A leave payout is money paid to an employee for annual leave they accrued but did not take. It most commonly arises on termination, when any leave balance still owing must be paid out.
What it means
The BCEA requires accrued annual leave to be paid out when employment ends - it cannot simply be forfeited. The payout is calculated on the leave days outstanding at the employee's rate of remuneration. Paying out leave during employment is more restricted, since the law generally wants leave to be taken as rest.
Where it fits in
A leave payout is an earnings component added in the relevant pay run, often the final one. It is taxable remuneration; where it forms part of a larger termination lump sum, a tax directive may govern the tax on the whole amount.
Key rules
- Cash for accrued but untaken annual leave.
- Required on termination - accrued leave cannot be forfeited.
- Calculated on outstanding leave days at the employee's rate.
- Taxable, and may fall under a directive as part of a termination lump sum.
