Calculate how much you’ll receive from your unused leave days.
Are you resigning, retiring, or facing retrenchment? Use the above Leave Payout Calculator to estimate the cash value of your unused annual leave days. Under the Basic Conditions of Employment Act (BCEA) in South Africa, employees must be paid out for any annual leave not taken upon termination of employment.
How to Calculate Leave Payout in South Africa
Understanding how to calculate leave payout can be confusing because the law defines leave in “consecutive days” while most companies operate on “working days.”
The Basic Calculation Formula
The standard formula to calculate the value of a single leave day relies on your daily remuneration rate.
- Determine your Daily Rate:
- Monthly Earners: Monthly Salary x 12 ÷ 365 = Daily Rate
- Weekly Earners: Weekly Wage ÷ Days worked per week = Daily Rate
- Multiply by Unused Days:
- Daily Rate x Number of Unused Leave Days = Total Payout
Note: Some payroll systems use the “21.67 average working days” method (Monthly Salary ÷ 21.67) to determine a daily rate for 5-day workers. Our calculator uses the standard daily rate calculation to provide a close estimate.
Example Calculation
If you earn R20,000 per month and have 10 days of accumulated leave:
- Step 1: R20,000 x 12 = R240,000 (Annual Salary)
- Step 2: R240,000 ÷ 365 = R657.53 (Daily Rate)
- Step 3: R657.53 x 10 = R6,575.30
Is Leave Payout Taxable in South Africa?
Yes, leave pay is fully taxable. A common search query is “leave payout tax calculator south africa.” It is important to know that SARS views leave payout as “variable remuneration.”
- Standard Resignation/Retirement: The leave payout is added to your gross income for that month and taxed at your marginal income tax rate (PAYE). It is not tax-free.
- Retrenchment: If the leave payout forms part of a valid severance package, it might fall under the special tax directive (where the first R550,000 of the severance lump sum is tax-free), but this largely depends on the specific tax code used by your employer on your IRP5. Generally, leave pay is code 3605 and is taxable.
South African Law on Leave Days (BCEA)
According to the Basic Conditions of Employment Act (BCEA), employees are entitled to:
- 21 consecutive days of annual leave per annual leave cycle.
- OR 1 day of leave for every 17 days worked (often used for temporary or hourly staff).
For a standard 5-day work week, “21 consecutive days” equals 15 working days of paid leave per year.
When must leave be paid out?
Employers are only legally required to pay out annual leave upon the termination of employment (resignation, dismissal, retrenchment, or death). It is illegal under the BCEA for an employer to pay you cash in exchange for leave days while you are still employed (unless the leave days are in excess of the statutory minimum).
Frequently Asked Questions (FAQs)
How do I calculate my leave days payout? To calculate your payout manually, divide your monthly salary by 4.333 (average weeks in a month) to get a weekly rate, then divide by your work days per week (usually 5) to get a daily rate. Multiply this daily rate by your number of unused leave days.
What happens to my leave if I resign? If you resign, your employer must pay out all statutory annual leave days that you have accumulated but not taken. This should be paid in your final payslip.
Does the calculator include tax? No, this tool calculates the Gross Leave Payout. Tax deductions depend on your total annual income and tax bracket. You should anticipate a tax deduction of at least 18% to 45% depending on your earnings.
Can I encash my leave days without resigning? Generally, no. The BCEA prohibits employers from paying employees for annual leave except upon termination of employment. However, if your contract allows for leave days above the statutory minimum (e.g., you get 20 working days instead of 15), the company policy may allow you to encash the excess days.
References & Sources
To ensure accuracy, this content adheres to the following official South African legislation:
- Department of Employment and Labour: Basic Guide to Annual Leave
- Basic Conditions of Employment Act: BCEA Chapter 3: Leave
- SARS (South African Revenue Service): Tax on Variable Remuneration