Cut­ting the cost of pub­lic hol­i­days

The Star Late Edition - - OPINION & ANALYSIS - John Botes coun­tries pro­vid­ing the John Botes is part­ner and head of Em­ploy­ment and Com­pen­sa­tion prac­tice, Baker McKen­zie (Johannesburg).

AFOREIGN busi­ness ex­ec­u­tive re­cently visiting our shores ex­pressed sur­prise at the num­ber of pub­lic hol­i­days en­joyed by South Africans. With four pub­lic hol­i­days in short suc­ces­sion in April, one can ap­pre­ci­ate his amaze­ment.

Com­pa­nies must con­tend with four con­sec­u­tive weeks re­duced to four-day weeks dur­ing April and May 2017, wreak­ing havoc on pro­duc­tiv­ity and through­put.

Our coun­try’s rank­ing on ap­par­ent labour mar­ket in­flex­i­bil­ity (129th out of 140 coun­tries ac­cord­ing to the World Eco­nomic Fo­rum Com­pet­i­tive­ness rank­ings 2015/2016) sug­gests that busi­nesses per­ceive ours to be a rigid oper­at­ing en­vi­ron­ment. Is this jus­ti­fied, though, and can em­ploy­ers limit their ex­po­sure to the cost in­her­ent in paid pub­lic hol­i­days?

South Africa guar­an­tees its citizens at least 12 pub­lic hol­i­days per year. An av­er­age of one pub­lic holiday per month does not seem ex­trav­a­gant, or does it? Sri Lanka ap­pears to be the undis­puted world cham­pi­ons of pub­lic hol­i­days with 25 pub­lic hol­i­days per year (http://www. worl­dat­las.com/ar­ti­cles/coun­tries-with­the-most-pub­lic-hol­i­days.html).

Prop­ping them up in sec­ond place, with a re­spectable 21 pub­lic hol­i­days per an­num, is In­dia. It comes as lit­tle sur­prise that Scan­di­na­vian bas­tions of labour force pro­tec­tion, Swe­den (15) and Nor­way (13), grant em­ploy­ees sig­nif­i­cant num­bers of pub­lic hol­i­days.

Some of the high­est num­ber of pub­lic hol­i­days are not those that would reg­u­larly spring to mind, in­clud­ing Colom­bia and the Philip­pines (18), Thai­land, Turkey and Pak­istan (17) and, join­ing Swe­den on 15 days, Ja­pan, Malaysia, Ar­gentina and Lithua­nia.

Even South Kore­ans get a gen­er­ous al­lot­ment of 13 days per year! It thus seems that South Africans do not en­joy sig­nif­i­cantly more time off due to statu­tory pub­lic hol­i­days than col­leagues in many other ju­ris­dic­tions.

But when faced with an econ­omy that is be­ing chal­lenged on many fronts, some busi­nesses can ill af­ford to ab­sorb the cost of pay­ing em­ploy­ees for an ad­di­tional day where they are not ex­pected to work (or to pay them dou­ble wages where the em­ploy­ees in­deed work on the pub­lic holiday).

When one sees the num­ber of busi­nesses down­siz­ing, re­lo­cat­ing op­er­a­tions to other ju­ris­dic­tions or clos­ing their doors, the harsh­ness of the realities facing busi­nesses is driven home.

For those or­gan­i­sa­tions that have to make tough calls on con­tin­ued vi­a­bil­ity and jus­ti­fy­ing their labour bill or loss in pro­duc­tiv­ity, there may be some re­prieve. The an­swer could lie in read­ing to­gether the obli­ga­tions and flex­i­bil­ity per­mit­ted in both the Ba­sic Con­di­tions of Em­ploy­ment Act and the Pub­lic Hol­i­days Act (PHA).

Ev­ery em­ployee is en­ti­tled to the pub­lic hol­i­days pub­lished in the PHA (sec­tion 5(1) of that act). Em­ploy­ees are also en­ti­tled to re­mu­ner­a­tion for the pub­lic hol­i­days (sec­tion 5(2) of the PHA and sec­tion 18(2) of the BCEA).

Where the em­ployee does not work on a pub­lic holiday (where the day falls on what would oth­er­wise have been a nor­mal work­ing day), the em­ployee re­mains en­ti­tled to pay­ment for that day. In essence, an em­ployer may not deduct a day’s wages from an em­ployee’s re­mu­ner­a­tion merely be­cause the em­ployee did not work as a re­sult of the day be­ing a pub­lic holiday.

Where the em­ployee works on a pub­lic holiday (and that day would have been a nor­mal work­ing day), the em­ployee is typ­i­cally en­ti­tled to dou­ble nor­mal wage for that day.

The com­pany is thus faced with a sit­u­a­tion where it ei­ther for­feits the pro­duc­tiv­ity of the em­ployee for that day (and pays nor­mal wage for the pub­lic holiday) or re­ceives the ben­e­fit of the em­ployee’s ser­vice, but pays dou­ble for it. The phrase Hob­son’s Choice springs to mind…

But an oft-for­got­ten sec­tion of the PHA may un­lock some re­lief for em­bat­tled em­ploy­ers. In terms of sec­tion 2(2) of the PHA, an em­ployer and em­ployee may agree to ex­change a pub­lic holiday for any other day. Thus, an em­ployee who does not wish to cel­e­brate Christ­mas may thus ex­change that pub­lic holiday for an­other day that have some sig­nif­i­cance to the em­ployee.

The em­ployee would thus work on Christ­mas Day, at nor­mal re­mu­ner­a­tion, but would be en­ti­tled to take off a day to cel­e­brate Di­wali, Rosh Hashanah or an­other day of sig­nif­i­cance to the em­ployee or com­mu­nity. The em­ployer would then treat the sub­sti­tute day as a pub­lic holiday for the em­ployee. Thus, the em­ployee would not be re­quired to at­tend work on that day and will re­ceive nor­mal re­mu­ner­a­tion for that day.

Should things change and the em­ployer ex­pect the em­ployee to work on this sub­sti­tute day, the em­ployer would have to pay the em­ployee dou­ble for the work done on that day.

Em­ploy­ers could seek to ob­tain the em­ployee’s con­sent to ex­change a pub­lic holiday (listed in the PHA) for an­other day where the em­ployee would or­di­nar­ily work. The par­ties would agree that the em­ployee would work on, say, Work­ers’ Day, but ex­change that pub­lic holiday for a nor­mal work­ing day, but at a time suit­able to the em­ployer’s busi­ness op­er­a­tion.

The value in this ar­range­ment is that the em­ployer can stag­ger the im­pact of ei­ther lost pro­duc­tion or in­creased cost oc­ca­sioned by em­ploy­ees work­ing on pub­lic hol­i­days.

Or­gan­i­sa­tions with 24/7/365 op­er­a­tions could ben­e­fit from an agree­ment al­low­ing them to let em­ploy­ees ex­change pub­lic hol­i­days for pe­ri­ods dur­ing which the busi­ness ex­pe­ri­ences lulls in pro­duc­tion or un­der­goes sea­sonal main­te­nance.

Con­sid­er­ing how jeal­ously some em­ploy­ees guard their pub­lic hol­i­days, ob­tain­ing their con­sent for this ex­change may be eas­ier said than done. How­ever, pru­dent em­ploy­ers may wish to in­sert word­ing to this ef­fect into their em­ploy­ment con­tracts.

PHOTO: MATTHEWS BALOYI

Cel­e­brat­ing Work­ers’ Day. But by con­sent some may pre­fer to work on this day and en­joy an­other day off-duty in lieu, says the writer.

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