Employment law update – Q&A

August 1st, 2014
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Question:

I am an attorney employed as a professional assistant since 2 May 2007. My employment agreement stipulates that I am ‘entitled to a bonus (13th cheque) which is equivalent to one month’s basic salary which is payable in their birth month’.

However, money was deducted from my bonus (13th cheque) in August 2013. After inquiries I was informed: ‘The new method of calculating a 13th cheque was introduced following adverse finding by external auditors. With this new method employees’ 13th cheque was effectively from 1 July 2013, calculated based on the 1/12th of the basic salaries earned during the bonus cycle.’

Because this is a unilateral amendment of my employment agreement, I filed grievances and was told to approach the Commission for Conciliation, Mediation and Arbitration (CCMA) if not satisfied.

Answer:

I am assuming that with the new method of calculating your bonus, the financial amount you receive is less as compared to what you previously received.

In your circumstances referring an unfair labour practice dispute to the CCMA is one of the options open to you.

In terms of s 186(2)(a) of the Labour Relations Act 66 of 1995 (LRA), an unfair labour practice is defined as –

‘any unfair act or omission that arises between an employer and an employee involving –

(a)

unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits to an employee’ (my emphasis).

In Trans-Caledon Tunnel Authority v Commission for Conciliation, Mediation and Arbitration and Others [2013] 9 BLLR 934 (LC) the Labour Court, per Marcus AJ, held that an employee who received a bonus less than what he was contractually entitled to, could refer an unfair labour practice dispute, in terms of ‘benefits’ to the CCMA. The fact that the employee’s claim was in fact one involving remuneration, did not deprive the CCMA of jurisdiction to hear the matter. Around the same time as this judgment was delivered, the Labour Appeal Court in Apollo Tyres South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and Others [2013] 5 BLLR 434 (LAC), also held that the CCMA has jurisdiction to hear disputes over benefits irrespective of whether the claim in dispute falls within the definition of remuneration.

In both judgments, the courts held that the issue before the arbitrator is whether the employer’s actions were fair or not. If the employer has a justifiable reason for not acting in terms of an employment contract or past practice, then an arbitrator would find the employee has not suffered an unfair labour practice. Thus, in your matter, the employer would have to explain what adverse findings any external auditor made and why it became necessary to change the calculations in relation to bonuses.

As an alternate you could refer a breach of contract claim to the Labour Court in terms of s 77(3) of the Basic Conditions of Employment Act 75 of 1997 (BCEA), wherein you would seek specific performance. This section reads:

‘The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment, irrespective of whether any basic condition of employment constitutes a term of that contract.’

However the CCMA will not only deal with your matter far sooner than the Labour Court, but this route will also prove more cost effective for you.

If your colleagues have also received a lower bonus and also want to pursue legal recourse, then an additional option would be for you and your colleagues collectively to refer a matter of mutual interest to the CCMA in terms of s 64(4) of the LRA. At the centre of your claim would be that the employer unilaterally changed your terms and conditions of employment by reducing your bonuses. The matter would be conciliated and, if unresolved, you and your colleagues could embark on protected strike action in an attempt to force the employer to revert to the previous method of calculating bonuses. This option would be available only if there is more than one employee referring the dispute. A strike, as defined in s 213 of the LRA, requires a ‘concerted’ refusal to work, which means that a single employee cannot embark on strike action. (It would be important to understand that if the employer has changed the method of calculating bonuses in terms of any applicable legislation or collective agreement which it previously had not complied with, then any changes in compliance with the law or collective agreement would not be seen as a matter of mutual interest thus preventing you and others to pursue the option of strike action.)

Question:

My letter of appointment stipulates my basic salary. It then continues to stipulate that my medical contribution and annuity payment shall be included in my basic salary. When I asked for a dummy payslip to see what my nett pay would be, I was provided with a payslip stipulating a basic salary plus medical plus annuity. The total amount was named ‘gross earnings’ on my payslip and was almost the same as the basic salary on my letter of appointment. I received two payslips in this order, but then it was changed and my basic salary is now indicated as my total package.

I am confused. What is the proper definition of a basic salary? How do our courts interpret a basic salary? Should one’s basic salary not include your benefits? I always thought that my total package or gross earnings would be calculated by adding my benefits to my basic salary?

Answer:

The term ‘basic salary’ is not defined in the Basic Conditions of Employment Act 75 of 1997 (BCEA). The BCEA does, however, define ‘remuneration’ in s 1 as ‘any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any person, including the State’.

My understanding of basic salary is the remuneration you receive for the ordinary hours of work tendered, excluding any overtime. To this, you include your overtime, if any, together with any other benefits you may receive (excluding employer’s contributions) which then gives you your ‘gross pay’.

The term ‘earning’ was defined in the Ministerial Determination GN356 GG25012/14-3-2003 (wherein the Minister of Labour set out the earning threshold to which employees earning above the annual threshold cannot lay legal claim to certain rights in the BCEA), as gross pay generated before deductions but excluding the employer’s contributions for example medical aid, retirement etcetera. (The current Ministerial Determination GN456 GG36620/1-7-2013, does not mention the term ‘gross pay’ but defines earning in the same or similar manner as before.)

A pro forma wage register as provided in the BCEA can be found alongside.

The first ‘total’ in the register indicates the employee’s gross earnings, which is made up of your basic salary and other benefits.

The term ‘total package’ or ‘cost to company’ refers to the total cost the employee presents to the employer and includes the employer’s contributions to medical aid, retirement etcetera.

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Moksha Naidoo BA (Wits) LLB (UKZN) is an advocate at the Johannesburg Bar.

This article was first published in De Rebus in 2014 (Aug) DR 46.

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