Leave is a vital right for workers, allowing them time to rest, recharge, and attend to personal matters. But what happens when a worker cannot use their annual leave days? That is where leave encashment comes in. Leave encashment refers to the practice of converting unused annual leave days into monetary compensation. In Botswana, the rules around leave encashment have shifted significantly between the Employment Act and the Employment and Labour Relations Act. Understanding this evolution is crucial for both employers and workers.
The Employment Act
This Act, under section 98, recognises annual leave as a basic entitlement, but the law offers minimal clarity on encashment. The Act required employers to grant workers annual leave of 15 working days as a minimum, for workers working 22 days per month and 18 days for workers working 24 or 26 days per month.
Encashment was only indirectly allowed in situations where employment was terminated. In such cases, the employer was obligated to pay the worker for any leave days accrued but not taken through what is known as leave pay. Beyond that, the Act did not explicitly provide for encashment during employment, leaving employers and workers in a grey area. Some companies voluntarily offered encashment for unused leave as part of their HR policies, while others adopted a “use it or lose it” approach.
This lack of guidance meant that disputes often arose, especially when workers carried over leave for years or when companies refused to pay out unused leave upon termination. The vagueness of the labour law offered only basic protection, and many workers were left at the mercy of company policy.
Employment and Labour Relations Act
The Employment and Labour Relations Act introduce a much clearer framework on leave encashment. For the first time, the law under section 219 (6) explicitly states that where no agreement exists between the worker and the employer on when leave should be taken within a leave cycle, and after at least two successive failed attempts to schedule the leave, the worker is entitled to receive 35 percent in monetary value of their accrued leave.
This provision recognises that in some workplaces, operational demands or disagreements may prevent workers from taking leave. Basically, elements beyond the worker’s control. Instead of forfeiting the leave, workers now have a fallback option to claim part of its value in cash. Unlike the Employment Act, where encashment was vague and mostly tied to termination of employment, subsection (6) creates a clear statutory right to partial encashment during employment. Subsection 6 strengthens worker rights by ensuring that leave has both rest value and cash value. It compels employers to either facilitate leave-taking or compensate workers fairly, thereby closing the gaps left by the old Act.
What does this mean for a Worker and an Employer?
For workers, this means better protection; they now can no longer be denied payment for unused leave upon termination, and they can negotiate encashment while still employed.
However, for employers, this may lead to reduced productivity as workers may prefer cash instead of taking rest, leading to burnout. Secondly, it may cause a cash flow impact as unexpected payouts may strain employer budgets. Lastly, it may bring potential disputes, whereby disagreements on scheduling leave may drive workers to demand encashment instead.
Conclusion
In conclusion, leave encashment may seem like a small matter, but it reflects the broader evolution of Botswana’s labour law. Where the Employment Act provided only basic protection, the Employment and Labour Relations Act provide clarity, flexibility, and enforceable rights. For employers, compliance is no longer optional but a legal necessity. For workers, rest and reward are finally guaranteed in both time and money. For all parties, note that this does not take anything away from the fact that leave is meant for one to rest, failing of which, plan B comes into full effect.
Contacts
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