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Holiday & Leave


Article exclusively contributed by the
Labour Relations Promotion Unit
of the Labour Department

Unused annual leave = forfeited annual leave?


Tony was a computer programmer. He had been working in Mr. Lee's trading company for nearly three years. To enhance the competitiveness of his company, Mr. Lee started computerization and he employed Tony to oversee the implementation of this project. Due to a heavy workload, Tony had not taken any annual leave in the past years and Mr. Lee had also not arranged for Tony to take any annual leave.

The computerization project was finally completed. Tony decided to take a break and applied for 14 days annual leave.

Mr. Lee rejected Tony's application because according to his record, Tony was only entitled to seven days annual leave in his second year of employment.

Tony, on the other hand, argued that he had already accumulated 14 days annual leave for he had not taken any annual leave before. Mr. Lee thought that it was not appropriate for Tony to accumulate any unused annual leave. If Tony did not take his entitled annual leave in the past year, it was assumed that his unused leave balance was forfeited.

Was Tony entitled to 14 days annual leave under this situation?

Under the Employment Ordinance, an employee is entitled to annual leave with pay after having been employed under a continuous contract for 12 months. An employee shall take the paid annual leave to which he is entitled within the following period of 12 months. For the first two years of service, an employee is entitled to seven days annual leave after each year of service.
The time of leave should be appointed by the employer after consultation with the employee or his representative, confirmed by a written notice to the employee at least 14 days in advance, unless a shorter period has been mutually agreed.
An employer who fails to grant annual leave or pay annual leave pay to an employee is liable to prosecution and, upon conviction, to a fine of $50,000. As Mr. Lee has not arranged for Tony to take any annual leave during the appropriate period, he may have already breached the above provision.
As for the outstanding 14 days annual leave, Mr. Lee is required to grant them to Tony.

The above case only serves as an illustration of the provisions of the Employment Ordinance on annual leave. The Employment Ordinance, however, remains the sole authority for the provisions explained above and in case of dispute, the final decision rests with the court.


Q & A about the Employment Ordinance
Q1 Who determines the timing of annual leave?
A1 The timing of the leave should be appointed by the employer after consultation with the employee or his representative. The employer should confirm by a written notice to the employee at least 14 days in advance, unless a shorter period has been mutually agreed.

Q2 Can annual leave be granted separately to an employee?
A2 Paid annual leave should be granted for an unbroken period. If the employee so requests, it may be granted in the following manner:
- Leave entitlement not exceeding 10 days: Up to 3 days can be granted separately; the balance should be granted consecutively.
- Leave entitlement exceeding 10 days: At least 7 days should be granted consecutively.

Q3

Can an employer make payment to an employee in lieu of annual leave?

A3 An employer should not include in an employment contract a term to forego all or any of his employee's annual leave entitlement, including payment of wages in lieu of any annual leave days. However, the law allows an employee to choose to accept payment in lieu of that part of his leave entitlement which exceeds 10 days.
[Example] : An employee who is entitled to 12 days annual leave can take 10 days leave and accept payment of the equivalent wages for the 2 days leave.

Q4 If an employee resigns before completing one year's service, should the employer grant pro-rata annual leave pay to him?
A4 An employee is entitled to pro-rata annual leave pay on completion of three months but less than 12 months service in a leave year if his employment contract is terminated, unless the employee is dismissed by summary dismissal.

   
 
Source : Labour Department


Taken from Career Times 19 April 2002

(Last review date: 23 August 2013)


Disclaimer: The opinions expressed in this article are those of the contributor.

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