HR DESK: What you need to know about annual leave

HR DESK

with

Nasir Kolawole 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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