What Are My Holiday Entitlements- Annual leave

Annual Leave

Annual leave is a leave type with full remuneration that is earned by the employee in relation to the length of their employment with their employer. It is also one of the most prominent leave types in Sri Lanka that allows the employee to choose when they can redeem their leaves, the other being casual leave. Find out more about casual leave from this article.  

“(a) In respect of the first year of employment during which any person has been continuously in employment in or about the business of any shop or office, that person shall be entitled to take and shall take – 

1. where his employment commences on or after the first day of January but before the first day of April, a holiday of fourteen days with full remuneration; 
2. where his employment commences on or after the first day of April but before the first day of July, a holiday of ten days with full remuneration; 
3. where his employment commences on or after the first day of July but before the first day of October, a holiday of seven days with full remuneration; and 
4. where his employment commences on or after the first day of October a holiday of four days with full remuneration, and the employer shall allow such holiday and be liable to pay such remuneration, and the employer shall allow such holiday and be liable to pay such remuneration, 

(b) In respect of the second or any subsequent year of employment during which any person has been continuously in employment in or about the business of any shop or office, that person shall be entitled to take and shall take a holiday of fourteen days with full remuneration, of which not less than seven days shall be consecutive days, and the employer shall allow such holiday and be liable to pay such remuneration.”

[Shop and Office Act, section 6(1)]

It is a common misconception that you are entitled to 14 days of annual leave each year. You are not able to redeem any annual leave in the first calendar year of your employment. The annual leave that you have accrued for the second year depends on the date of joining in the first year. Leave reset for annual and casual leave happens in correlation to the calendar year which begins on the 1^st of January. Let’s look at a few examples of annual leave entitlements for the first, second and third years of employment according to the above clauses.  

Example 1

Joined date is July 15^th  2022,    

• Annual leaves for 2022 (July 15^th to Dec 31^st ) = 0 days 
• Annual leaves for 2023 (Jan 1^st to Dec 31^st ) = 10 days
• Annual leaves for 2024 (Jan 1^st to Dec 31^st) = 14 days   

Since you worked from July 15^th until the end of the year in 2022, you have earned 7 days of annual leave that you can use in the next year, 2023. From 2024 onwards, you can use the full 14 days of annual leave.  

Example 2

Joined date is February 15^th 2022,  

• Annual leaves for 2022 (Feb15^th to Dec 31^st ) = 0 days
• Annual leaves for 2023 (Jan 1^st to Dec 31^st ) = 14 days  
• Annual leaves for 2024 (Jan 1^st to Dec 31^st) = 14 days 

Since you worked from Feb 15^th until the end of the year in 2022, you have earned the full 14 days of annual leave that you can use in the next year, 2023. From 2024 onwards, you can use the full 14 days of annual leave. 

“The holidays referred to in subsection (1) in respect of any year of employment shall be taken in the year immediately succeeding on days to be agreed upon by the employer and the employee.”

[Shop and Office Act, section 6(1)]

What you earn as annual leave according to your time commitment in the calendar year is the redeemable annual leave entitlement for the next year. This is why HR professionals often say that “you have to earn your annual leave”. When you can redeem your annual leave entitlement it should result from a mutual agreement between your employer and yourself.  

As prescribed in section (1), out of the 14 annual leaves, at least 7 must be taken on consecutive days. However, it is unclear the extent to which this clause is followed in Sri Lankan companies now 

In conclusion, the Shop and Office Act in Sri Lanka provides employees with annual leave entitlements based on their length of service and the calendar year. This system ensures that employees earn their annual leave gradually and can redeem it in subsequent years. While the Act specifies requirements for the duration and timing of annual leave, the actual implementation may vary among companies. 

It’s important for both employees and employers to understand these entitlements and agree upon the terms for taking annual leave. Annual leave plays a significant role in promoting work-life balance and allowing employees to take necessary breaks to rejuvenate and maintain their well-being.