In recent times, I have had to attend to enquiries from employees, Human Resource Managers and individual business owners on issues that bother on Annual Leave Vacations, the position of the Nigerian Labour Law a on its legality, approved days of vacation, mode of payment, procedures and its relationship to sick and maternity leave entitlement.
It is important to states right from the outset that paid annual leave is a statutory provision that employees are entitled to as provided for by the Nigerian Labour Acts 1990 and other amendments. Section 18, subsection 1 of the Labour Act, states clearly 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 the case of a person under the age of sixteen years (including apprentices), at least twelve working days.
From the above citation, it is clear that annual leave is statutory and backed by law. However, the critical issues with most people hinges on its implementation, numbers of days that an employee should be entitled to, the minimum amount to be paid as leave allowance and the procedure to be followed in its implementation. Also, one contending issue is the misinterpretation of the word holiday in the provision of the act
Also for the purpose of clarity, the word holiday means leave or vacation or the period for which the employee is permitted off duties for the purpose of utilizing his or her leave earnings. This becomes important because leave is different from approved public holidays which are not and should not be included when computing the leave entitlement period.
For example, if an employees leave is twelve working days and there are approved public holidays say two days that fall within the approved leave period of twelve days, it then automatically means that the employee will earn his or her twelve days plus the two days of public holidays thereby making fourteen working days.
In this write-up, I will make effort to address all the highlighted issues and give clarifications to the annual leave imbroglio.
WHAT IS ANNUAL LEAVE?
According to Wikipedia, Annual leave is paid time off work granted by employers to employees to be used for whatever the employee wishes The crucial elements of this definition are:
1) Annual. This means that it is an entitlement that is qualified for after a one-year continuous service or employment. It is an accumulated paid off duties vacation that an employee is qualified for after a one year or yearly service in an organization.
2) Annual Leave Allowance. Annual leave comes with pay. This means that employers are to pay their employee for the annual leave earning period or days. Does it mean that the employee earns an extra allowance other than his or her regular monthly income? The answer is yes. The employee is not only paid his or her full salary by month end but they are paid for the numbers of days for which they are entitled to leave.
3) Off Work. During the period of annual leave, an employee stays off work and is liberty to use his leave for whatsoever purpose that is best to him. It could be used for rest, personal development, travels/vacation or private endeavors.
4) It is given or granted by the employer. This means that there is an application and approval requirement for annual leave to be granted. It is must be done by the worker’s supervisor after operational needs must have been taken into cognizance. The fact that an employee attends twelve months of continuous does not automatically mean that he or she would take the annual leave automatically. It is must be properly scheduled in such a way that the companys operations does not suffers. And this does not also means that it should be denied or prolonged unnecessarily. It is must be planned and adequately structured by HR and the staff involved.
Section 18, subsection 2, of the Nigerian Labour Act is very clear on this and its states:
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 twenty-four months continuous service.
WHAT HAPPENS WHEN AN EMPLOYEE CEASES FROM EMPLOYMENT BEFORE ATTAINING TWELVE MONTHS OF CONTINUOUS SERVICE?
We sometimes have justification why an employee cannot continue in service beyond a period of time and such reasons will include: redundancy, termination of appointment, incapacitation and others. In such situation what does the act says?
Section 18, Subsection 4 states that Aperson who ceases to be employed after having
(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 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 part for one week at his normal rate as that period bears to twelve months.
The standard practice is to pay an employee who has served up to six months on prorated basis which is a proportion of his leave entitlement had he or she completed twelve months of continuous service.
If A is entitled to an annual leave allowance of N 35,000 for a leave period of 20 working days per annual, if he resigned his appointment seven (7) months or after his last leave, his terminal benefits would include the unearned period of his leave.
Prorated unearned Leave Allowance: N 35,000 * 7 / 12 = 20,416.67.67
IS IT WITHIN THE AMBIT OF THE LAW TO PAY LEAVE ENCASHMENT
Leave encashment for terminated staff is supported by the Nigerian Labour Act, but section 18, subsection 3, made it illegal and contravention of the law to pay those still in employment money in lieu of their annual vacation or leave.
It shall be unlawful for an employer to pay wages in lieu of the holiday mentioned in subsection (1) of this section to a worker whose contract has not terminated.
WHY SHOULD EMPLOYEE GO ON ANNUAL LEAVE
It is fashionable for young employees and those who have urgent needs for cash to want to demand for payment in lieu of notice without a properly understanding of the benefits of time off from regular day-to-day activity.
• The Need for Rest
The human body requires a significant amount of rest to enable it rejuvenate itself for better performance, and it will be unfair to treat the body as an unserviceable machine that would finally break down under pressure. So, from medical point of view it is important to take some times off work for rest and other activities.
• The Need to Gain New Perspectives
The question has been asked that about what the employee do with their leave vacation, the important answer is whatever they do during this time is good for their mind , understanding of their environment and self. When you are free from a monotonous daily routine, your senses and mind tends to perceives and process information differently.
• The Need to Correct Negative Impressions
Annual Leave holiday helps the organization erased the misconception of without-me the organization cannot survived mind-set. My experience in organizational change and re-engineering shows that most HR or entrepreneur unconsciously creates the impression in the mind s of their staff that they (employees) are indispensable when they refused to allow them take some days off. It is good for the health of the organization that staffers are allowed to take their leave.
• The Need to Portray the Organization as a Responsible Corporate Citizen
Enhancement of companys image. Corporate image-building are deliberate actions aimed at portraying the organization as a responsible corporate person. Good image is seen as a competitive edge and attracts the best hands to the organization. Good hands would like to take job roles in organizations that obey the laws and protect their interest including vacation.
• The Need to Develop Leaders from within the Organization
When staff precedes on leave other people or an immediate subordinate is given opportunity to act as a reliever in the place of the worker on leave. This arrangement has often brought out the best from such subordinates who show leadership and bring new ideas on board. When you give people the opportunities to act most of the time its brings out the best in them.
WHAT IS THE MANDATORY NUMBERS OF DAYS THAT WORKERS ARE ENTITLED TO AS THEIR LEAVE VACATION?
Section 18, gave an insight to this, it explains that the minimum leave earning period shall be 6 working days while in the case of persons under the age of 12 including apprentices it shall be twelve working days of paid leave.
Section 18, subsection 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 the case of persons under the age of sixteen years (including apprentices), at least twelve working days.
However, by practice and agreement, major adjustment is made to this as we have junior workers who earn as much as two weeks to as much as 20 days and above. This is particularly so in the oil sector where the union and management have collectively agreed on condition of service.
The Act allows for such flexibility and negotiation as can be seen in section 18, subsection 2 which states as follows
The holiday mentioned in subsection (1) of this section may be deferred by agreement between the employer and the worker
It is however, appropriate to correct the erroneous impression which some hold onto which can be seen in the workmen Compensation Act. Let us look at that section Subject to the workmen Compensation Act, a worker shall be entitled to be paid wage up to twelve working days in any one calendar years during absence from work caused by temporary illness certified by a registered medical practitioner. Nigerian Labour Act, 1990 Section 16.
It is also clear from the foregoing that the reference to twelve days is for health or sickness related off work payment as against annual leave or vacation pay.
SO WHAT IS THE PRACTICE?
The honest truth about days and leave entitlement period is dependent on conditions of service or contract of employment, agreement reached with the employee (Non-Discriminating standard practice in the organization), collective agreement and industry practice.
Section 7, subsection 1 (g) provides that holiday and holiday pay should form part of employment contract or condition of service that should be in written form and given to the employee not later than six months of his or her appointment.
Its stated that
(g) any terms and conditions relating to-
(i) hours of work, or
(ii) holidays and holiday pay, or
(iii) incapacity for work due to sickness or injury, including any provisions for sick pay; €¦
Must be stated in written, so leave entitlement days and payment should be agreed upon at the point when the employment agreement is being negotiated and contracted
S/N COUNTRIES ANNUEL LEAVE ENTITLEMENT ( BY NUMBERS OF DAYS)
1 Angola Workers are entitled to 22 working days per year, excluding weekends and approved rest days and public holidays.
2 Algeria Calculated on the basis of 2 and ½ days per month, but the total numbers of the days cannot exceed 30 calendar days per year.
3 Argentina 14 calendar days from 0-5 years
21 Calendar days from 5 to 10 years
28 calendar days from 10 to 20 years
35 calendar days from 20 and above
4 Benin Republic 2 working days per month of effective service. The law in Benin however, states that unless there is a favourable provisions in collective agreements or contract of employment the above condition shall suffice.
5 Brazil The length of annual leave is dependent on the numbers of absence from work by the employee.
30 days when the worker was absence from work for more than 5 days. 24 days when absence between 6 to 14 days, 18 days of leave when absence between 5 to 23 days and 12 days when absence between 24 to 32 days.
6 Burkina Faso 2 ½ ( Two and half days) per month spent in the service of the employer for a continuous one year of employment.
7 Kenya Employees are entitled to not less than 21 working days after twelve consecutive month of active service with the employer
10 South Korea 15 days for workers who have worked up to a period of three years, one day will thereafter be added to every one year continuously worked but not more than 25 days of leave.
11 United States of American There is no law in the United States that require employers to provide paid vacation or annual leave to its employees. Employers are at liberty to offer their employees paid leave. According to the US Bureau of Labor Statistics, an average of 10 days paid leave is offer by private employers. It is however, not mandatory by law.
12 Uruguay Public and private sector workers are entitled to a minimum of 20days of annual leave.
13 United Kingdom In the United Kingdom, employees are entitled to 5.6 weeks annual leave that is 28 days of paid leave in addition to the 8 days of public and banks holidays which are not paid for. It is of equal importance to say that leave period is often associated with the number of years in service to a maximum of 30 days per year
A look at the cross countries evaluation shows that leave earning periods are mostly provided for by law except in the United States where is not prescribed by law but it is being observed by most organizations. It is however important to states that in all countries x-rated here, workers are entitled to both annual leaves and approved public holidays that are exclusive of annual leave.
Also, I believe we can learn from some of the countries and enriches our practice as a nation. In some countries leave entitlements are accumulated and it ultimately accrued to the workers. While in some jurisprudence it is related to efficient performance for the period of a year.
The impression of just waiting to earn leave even while no meaningful value has been added by employees in the course of the year could be eliminated and then gradually build in the Nigerian workforce a culture of value for money.
CAN SICK LEAVE BE ANNUAL LEAVE DEDUCTIBLE?
Annual leave is different from sick leave and they dont in any way affect the length of each other. So the practice where the annual leave of a staff is deducted from the numbers of days spent in attending to ill-health is illegal and against the law.
PROCEDURE FOR GRANTING ANNUAL LEAVE
Procedurally, the employee is expected to make a formal request for annual leave on or before the completion of one year of continuous service.
This application should be made through his or her immediate supervisor; who will endorse same and send it to HR. The reason for this is to ensure that operation is not affected negatively due to the shortage of manpower necessitated by absence from work by the worker.
It is not right for HR to haphazardly grant leave approval without the line managers or supervisors approval. I have seen this create unnecessary bickering in most organizations.
HR should give a formal approval in writing stating the start date of the leave and when the staff should report back to work.
Also, the approved letter should be copied to the line manager or direct supervisor and the Finance and Account department for the processing of the annual leave allowance.
Application and approval letter should be kept in both personal files of the worker and the personnel or HR file.
It is important to note that proper documentation should be done because during staffs annual leave vacations they still remain in the employment of the company and you have the duty of care over them.
It is important to ask an employee in the application form where they will be spending their leave and if they will be traveling outside their state of cities of work. This will enable HR to relate with them in case of emergencies or operational exigencies. For example, when I worked for an industrial catering company in Rivers State in Nigeria, we got a contract with the Nigeria Liquefied Natural Gas Company and it was necessary that we mobilized to site all most immediately, we would put the best hands together because of the short notice is given to us. This necessitated the recall of our most senior Chef from his annual leave vacation. Imagine if there was no contact how difficult it would have been for us.
It is appropriate to call the worker a week before resumption and intelligently remind him or her of the resumption date. We have cases where the employee picked up another appointment without recourse to present employer. Such knowledge will allow HR plan adequately for a replacement or put a hold on other staff leave pending when such replacement was found.
HUMAN RESOURCE PLANNING AND ANNUAL LEAVE SCHEDULING
Scheduling staff leaves and vacations require adequate and careful planning more so as most staff will fall due on the anniversary of their employment. In a situation, where people started a new operation on the same day, if they all asked for leave on the anniversary of their employment it means a total collapse of operation.
My suggestion is for HR and line managers to plan ahead of time by properly scheduling workers leave for different months and time without exceeding the 24 months deferment time frame.
The standard practice is to design a Leave Roster which is sent to the supervisors or line Managers. The line Managers will, in turn, discuss with the employees on when they would have their annual leave scheduled for the year. When all necessary adjustments are made and clashes in dates ironed out then the roster can be returned to HR for documentation and implementation.
COMPUTATION OF ANNUAL LEAVE PAY
Section 19, of the Labour Act, gives information on the basis for computation of leave or sick benefits when its stated inter alia that
In the calculation of leave pay and sickness benefits only that part of his wages which a worker receives in money (excluding overtime and other allowances) shall be taken into account.
This means that depending on the agreed percentage either determined by a contract of employment or collective agreement, the computation shall be based on the staff annual base pay That is Basic + Housing + Transportation excluding other allowances, bonuses, overtime rates etc.
I have equally seen an organization where leave pay is computed as a factor of Annual Basic salary thereby excluding Housing and transportation allowance.
However, in order not to sound too prescriptive, it is important that the principle of collective agreement, contract of employment, practices within a sector or industry be taken into consideration when computing leave allowance.
An organization can decide to do more but the fundamental rest on section 19 of the Act.
It is intended that this article will be further expanded upon to cover other leave related matters such as maternity leave, compassionate, study leave and examination leave. Its also planned to look at specific organizations and the government agencies if such permission is given.
In the overall, the objective of this blog article is to clarify some of the gray issues surrounding the interpretation of the provision of the Nigerian labor Act regarding annual leave allowance and its implementation. I sincerely hope that this article has been helpful to you and I will be willing to answer your questions on this and other posts that I have written.
Alan Cave ” Managing Change in the Workplace New Approaches to Employee Relations” Coopers & Lybrand 1994
Nigerian Labour Act 1990
Rebecca R. Milla Sanes and John Schmitt ” No Vacation Nation, Revisited” May 2013. Center for Economic and Policy Research ( CEPR)
Sola Fajana, ” Human Resource Management An Introduction” Labofin and Company, Lagos. 2006
Nwagbo Eze ” African Industrial – Organizational Psychology” Pumark Nigeria Limited. 2004
Sharing is caring!