IT’S “13TH CHEQUE” TIME AGAIN: MUST YOU PAY ANNUAL BONUSES?

 

 

Once again November is upon us, and no doubt employees around the country are starting to dream of all the good things they can do with that “Christmas” bonus coming their way.

If you are one of them perhaps you plan to pay off debt or to re-charge the family’s batteries with a special holiday. Or perhaps you just want to reward yourself and your loved ones with a bit of free-spending on a luxury or two to celebrate a special time of year.

That’s all well and good, but the hard reality is that every year a percentage of employers decide that they can’t afford a sudden doubling of their staff costs and will call everyone together to say something like “Sorry guys, times are really tough so no bonuses this year. You’re lucky to still have jobs”.

Disappointment and anger will no doubt lead to thoughts of CCMA referral and legal action, but none of that is necessary if both employers and employees (a) understand the law, (b) prepare and plan properly, and (c) communicate effectively long before hopes are raised then shattered.

Firstly, what does our law say?

It is a persistent myth that our law automatically forces employers to pay annual bonuses.  Not so – nothing in our labour legislation or employment law says anything of the sort.

What our law does say to employers is this

  • If your employment contracts say you must pay bonuses, your employees have an enforceable legal right to receive them. This is just standard contractual law – both you and your employees are held to your agreements.
  • You must consider not only what your employment contracts themselves provide, but also any company policies, collective agreements and the like.
  • Check also whether any conditions – like profitability of the business or employee performance or contribution to profitability – are specified. And are you given unlimited discretion in deciding whether or not to award bonuses?
  • Even where nothing has actually been agreed as above, you may still be bound to pay annual bonuses if you have paid them regularly in the past. This is because departing from any established practice or custom without prior employee consultation can be seen as an unfair labour practice.  The law aside, employee morale will naturally plummet if expectations of a bonus have been built up over the years but are then dashed at short notice.
  • Be careful of differentiating between employees performing the same or similar work – that’s a recipe for dispute and accusations of unfair labour practice.

Prepare and plan

Employers: Have your lawyer check all your employment contracts and company policies to make sure that you have full discretion and will never be forced to pay bonuses your business can’t afford. Take advice on how you can regularly pay bonuses in good years without creating “rights of expectation” enforceable by your employees in bad years. Use cash flow projections to give you (and your employees) early warning of any inability to pay bonuses this year.

Employees: Don’t spend your bonus until you know for certain how much (if anything) is actually coming your way. And remember that SARS could be taking a bigger than normal slice out of this particular pie – ask your employer for an estimate of how much from the PAYE deduction tables.

Communicate, communicate!

Whichever side of the employment contract you are on, open and effective communication will always be the key to avoiding false hope and bitter disappointment when it comes to bonus time.

So as an employee don’t be shy to ask the boss about his/her bonus plans and if as an employer you have any doubt at all about your business’ capacity and/or willingness to pay bonuses this year, tell your employees what to expect before expectations build up. After, of course, taking legal advice if you have any doubt as to your legal position in this regard – our labour laws are complex and getting them wrong can be costly!

Credit: Law Dot News

For more information and assistance, contact Tracey Mouton, HR Director, Goldberg & de Villiers Inc on 041 5019800.

 

AGING EMPLOYEES : WHEN MUST THEY RETIRE?

“Retirement at sixty-five is ridiculous. When I was sixty-five I still had pimples” (Comedian George Burns)

Record numbers of Baby Boomers are now reaching their 60s, and if you are an employer in any size of business (from the smallest family-owned enterprise to the largest corporate), make sure now that you have a policy in place to handle the thorny question of compulsory retirement.

This is vital – sooner or later you are going to have an employee turning 55 or 60 or 65, and if you think you can just say “Happy Birthday Kim, time for you to retire, see you around” you are in for big trouble.

So what’s the legally required retirement age?

The problem is that nothing in our law imposes a standard retirement age on employees. So trying to force someone to retire at an age that you unilaterally choose (no matter how much you may think that 65 is the universally-accepted gold standard for being put out to pasture) opens you up to a claim for ‘age discrimination’. And that would amount to an automatically unfair dismissal, for which our courts will make you pay dearly.

What our law does say is that “a dismissal based on age is fair if the employee has reached the normal or agreed retirement age for persons employed in that capacity” (our emphasis).

Let’s look at each of those options

“Agreed”: Clearly your best course of action is to have a written agreement with every employee specifying a compulsory retirement date. Ideally have such a clause in every new employment contract, and if any existing contracts have no such clause, negotiate one now (it’s essential to do this bilaterally not unilaterally – see case below).

“Normal”: You can always try to convince a court that you have, through past practice in your business, established a “normal” retirement age. You will have to prove that you have consistently applied this age in previous retirement situations and that the employee in question was aware of it. Far safer of course is to have in place a formal “retirement policy”.

Whatever you do, don’t act unilaterally

A recent Labour Court case shows how dangerous it can be to try to alter any term of employment without negotiating and agreeing it with your employees –

An employee’s employment contract made no direct mention of a compulsory or automatic retirement age, but his employer’s ‘Human Resources Policy and Procedure Manual’, which was incorporated into and formed part of his contract, stipulated a retirement age of 65.

This was reduced to 60 when the Manual was replaced by a “Terms and Conditions of Employment” policy. The new policy excluded employees “expressly entitled to retire at 65 in terms of their individual contracts of employment”.

The employee’s services were terminated when he turned 60 and he approached the Labour Court for assistance.

The Court held that the employer is “not permitted to unilaterally amend terms and conditions contractually agreed to” and was therefore in breach of contract. The employer must now reinstate the employee retrospectively to the date of termination, his compulsory retirement age being confirmed at 65.

What to do when retirement age is reached

Preferably your employment contracts should specify an agreed procedure to be followed on retirement date, but in any event don’t let the date just float past. Rather, if you agree on an extension period, have your lawyer draw up an amended employment contract to avoid any uncertainty or dispute.

Employees – know your rights

Age discrimination is just one form of automatically unfair discrimination prohibited by law. Stand up for your rights if you think you are being discriminated against, directly or indirectly, “on any arbitrary ground, including, but not limited to race, gender, sex, ethnic or social origin, colour, sexual orientation, age, disability, religion, conscience, belief, political opinion, culture, language, marital status or family responsibility.”

Credit: LawDotNews

For assistance and more information, contact the professional legal team at Goldberg & de Villiers Inc on 041 5019800.

 

DAGGA – JUST HOW LEGAL IS IT NOW?

 

 

The media has been awash with reports (sometimes conflicting, often vague) of what the recent Constitutional Court ruling actually means in practice.

Whether you agree with the ruling or not, and whether or not you personally have ever had (or intend to have) anything to do with cannabis/marijuana/weed/dagga, we all need to be aware of the implications.

Here’s some food for thought –

  • Err on the side of caution: Parliament has two years to change the relevant Acts to cure their constitutional defects. Until it does so, there will be many grey areas and your best course of action is always going to be to err on the side of caution. You really don’t want to be funding a test case in court, particularly if your job or your clean criminal record is at stake.
  • The limits of the ruling: The Court’s decision has not comprehensively “legalised dagga”. What it has done is to provide that, until the Acts are amended, it could not be a criminal offence for an adult person –

o          To use or be in possession of cannabis in private for his or her personal consumption in private; and

o          To cultivate cannabis in a private place for his or her personal consumption in private.

Any form of supply or purchase, even in private, and any possession or use by a minor (under 18), anywhere, would still put you at risk of a criminal record and heavy penalties.

  • The danger of arrest: As the Court put it, if a police officer finds a person in possession of cannabis and thinks it is not for personal consumption, then “He or she will ask the person such questions as may be necessary to satisfy himself or herself whether the cannabis he or she is in possession of is for personal consumption.  If, having heard what the person has to say, the police officer thinks that the explanation is not satisfactory, he or she may arrest the person.  Ultimately, it will be the court that will decide whether the person possessed the cannabis for personal consumption.” Similar considerations will, said the Court, apply to questions around cultivation.

There is also no clarity on what will be considered to be a “private place” other than the Court’s comment that there are places other than “a person’s home or a private dwelling” where the right to privacy would apply.

The bottom line – you still risk arrest on suspicion of having or growing more dagga than a police officer considers reasonable for your personal consumption, or in a place that you consider “private” but that a police officer doesn’t.

  • Driving under the influence: Our law provides that: “No person shall on a public road … drive a vehicle or occupy the driver’s seat of a motor vehicle of which the engine is running … while under the influence of intoxicating liquor or a drug having narcotic effect”. Effective testing by police if you are pulled over is another matter entirely, but does anyone really want to risk a stay in a police cell while a test is arranged?
  • In the workplace: Since the court’s ruling applies only to “private places” it seems unlikely that employees could ever get away with use or possession in a standard office situation. But what about an employee pitching for work whilst still under the influence? Practical issues of proof aside, it is probably an extremely bad idea. Employees have a general duty to perform their functions properly and doing anything to compromise that probably puts you at risk of at the very least a disciplinary warning. Of course anyone in a job where 100% sobriety is a non-negotiable necessity (think heavy machinery operators, surgeons, pilots and the like) risks a lot more than just a warning.

Employers: a final note

Having a properly-drawn “sobriety policy” in place will reduce the risk of confusion and dispute in the workplace. If you have a policy in place already, ask your lawyer to check that it adequately covers you in light of these new developments.

Credit: LawDotNews

For more information contact Tracey Mouton of Goldberg & de Villiers Inc on 041 501 9800.

THE IMPORTANCE OF MAINTAINING RECORDS FOR OVERTIME

 

Section 76 of the Basic Conditions of Employment Act requires the employer to prove the accuracy and validity of any record that it maintains and, if it has failed to maintain a record, it must prove that it has complied with the Act.

In Venter vs Symington & De Kok the Court pointed out that the onus of proving that overtime was worked still rests on the employee, but once the employee is able to show on a balance of probabilities that she did work overtime on certain occasions, the burden of proving compliance with the BCEA shifts to the employer.

The Court accepted that instructions that particular work had to be finished before the employee could leave for the day was to be construed as an instruction to work overtime, and accordingly payment was thus due to the employee.

This case is amongst many that highlight the importance of keeping records which comply with the BCEA.

For advice in relation to the Basic Conditions of Employment Act contact Goldberg & De Villiers Inc., Tracey Mouton on (041) 501 9801 or e-mail: traceym@goldlaw.co.za.

DEPRESSED AND DISMISSED – A HARD LESSON FOR A HARD EMPLOYER

A recent Labour Court decision shows how dangerous it is as an employer, when attempting to dismiss an employee, not to draw a clear distinction between misconduct and incapacity.

Disciplined for depression

An employee, whose track record had originally been an excellent one, was charged at a disciplinary enquiry with four charges of misconduct –

o             Unauthorised absence from work for 17 working days,

o             Failure to inform his manager of his absences in accordance with company policy,

o             “Gross insolence” in the form of turning his back on his manager when talking about his absenteeism,

o             Refusal to obey a “lawful and reasonable” instruction.

He was summarily dismissed after being found guilty of all the charges.

He then asked the Labour Court to declare his dismissal unlawful on the basis that although his conduct was as charged, it was caused by his state of depression. He had been diagnosed by two doctors for depression and prescribed anti-depressants. Moreover a clinical psychologist recommended he be granted sick leave as he was suffering the symptoms of a burnout and “reactive depression”, and was close to an emotional breakdown.

He blamed his depression on his personal and financial problems, and on workplace stress related to his management’s reaction (and inaction) when he asked for help. For example, he was denied a salary increase and performance bonus and said he felt betrayed when his manager appeared on behalf of his wife in his divorce.

The Court, finding that depression is a form of mental illness and that the employee’s conduct was inextricably linked to his mental condition, held that the employer had a duty to institute an incapacity enquiry rather than a disciplinary one. Furthermore, knowing that the employee was a person with a disability, the employer “was under a duty to reasonably accommodate him”.

In all the circumstances the Court found that

o             The dismissal was automatically unfair in terms of the Labour Relations Act, and

o             The employee had suffered unfair discrimination in terms of the Employment Equity Act.

The hard lesson for employers

The end result is that the employer must –

  • Reinstate the employee with full retrospective effect,
  • Pay him an additional six months’ salary as compensation,
  • Pay his legal costs.

Mental health issues are perhaps not always as easily understood as physical ones, but they can both amount to incapacity and in both a little bit of empathy will go a long way. Moreover specific legal rules apply as to how you should proceed, and even if you suspect malingering it’s vital to act fairly and in accordance with procedure.

Take specific advice before you do anything as the penalties for getting this wrong will be severe – our courts are not gentle with employers who contravene our labour laws, particularly in cases of automatic unfairness and unfair discrimination

Credit: LawDotNews

For professional Labour Law advice, contact Goldberg & de Villiers Inc on 041 501 9800.

INCREASED BENEFITS UNDER UNEMPLOYMENT INSURANCE ACT

Through amendments to the Unemployment Insurance Act, which amendments were passed in January 2017 but have not yet come into effect, the Department of Labour intends using a portion of the surplus held in the Unemployment Insurance Fund (UIF) to expand the scope and reach of benefits available to contributors to the fund that lose their jobs.

As the increase in benefits will be paid out from the surplus in the fund, there will not be an increase in the contributions made by employers or employees to the fund (employees currently contribute 1% of their salary to the fund and employers must match that amount).

Some of the more notable changes to benefits include:

  • A period of up to a year for contributors to submit claims instead of the current six months;
  • Benefits of up to a year instead of the current eight months i.e. one day of benefit pay for every four days worked;
  • Inclusion of public servants in the UIF;
  • Inclusion of learners completing learnerships or vocational education and training programmes; and
  • Qualifying maternity leave applicants to receive a flat rate of 66% of their salary (subject to a maximum benefit of R17 712 per month) instead of a rate of 38% to 60%.

According to Makhosonke Buthelezi, UIF Director of Communication and Marketing (https://www.groundup.org.za/article/department-labour-use-its-billion-rand-surplus-extend-uif-benefits/), the Department’s systems are now “98%” ready for the changes which would have meant that an extra R7 billion would have been paid out between January 2017 and April 2018 (the UIF paid R8.47 billion in benefits in the 2016-2017 year).

For professional legal advice, contact Goldberg & de Villiers Inc on 041 501 9800.

 

 

 

 

 

WHISTLEBLOWERS: WHAT IF YOUR DISCLOSURE IS FACTUALLY WRONG?

For many years now the “Whistleblower’s Act” (actually the Protected Disclosures Act or “PDA”) has been providing protection to employees who report unlawful or improper conduct by their employers or fellow employees.

Recent updates to the PDA have extended protection to independent contractors, consultants, agents and workers employed by labour brokers. There is also a new requirement for employers to put in place “internal procedures for receiving and dealing with information about improprieties”.

Reprisals against a whistleblower (in the form of any type of “occupational detriment”) will land an employer in very hot water indeed. For example if the reprisal takes the form of a dismissal, it is “automatically unfair” and that carries substantial risk such as a compensation order of up to 24 months’ salary.

A case of incompatibility or retaliation?

  • An employee of a large organisation came to believe that several of her subordinates’ positions had been re-graded to a lower grade, without their knowledge or consultation, and that this both negatively impacted on their future salaries and distorted the accuracy of the company’s employment equity report. She reported this to her immediate superiors, then to the company’s internal audit department and to senior executives, but received no feedback.
  • Out of the blue she was presented with a termination offer, and when she didn’t accept it she was summarily dismissed for “incompatibility with colleagues”.
  • Her claim for automatically unfair dismissal in terms of the PDA was rejected by the Labour Court, but on appeal to the Labour Appeal Court her claim was upheld and she was awarded compensation of 18 months’ salary, with her employer ordered to pay all legal costs.

In reaching this decision, the Court considered several important questions

  • Was the whistleblower’s disclosure made in good faith, in accordance with procedure, and based on a reasonable belief that it was substantially true? If so, the disclosure is a protected one. Importantly, said the Court, the whistleblower need not prove a factual basis for the belief “because a belief can still be reasonable even if the information turns out to be inaccurate.”
  • Was it reasonable in all the circumstances for the whistleblower to have made the disclosure? On the facts, held the Court, the whistleblower had acted reasonably and the employer’s contention that the dismissal was based on incompatibility was “nothing short of fiction and the only probability is that the appellant’s dismissal was in retaliation for her disclosure of the irregularities in the re-grading process.”

The lesson for whistleblowers

The PDA provides you with strong protections if you follow the correct procedures; just be sure you will be able to pass the tests posed by the above questions.

The lesson for employers

Don’t take action against a whistleblower just because a disclosure is factually incorrect – it is the reasonableness or not of the employee’s belief, and the “good faith” requirement, that you should concentrate on. Make sure also to have a whistleblower policy in place and to tell all your employees about it – not only is that now a legal requirement, but your business can only benefit from uncovering any improper or criminal conduct going on behind your back.

As always, with our labour laws being so complicated, and the penalties for breaching them so severe, take specific advice on your particular situation.

Credit: LawDotNews

For more information contact Tracey Mouton at Goldberg & de Villies Inc on 041 501 9800.

RESTRAINT OF TRADE

Importance of definitions – meaning of “client”

A restraint of trade is characteristically used in an employment situation where an employee has access to the employer’s client lists and due to the nature of the position gains trust, confidence and personal relationships with the clients.

A typical example of such an industry is the insurance industry. Whilst a restraint of trade may be imposed it is essential that it be well constructed and that the intention of the contracting parties be spelt out clearly.

In a recent matter, company was upset that its employee had acquired an ex-client of their business. The company launched an interdict application in the Labour Court which application centred on whether a previous client of the company is still a protectable interest in relation to the restraint of trade.

The Court held that if the restraint does not specify the definition of client, it is only capable of being interpreted as current clients of the company. The Court held further that should a client leave the company of his or her own volition and without being induced or enticed to leave by the restrained employee and move his or her business to that restrained employee, the restrained employee cannot be seen to have breached his or her retrained.

This particular case was dismissed against the company and the company was ordered to pay costs.

The important lesson to be learnt from the matter is that a restraint is only as good as its terms and only a properly reasonably drafted restraint will be enforceable.

For more information in relation to restraints of trade and other employment law aspects, please do not hesitate to contact Tracey Mouton at Goldberg & de Villiers on 082 898 7841 or traceym@goldlaw.co.za.

Medical Certificates

In terms of Rule 15(1) of the Ethical and Professional Rules of the Medical and Dental Professions Board of the Health Professions Council of South Africa, a practitioner shall only grant a certificate of illness if such certificate contains the following information, namely:
  • The name, address and qualification of the practitioner
  • The name of the patient;
  • The employment number of the patient (if applicable);
  • The date and time of the examination;
  • Whether the certificate is being issued as a result of personal observations by the practitioner during an examination, or as the result of information received from the patient and which is based on acceptable medical grounds;
  • A description of the illness, disorder or malady, with the informed consent of the patient, provided that if the patient is not prepared to give such consent, the medial practitioner or dentist shall merely specify that, in his or her opinion based on an examination of the patient, the patient is unfit to work;
  • Whether the patient is totally indisposed for duty or whether the patient is able to perform less strenuous duties in the work situation;
  • The exact period of recommended sick leave;
  • The date of issuing of the certificate of illness; and
  • A clear indication of the identity of the practitioner who issued the certificate which will be personally and originally signed by him or her next to his or her initials and surname in printed or block letters.
When one considers clinic certificates or clinic notes in terms of Rule 15 (1)(j) above the medical practitioner is required to print his name and initials on the medical certificate in addition to his or her usual signature. As occurs on a daily basis, medical certificates issued by a clinic hospital or satellite clinic is normally found not to be signed by the registered medical practitioner. Every clinic and hospital has qualified medical practitioners in attendance, and any person who is ill is to be examined by such a person.
The consequence of Rule 15 (1)(j) above is that an examination by a nurse or other person who is not qualified to carry out examination and diagnoses is not acceptable. A certificate signed by a person other than a medical practitioner who is authorised to make such examination and diagnoses is equally unacceptable.
The resultant effect is that if the certificate from a clinic which contains an illegible signature and a stamp, it does not have to be accepted by the company. In such a case the company may insist that the rules as set out above are complied with and if not complied with the company may treat that period of illness as unpaid leave.
For more information concerning the implementation of correct sick control policies, the regulation thereof and the remedies available to employers for employees who abuse the system, contact Tracey Mouton at Goldberg & de Villiers on 041 501 9800, e-mail: traceym@goldlaw.co.za

EMPLOYEES: MUST YOU REPORT WRONGDOERS? A VIOLENT STRIKE ILLUSTRATES

Our laws and courts provide strong protection for the right of employees to go on strike, and are quick to shield participants in a protected strike from any unlawful action against them by their employers.

But this is subject to the important provision that strikers (and their unions) must always act within the law, which includes the fundamental requirement that strike action must at all times be peaceful and non-violent.

And, as a recent Labour Court decision shows, even employee’s innocent of any direct involvement in misconduct can be held liable if they refuse to assist in investigating it.

A strike turns violent

  • A wage dispute led to industrial action in the form of a protected strike
  • The strike was characterised by violent confrontations, intimidation, harassment, and attacks on property
  • Despite a court interdict against this serious misconduct, it continued unabated
  • The employer then dismissed not only those strikers directly involved in the violence, but also those found guilty of “derivative misconduct” for their failure to identify the actual perpetrators when asked to do so.

Trust, good faith, and the duty to identify offenders

The Labour Court, in upholding all these dismissals as being fair, set out and applied our law on “derivative misconduct” as follows:

  • The nature and essence of the employment relationship is based on trust and good faith
  • A breach of this good faith can justify dismissal
  • Non-disclosure of knowledge relevant to misconduct committed by fellow employees is a breach of the duty of good faith
  • Those strikers who, although innocent of actual perpetration of misconduct, consciously chose not to disclose information known to them (they remained silent when repeatedly asked to identify the perpetrators) were guilty of derivative misconduct and their dismissals were both substantively and procedurally fair.

For professional legal advice contact Labour Law Director, Tracey Mouton, at Goldberg & de Villiers Inc. on 041 5019800.