Employment law update – Deductions from remuneration

February 1st, 2023
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In National Education, Health and Allied Workers’ Union obo Mamogale and Others v North West Department of Community Safety and Transport Management and Another [2022] 11 BLLR 1041 (LC) the Labour Court (LC) had to determine the lawfulness of certain deductions made from employees’ salaries. In this case, the employees were employed as traffic officials in terms of a two-shift system. The Department then replaced this system with a three-shift system, but the employees refused to obey the instruction to work according to this new shift arrangement. They were willing to tender their services as per the old shift system, which would have entailed some overlapping of hours, but they were not issued with the keys to the traffic vehicles by the Department and, therefore, could not tender their services. The employees were informed that the principle of ‘no work, no pay’ would be implemented until they complied with the new shift arrangement. They were nevertheless still paid their normal salaries for April and May 2022. However, at the end of June 2022 their payslips reflected that an amount would be deducted from their salaries to offset the overpayments that had been made in respect of April and May. An urgent application was launched by the union on behalf of the employees seeking an order to direct the Department not to make any further deductions from their salaries and to reimburse the employees for those deductions that had already been made by the Department.

It was argued on behalf of the employees that the deductions were unlawful and in breach of s 34 of the Basic Conditions of Employment Act 75 of 1997 (BCEA) because the employees had not agreed to the deductions. Furthermore, it was alleged that the employees would have tendered their services but were prevented from doing so by the employer who withheld the tools of the trade and that this accordingly constituted an unlawful lock-out.

The employer relied on the decision in Mpanza and Another v Minister of Justice and Constitutional Development and Correctional Services and Others [2017] 10 BLLR 1062 (LC) to justify the deduction. The LC found that the circumstances of this case were distinctive to the facts of the Mpanza case as in the Mpanza case the employees had been afforded a proper opportunity to make representations. Furthermore, the Mpanza case was not a case where the employees had been paid their normal remuneration and then deductions were made from their salaries thereafter as was the case in this case. The LC remarked that it would have been in order for the employer to have applied the ‘no work, no pay’ principle and not have paid the employees during the month that it fell due. The issue here was that the employees had been paid their salary and the employer was now trying to recover these amounts through a deduction from salary.

It was held that there was no law, collective agreement, or award, which authorised the employer to deduct the amounts from the salaries without the written consent of the employees as contemplated in s 34 of the BCEA. The deductions accordingly did not comply with s 34 of the BCEA and were unlawful and the employer was ordered to repay these amounts to the employees. As regards the allegation that the employer’s withdrawal of the tools of the trade amounted to a lock-out, it was held that this was not a lock-out and, therefore, the only relief for the employee was an interdict of the deductions for April to June 2022 and the repayment of the deductions already made. The employer was still entitled to institute civil proceedings to recover the undue portions of the salary from the employees.

 

In Gqithekhaya and Others v Amathole District Municipality [2022] 11 BLLR 1066 (ECL) the employees had participated in an unprotected strike but were paid their normal salary in the normal course in respect of the strike period. Approximately five months later, the employees received a notice informing them that the remuneration they had been paid during the strike would be deducted from their salaries on the basis of the ‘no work, no pay’ principle.

The employees instituted an urgent application seeking an order to restrain the employer from making the deductions and to direct the employer to repay the amounts that had already been deducted.

The employer argued that it was entitled to make the deductions as the strike had been unprotected. The employer argued that it was simply applying the common law doctrine of set-off. As regards the delay in recovering the amounts, the employer alleged that it took time to determine who the employees were who participated in the strike and were not entitled to be paid due to the large number of employees involved.

The court held that the principle of ‘no work, no pay’ applied to both protected strikers and unprotected strikers. Therefore, strikers are not entitled to be remunerated and should be required to reimburse the employer for amounts paid to them when they did not tender their services. It was held that in this case the delay in the employer implementing the ‘no work, no pay’ principle was justified given the vast number of strikers. The employer was, therefore, entitled to recover these amounts and the normal timelines for prescription applied.

The court, however, held that even though the amounts were paid to the employees who participated in the strike in error the employees should have been afforded an opportunity to make representations on the amounts involved and how the employer should attempt to recover these amounts. It was held that the fact that the employer mistakenly thought that the employees did not participate in the strike and, therefore, paid the employees erroneously was not the type of error contemplated in s 34(5) of the Basic Conditions of Employment Act 75 of 1997 (BCEA), which was when there is an error in the actual calculation of the remuneration, which permits an employer to make such a deduction without consent. The court also remarked on the fact that the deduction must be limited to one-quarter of the loss or damage, and this requires a fair process to be followed with the employee in which the employee is afforded a hearing. It was held that there had been a breach of the BCEA as the employees had not been afforded an opportunity to make these representations.

It was held, however, that the employees were indebted to the employer under common law and, therefore, the employer was entitled to recover the amounts paid to the employees under common law until the debt has been extinguished.

Monique Jefferson BA (Wits) LLB (Rhodes) is a legal practitioner at DLA Piper in Johannesburg.

This article was first published in De Rebus in 2023 (Jan/Feb) DR 51.

 

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