowed to request the time for any reasons they wish to be off of work . It is also worthy of note that this holiday most often attract some allowances. The bone of contention most times is on the number of allotted days for the annual leave and the entitled allowances.
A quick glance at section 18 of the Nigerian Labour Law reveals that:
1. Every worker shall be entitled after twelve months’ continuous service to a holiday with full pay of-
a) At least six working days; or
b) In case of a person under the age of sixteen years (including an apprentice), at least 12 working days.
2. The holiday mentioned in subsection (1) of this section may be deferred by agreement between the employer and the worker: Provided that the holiday-earning period shall not thereby be increased beyond 24 months’ continuous service.
3. It shall be unlawful for any employer to pay wages in lieu of the holiday mention in subsection (1) of this section to worker whose contract has not terminated.
4. A person who ceases to be employed after having completed-
a) Less than twelve but not less than six months in the continuous employment of an employer; or
b) Not less than six months in the continuous employment of an employer since he last qualified for a holiday under subsection (1) of this section, shall be paid with respect to that period of employment an amount bearing the same proportion to full pay for one week at his normal rate as that period bears to twelve months.
Section 19, however states in clear terms that in the calculation of leave pay…only that part of his wages which a worker receives in money (excluding overtime and other allowances) shall be taken into account.
From the forgoing, it is glaring that annual leave is the right of all employees who meet the statutory requirements as in above. Although, the law makes it impossible to enforce leave allowance and days beyond 6 days on employers, the common practice amongst HR practitioners in Nigeria is a full month (sometimes it is broken, depending on the industry) annual leave, and this is always clearly stated in employees’ offer of employment and handbook.
Similarly, leave allowance is also an area where there is no equivocation amongst HR managers. However, the amount to be paid as leave allowance is the only area where there is no unanimity. The rate to be paid is thus industry dependent, and of course subject to the adoption of individual company. The rate is determined through a collective agreement at the NJIC and is expected to apply to all the industries in each sector.
The widely adopted rate is 10% of employees’ annual basic salary minus taxation and other deductions, but with the new tax system this measure is also gradually losing it acceptability, although it still enjoys the widest adoption. It is also worthy of note that some industries do more than 10%, For instance, in the chemical and nonmetallic product federation, 12% is adopted, whereas other sector use higher rates. Infact, some companies just stick to a month gross pay as leave allowance. The long and short of it is that it is related to the practice of individual industry, collective agreement between employers and Union and finally the provision in the policy of each company.
In conclusion, it is pertinent at this juncture to talk about resigning employees’ position on leave allowance. The standard practice among HR professionals is to pro rate the leave days and its allowance for any staff who has stayed up to six months in the company’s employment, or who has stayed up to six months from the date of his last annual leave. Eventhough, some practitioners may practice contrary to this, this is the best practice backed by the law (section 18(IV)). That is if the company’s policy makes provision for leave allowance, otherwise only leave days’ pay will be covered by this.
To Eninwase, if her employment letter/contract did not make provision for leave allowance, she may find it tough getting allowance for leave especially if her company is an unstructured setting (as it appears). But for her leave, it is her right to observe at least one week leave after a year of her appointment. She should continue to demand (albeit diplomatically) for this until she gets her entitlement, alternatively she could seek legal redress (although this may eventually cost her her job in such a setting). Since she does not want to lose the job, she should go for the former.
Always remember “In learning you will teach, and in teaching you will learn”.
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Hi Nasir,
Thanks a bunch for this wonderful and informative piece. As a human resource management undergraduate, I find pleasure reading your section in this blog. Keep it up.
However, I have a few issues in the answer you provided. First, in the last paragraph, you wrote “To Eninwase, if her employment letter/contract did not make provision for leave allowance, she may find it tough getting allowance for leave especially if her company is an unstructured setting (as it appears)”. The question therein is, if the Nigeria labour act (1974) provides the minimum terms and conditions of employment in Nigeria and it clearly stated in section 18 (1) that Every worker shall be entitled after twelve months’ continuous service to a holiday with full pay of 6 working days …, Don’t you think that by withholding Eninwase leave entitlement, the company is on the wrong of the labour act?
Secondly, unlike normal hours of work which the act stated specifically is an agreement between the employee and employer (13. 1) , the provision(s) on leave/holiday was clearly stated. Therefore, one may think that in the absence of a writing contract between Eninwase and her employer pertaining to leave provision, the provisions of the labour act should be enforced.
Furthermore, I think that if the Nigeria labour act is truly the minimal terms and condition of employment, I believe that any other terms and conditions of employment entered between an employee and employer that is less favourable should be null and void. Otherwise, an employer may elect to grant 2 days annual leave.
Finally, if small companies like Arenije Nigeria Ltd is finding it difficult to pay month gross or 10% of annual basic salary like other companies as leave allowance, why not adopt daily rated pay. in this case, the employee monthly basic wage is divided by 26 to get the daily rated pay and multiply by the number of leave days. To withhold the leave allowance or leaven entitlement of an employee on the basis that it is not written in the employment contract is contrary to the provisions of the labour act and the employee should seek legal redress.
Once again, thanks for the very informative article. Would appreciate if the issues i raised here is responded to.
Kelvin
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my annual leave is 35days and I usually receive my leave allowances in full whether or not I break my leave in two (2) parts, but this year the management insist on paying allowances also in parts i.e if I go for15 days first, I will receive allowance for 15 days and will only receive the balance allowance when I proceed on the remaining days. this we kicked against but the claim here is that is the position of the law. please enlighten me
Hi Kelvin, sorry i am just noticing your comment now(19/03/14). I am highly impressed by your above observation and contribution, This coming from an undergraduate shows there is hope for this country.
Having said this, the interpretation of that sub-section of the Labour Act is where the confusion lies. I must admit to you, most practitioners, (HR Managers in their various organizations) also ignorantly interpret it as you did above, because of the usual (which actually is the best) practice around. But i am afraid the labour law did not provide for the ‘best’ practice.
Now to interpret it, which i believe will suffice as a response to your two observation.
what the content of the labour law as you quoted above simple say is that (let me put it in law man terms) after working continuously for 12 months you will be entitled to holiday(leave) of at least SIX DAYS and that while on that holiday, your employer must pay you for sitting at home.
Note: your employer is mandated to pay you for the days you are at home (holiday or leave). The provision did not say your employer should also pay you bonus(leave allowance) for staying at home. Also, note that the provision DID NOT even say one month leave or two weeks, it only says at least six days.
in addition, the law so made it easy for your employer that, while observing the holiday (leave) they can say they cannot afford to pay you for sitting at home MORE THAN SIX WORKING DAYS. that is if they allow you to observe more than six working days as leave. This simply means that in the month of your leave, your employer may even decide not to pay full salary if you observe one month leave, let alone paying you leave allowance.
However, as we all know, and as you have rightly said above, the labour Act should be the minimum standard, so best practice has made it ALMOST statutory that employees get leave allowance and even observe up to one month leave. and since it is not yet statutory, sorry you cant sue your employer for not paying you leave allowance.
Finally, you can read my article again i tried to explain all this well.
All the best bro.
Hello Habib,
In your situation, two things are involved:
1. if it is stated in your employee handbook/policy manual/contract of employment that the allowance will be paid at a go, irrespective of how the leave is observed.
2. if you have employees representative or union in your organization.
If condition one is available, then you can seek the audience of the HR person to observe/enforce the provision of the law (internal Law).
If condition one is not available and condition two is available, you can use the platform to revisit the issue and persuade the management to rescind its decision.
As per the position of the law, sorry the law did not make provision for leave allowance. However, there is a good news, and it is that every sector has there practices as far as leave allowance is concerned so your sector of the economy may give you weight to claiming right to leave allowance, but definitely not how the allowance is paid, that is subjective to individual organization.
I expect the management to manage this well, as all the allowances and bonuses are retention strategies, if it is not well managed some of the good staff may just take that as an avenue to leave the company.
I wish you all the best bro.
No 1,please treat cos i have same issue.
leave here is calculated one year of service just for 13 days.Thats is after your one year as a staff before you can go on leave.
what can we do to make it realistic for staff..
please treat.
Thanks.
Hi Ugo, i dont understand what you mean by realistic for staff.
Anyway to move on, by law after one year of work you are entitled to 12 days PAID leave. that is the minimum requirement by law. best practice, company sector etc will further guide what to give and how to go about it.
your post suggests you are an HR person. you may reach me on personal basis for further clarifications.
meanwhile,
Ugo,
i mean to say SIX days. not twelve.
can leave allowance be part of consolidated salary?
Hi Tai,
Yes it can be provided you are fore warned.
Hi Jarus
Please I need your answer on the following situation.
I work in an establishment who has being in operations for 7 years now. Many staff joined in March 2008 and during the course of working in the year the Hr directed all HODs to do a leave Rota from that same year,2008 October, this is because they envisaged that it will affect the company if about 30 staff goes on leave in 2009 march(anniversary date).
Now fast word to 2014 some staff want to go on leave but the Hr said this is not possible that the staff have gone for 120 days in the space of six years, that is 20days each year. This is currently the seventh year running for the staff, better put the staff concerned will clock 7years by Feb. 2015. The Hr is saying the staff are not entitled to the leave this year because of the 120days done already, but I believe this is wrong .should they not observe 7 annual leave in 7years,or is it 6 annual leave in 7years.please help clarify this, what is the appropriate thing. Thanks
Hi Juliana,
The staff is not entitled to leave again, UNTIL he clocks 7 seven.
Hello, please i need enlightenment on this: is leave allowance to be paid to ONLY STAFF that go on leave in the year, or for everyone irrespective of whether they went for their leave or not?
It depends on the organization. But for most companies, you get leave allowance irrespective of whether you go for leave or not.
Hi Tolu,
leave allowance is for everybody whether you go or not.
except there is clear policy on that, in which case whenever you observe your leave you get your pay.
Hi Jarus,
One of our staff has been on sick bed for close to 2 months now and the HR is advising that his full monthly pay should continue until the 3 months after which we will start making half salary for another 3 months before the guy could be terminated and i’m not too sure if this is correct.
Kindly advise on how the issue should be treated. Thanks.
On this issue, few clarifications are necessary:
Is the Sickness work related?
What is the company’s policy on issues like this?
How relevant is the employee to the organization?
If you notice, HR professionals hardly make blanket comment on employee related issue except some clarifications are made. This is because different companies have different policies on varied issues; and company size, ownership, management style, industry etc also play a long role on how employee related issues are treated by individual company. Although some case have statutory backings.
To save us from many correspondences I will assume some answers to the raised questions to suggest ways to handle the case at hand.
First of all, terminating a staff employment while on sick bed is not a good practice. However paying the staff salary and for how long is another kettle of fish.
If the sickness arises in the course of work/work related then the company has obligation even beyond what the HR advised and terminating the employee’s appointment will be unlawful without completing the procedure. This is taken care of by the Employee Compensation Scheme which is a statutory obligation for all employers. I assume this is what informed the HR advice.
Secondly, if the company policy accommodate such, then the HR is right to recommend such payment for the staff. If however, there is no provision for such in the company’s policy, then the company is not duty bound to pay the staff salary beyond 12 days, provided it is not work related sickness (even at that, NSITF will be responsible for the payment, not the company).
Meanwhile, the company should give the staff a good/soft landing: e.g substitute the employee’s casual leave days, compassionate leave, annual leave to the period he/she is on sick bed, if all of these are exhausted and the staff is still on sick bed, then the company is mandated by law to pay him for at least 12 days after that the company can use its discretion to further extend payment of full or part of the employee salary. Whatever the company resolved to doing should be a general standard for all, to avoid issues later.
On termination, it will not be humane to terminate the employee’s employment because he/she is sick, rather they can stop the continuous payment of the employee’s salary after fulfilling the minimum statutory requirement. And when the staff gets well, he could be allowed to resume his duty, provided the duration of the absence will not be too long for the company to cope with, otherwise it will be a different ball game entirely.
We are all learning. I hope I have been able to help.
Hello, I need guidance on compensation & benefit for employee, how can you help me.
Hi Ayo,
Compensation and benefit is broad. what aspect of it are you referring to? you need to be specific about what you want.
Hi, please i will like to know if a company is obligated by law to pay leave allowance after paying the employee the normal salary for sitting at home for one month during the leave (i.e monthly salary + leave allowance for one month)
Hello Damilola,
It all depend on what you call law. The following are the sources of legal backings in HR decisions you may be caught up in one or the other, depending on your compliance level:
1. Common Law (your contract of employment)
2. Conventions & Recommendations of ILO
3. Statutes, Legislation and Enactment
4. Precedents, Customs and Practice.
If you want to consider item (3) – that is what you mean “by law” then you can say it is not not binding to pay leave allowance.
However: a) what does your contract of employment say? (item 1)
b) what has been the practice and precedence in your company. what is the practice within your industry? (item 4).
c) finally, what is the best practice? (item 2)
The Choice is now yours
Hi Jarus,
Thanks for your blog. I will like you to talk about casual & Compassionate leave. I know it is not mentioned in the Labour Law. What is the best practice? What are some organizations doing? Thanks.
Hello,
Kindly help with this.
In a situation where one joined a company precisely on the 19th October, 2015 and he resigned the following year on 9th September, 2016, how many months leave allowance is he entitled to?
Kindly treat this as urgent. Thank you as I await your prompt response
does weekend part of working days
I want to know if i can go on annual leave, 1yearplus after resuming from maternity leave
It depends on your company policy. Ask your HR.
I want to know if i can go on annual leave, 1yearplus after resuming from maternity leave
Nice.I dont think you can be granted annual leave again after maternity leave.you can be given some days off if you are sick or otherwise
Hello and thanks for your answers. I am in a situation now and would appreciate your advice. Worked for 22 months at an organization that could be harsh. I wasn’t confirmed and worked hard but was asked to leave as organization was reorganizing. I was initially asked to go on leave and was at home till they asked me for a meeting. I have asked for my leave allowance, month pay for that month I was on leave as well as payment for 4 weeks lieu notice. Is this appropriate?
Hello, is it right to ask staff to go on leave without paying neither salary nor leave allowance?
Hello, I will like to ask about contract staff. Does a contract employee have any leave entitlement in law? Thanks for your expected response.
Yes, all employees are entitled to leave by labour law.
Good Evening Moruf,
Thanks for the Educative article. I have a question.
A person is employed in year 1 and has his leave allowance stated on his letter. At what point will he person access the leave allowance of Year 1? Or will the leave allowance start counting from Year 2 when such a person is entitled to go on leave?
Need to be clear on if leave allowance written on letter for Year 1 is accessible.
Thanks.
please i will like to know if it it is fine to consider the company’s financial in relation to when a staff is due for leave.
please i will like to know if it it is fine to consider the company’s financial year end in relation to when a staff is due for leave.
My employer because of Covid 19 and Government pronouncement of Stay At Home has asked me to proceed on 2 weeks Annual Leave. Is it right to use my annual leave for the Stay At Home?
pls, how do the law interpret: a staff is off duty and he is being called for work or staff meeting.