Sometime in late June of 2014, a client of mine asked if a company has the right to withhold annual leave for up to 12 months. I told him that that would be bad HR practice and that his management should not withhold annual leave for up to 1 year. As far as I know, once an employee completes 3 months of continuous service, he should be entitled to paid leave albeit pro-rated. My client made reference to an MOM website which stated that an employer is allowed to withhold annual leave for up to 12 months.
The following (below) is a screen shot from MOM’s website:
The website can be found at: http://www.mom.gov.sg/Documents/employment-practices/al-and-sl-revised.pdf
Subsequently, I asked my client to write to MOM to confirm whether this is indeed true, and MOM responded that what is stated is correct. I entered into the e-mail exchanges and asked MOM, which part of the law allows the annual leave to be withheld, and they responded with the following clause, which I am reproducing word for word;
“Dear Mr Martin,
We refer to your email dated 1 Jul 2014.
Section 43(6) of the Employment Act stipulates that
“The employer shall grant and the employee shall take such leave not later than 12 months after the end of every 12 months continuous service…..“
Note that the above produced by MOM is just half of the clause and it sounds to be correct when read partially. However, I responded to MOM and said that, if the entire clause is read in full, the meaning would differ from their interpretation of the law. When read in full, Section 43(6) would read as follows;
“The employer shall grant and the employee shall take such leave not later than 12 months after the end of every 12 months of continuous service and any employee who fails to take that leave by the end of such period shall thereupon cease to be entitled thereto”.
When read in full, it seems to imply that the annual leave earned (in a particular year) by the employee could be brought forward to the following year. At least that’s how I interpret it. Furthermore, I added that Section 43(2) substantiated my case, as it clearly state the following;
“An employee who has served an employer for a period of not less than 3 months but who has not completed 12 months of continuous service in any year shall be entitled to annual leave in proportion to the number of completed months of service in that year”.
Key words here are “any year” & “in that year”.
I asked MOM “are we to disregard Sec 43(2)?” I did not get a direct answer from MOM, all they said was that I am correct to the fact that an incomplete year of service would entitle to an employee having his leave pro rated, and they ended by saying that they do not provide legal consultancy pertaining to the clause I brought forward and that I should go seek a lawyer’s view. I was indeed very disappointed by MOM’s response.
On 16th of July, at our 36th HR Sharing, I presented to an audience of about 40 HR Professionals the 2 clauses and asked for their views. Most were of the view that the 2 clauses of Sec 43(6) and 43(2), were ambiguous when read together.
Note: Part IV of the Employment Act & Section 33 applies only to: Workmen earning not more than $4,500 basic monthly salaries; and Other employees (other than workmen) covered under Employment Act earning not more than $2,500 basic monthly salaries. Part IV of the Employment Act does not cover managers or executives.
By Martin Gabriel, Senior HR Consultant, HRmatters21
