An employer cannot reduce any employee's salary to below the current minimum wage. Can my boss deduct money from my salary? Complete our Salary Survey and Win a Wage! It is, therefore, our view that employers could – during this unprecedented time – engage with employees, where written employment contracts are in place, to vary terms and conditions of employment to have employees take their annual leave during the lockdown period. Who takes the blame? You can apply for unemployment and see what they say. It’s not an uncommon question. But can you ask your employees to take a pay-cut, and if so, do they have to agree? Reduced working time and/or forced shutdown. Furthermore, and in accordance with s 41(4) of the Basic Conditions of Employment Act 75 of 1997 (BCEA): ‘An employee who unreasonably refuses to accept the employer’s offer of alternative employment with that employer or any other employer, is not entitled to severance pay in terms of subsection (2)’ (our italics). You can listen to the full interview below: Use Caution When Cutting Exempt Employees’ Salary But if your company put you on unpaid leave during this time, or if you have been laid off temporarily - or if a company can only afford to pay a part of your salary - you may get a special payout from the UIF, as part of the Covid-19 Temporary Relief scheme, also known as the special Temporary Employee/Employer Relief Scheme (TERS). Alternatives include, but are not limited to, short-time implementation and/or temporary dismissal. Employers may not deduct money from a worker’s pay unless: The worker agrees in writing to the deduction of a debt. Publications. _____ Anonymous Date: Mar 16, 2017. To minimise job loss, alternatives to retrenchment may be offered during consultation. An employer should consult the employee before making any changes to the employees working hours and commensurately reduce wages. Will their businesses go bankrupt and what happens to employees, if they cannot afford to keep them on or pay them? SARS: The South African Revenue Service, which is responsible for the collection of all taxes in South Africa. This benefit cannot be used in conjunction with any other UIF benefit. The deduction is made in terms of a collective agreement, law (e.g. If an employee is not sick and still willing to attend work, but it is a direct instruction from their employer to remain at home, such employees will still be entitled to earn and receive their normal salary and benefits. Complete our Salary Survey and Win a Wage! But employers can land themselves in legal trouble if they cut an exempt employee's salary without adhering to wage laws. Your employer may look at reducing your pay in an attempt to reduce their overheads if they're struggling to stay afloat. Good afaternoon. Mywage.co.za is connected to the WageIndicator Network. Pay Deductions and work agreement, Payroll Deductions and contract, pay deductions and wages. "If there's any concern as to whether there's a conflict of interest to do work outside, it might be good to get it in writing that it's OK to pursue that," he says. This is normally in the form of a collective agreement, a written agreement with the employee, legislation or a court (Section 34 of the Basic Conditions of Employment Act 75 of 1997) (BCEA). As coronavirus (CoVID-19) spreads in South Africa, employers and employees alike find themselves in unchartered territory. The point to remember is that there must be consultation with employees and not a unilateral implementation of a change to terms and conditions imposed by the employer. If the aforementioned conditions are not satisfied the accommodation provided to an employee by their employer is fully taxable in South Africa. Labour law in South Africa, and more specifically the Basic Conditions of Employment Act, stipulates what “wage” means. If they don’t agree, you must pay them the full amount for their normal working hours as stated in their employment contract, even if you have no work for them to do. By continuing to use this site you consent to the use of cookies on your device as described in our cookie policy unless you have disabled them. How does the Law Society of South Africa fulfil its functions? Bates also advised that if an employer was considering reducing an employee’s salary or non-discretionary bonus, for example to cut costs, they would need to consult with the employee first and seek their agreement to the proposed changes. Fill the Salary Questionnaire and learn about real wages, Living and Working during the Coronavirus Pandemic - Link me to the Covid 19 Survey and Daily Updates, Do you know when it is legal to make a pay deduction from a salary in South Africa? By law, employers cannot unilaterally cut an employee's pay. But, what they can't do is lower your salary without telling you in advance and you (the employee) must agree to it. Large South African employers have announced drastic measures to cope with the coronavirus lockdown in South Africa, which include salary cuts and 4-day work weeks. Generally, it is unlikely an employer will be able to lawfully impose a pay cut without consulting with employees first. However, if it states that you “must” work for 40 hours, you may possibly have claim for wages for 40 hours even if your employer requires you to work less. There are laws you need to follow when reducing an employee’s salary. A salary reduction is much more than just changing your payroll. December 1st, 2020. Make sure you know what is in your work Contract. In cases where an employee is forced to work from home, but does not have the tools, the employer will still be obliged to pay the employee's salary. Pursuant to your query, it may be noted that an employer affected by the precautionary measures taken to contain Covid-19 may choose to temporarily reduce the salary of … Roy Bregman and Sharusha Moodley are legal practitioners at Bregman Moodley Attorneys Inc in Johannesburg and Jaco Lessing is a director at Contract Labour in Pretoria. Unfortunately, employers can, in most cases, cut your pay or reduce your hours since most employees are "hired at will." Spouses, life partners, children and nominated persons, in that order, are eligible to apply. Given the cost of such claims, it’s vital to know where you stand. So the question becomes: if your pay is reduced, can you quit while still being eligible to receive unemployment benefits? Employers could safely argue that the impact of COVID-19 on their business negatively impacted its operations on some level. Do you know when it is legal to make a pay deduction from a salary in South Africa? An employer can change terms and conditions of employment through consultation and negotiation. Find out all about state Minimum Wages for all official sectors. In answer to the above question, yes, you can ask your employee to take a pay-cut, but no, they do not have to agree. When can a deduction be made from my salary? Before the Covid-19 pandemic, South Africa’s economy and workforce were characterised by high levels of unemployment and income inequality. What You Can Do: Be proactive. Despite the strict rules for exempt classification, employers can still reduce employees' salaries in some situations. Benefits are paid to the beneficiaries of the deceased. If you started your job with a great bonus scheme and 28 holidays a year, but your employer is having financial difficulties, is it legal for them to remove these sections from your contract? “An employer cannot unilaterally reduce an employee’s salary,” she said. Negligent loss of a firearm: A dilemma for the state? South Africa - Get a free salary comparison based on job title, skills, experience and education. Understandably, you may not want to work for less than you had been making. The Department of Labour has taken measures to accommodate alternatives to retrenching staff over this period by allowing employees to claim from the Unemployment Insurance Fund (UIF). More information on where your closest CCMA offices are located can be found on www.ccma.org.za. As part of the regulations enacted by President Ramaphosa in terms of the Disaster Management Act, all non-essential businesses were required to cease trading. However, if the employer went about offering employees the choice in a procedurally fair manner and could genuinely justify the cuts, they would be upheld legally. Gleeson advised that if an employer was to reduce an employee’s salary, for example below the national adult minimum wage (currently $656.90 per week), this would be a breach of the National Minimum Wage Order. When can a deduction be made from my salary? Is it good management to do this it depends on the position of the company financially. The Labor Contract Law does not provide for pay cuts due to an employee’s misconduct. The relevant Award or Enterprise Agreement (if one applies) will set minimum pay and conditions. What are your pay obligations under the Fair Work Act? Dear Sir / Madam, Your employer may not unilaterally change your conditions of employment, eg your salary. Can my boss deduct money from my salary? Unfortunately, salary reduction might be necessary. What follows is a summary of options open to employers. You can google section 189 of the Labour Relations act for the requirements and also find information on the department of labour’s website. Where this is not the case, your employer cannot reduce it without your agreement, as this would change the terms of your contract of employment. This enforced leave will not apply for periods of self-isolation or quarantine and only applies to the statutory portion of annual leave (ie, 15 business days). If you are faced with a reduced income, the law states that you are not exempt from your obligations such as rent or debt. Should the employer experience financial difficulties, salary reduction is an option to be discussed with employees before retrenching them, but it has to be a consultative process. Accurate, reliable salary and compensation comparisons for South Africa In Plaatjies vs RK Agencies (2005, 1 BALR 77) the employer offered the employee an alternative post at a lower salary due to the fact that the employer had lost a major contract. Ever wondered if you, as an employer, can lawfully reduce an employee’s salary? If an employee is not sick and still willing to attend work, but it is a direct instruction from their employer to remain at home, such employees will still be entitled to earn and receive their normal salary and benefits. You’re not allowed to pay an employee less than what’s required under the applicable Award or Enterprise Agreement, and there are significant consequences for getting it wrong including civil penalties and back payments.If an employee i… In answer to the above question, yes, you can ask your employee to take a pay-cut, but no, they do not have to agree. R 6 730.56). Bear in mind that a s 189 process has guidelines that must be adhered to and attracts statutory payments like severance pay, notice pay, outstanding leave pay-out and so forth. The UIF will compensate affected workers through a new "National Disaster Benefit". Workers also cannot be required to work additional hours without fair compensation. Although a business owner would never want to dismiss, retrench or short time its employees, what happens if there is no business – or one that is just surviving – at the end of the lockdown. Part 2.9 Division 2 of the FW Act imposes rules about the payment of wages and what you can … If there are no contracts in place, an employer can determine when annual leave must be taken and call on employees to take their annual leave during the lockdown period. A contract can be varied relating to salary reduction, bonus waiver or reduction, compulsory use of annual leave during the lockdown period and so forth. The maximum amount of the COVID-19 TERS monthly payment will therefore be the amount of ZAR 6 730. Your employer will deduct PAYE from your salary on a monthly basis and pay it to SARS on your behalf. Cut staff hours. Director at Contact Labour, Jaco Lessing, discusses the following measures –. Bear in mind, should the employee fall ill during the annual leave period, sick leave is applicable. If the company needs to close as a direct result of COVID-19 and the employer cannot pay his employees for this period, the employer can apply for the ‘National Disaster Benefit’ from the UIF. The guidelines of the World Health Organization can provide useful guidance, such as making hand sanitizing gel available to workers, reminding workers to stay at home when they feel sick, disinfecting workplaces, etc. It is important that agreements reached must be reduced to writing (even confirmation via WhatsApp would suffice if the normal conditions of a binding variation of a contract are met). Employers may not deduct money from a worker’s pay unless: The worker agrees in writing to the deduction of a debt.
The deduction is made in terms of a collective agreement, law (e.g. You can take the matter up internally by filing a grievance and discussing the matter with senior management, or you can contact an attorney who will pursue a civil case against your employer. It really is as simple an answer as that. The Department of Labour has published new regulations which outline South Africa’s new Covid-19 Temporary Employee/Employer Relief Scheme (TERS). The issue is further clarified in Section 35(1) of the BCEA, which states: “an employee’s wage is calculated by reference to the number of hours the employer … An employer can change terms and conditions of employment through consultation and negotiation. Deductions for damage or loss caused by the worker may only be made if: The employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made. When it comes to exempt employees, pay can be reduced based on long-term business interests. Pursuant to your query, it may be noted that an employer affected by the precautionary measures taken to contain Covid-19 may choose to temporarily reduce the salary of its employee. But the salary is obviously reduced. Section 20(10) provides, inter alia, that annual leave must be taken in accordance with a written employment contract between an employer and employee. The forms can be submitted by e-mailing the application to the nearest UIF processing centre. Read more about Employers not paying full salary must present balance sheet in court: Govt on Business Standard. Check your Pay, Salary, Income with the Salary Check tool. The employer may legally reduce an employee’s salary if he or she violates its policies. This will … South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. Which platform businesses can be selected for this research? UI19 and UI2.7 (completed by employer – choose option 17 on the UI19 document); UI19 and UI53 (completed by the employer); ID document of the deceased and the applicant. Employers must complete the UI19 form stating the last date of termination and the reason thereof. The South African Labour Law allows employers leeway to pay their employees until the seventh day of the following month. Employers generally cannot lower the salary of an H-1B or E-3 visa holder to less than the amount (or range) stated in the approved DOL labor condition application for that worker. Look for ways to help your employer cut back without cutting jobs or pay. ... How does the Law Society of South Africa fulfil its functions? Affected employees can claim UIF money if an employer cut their hours (this is called the “reduced working time” claim). You can take this to the CCMA as an unfair labour practice. Employers should consider at least one week of negotiations before cutting salaries. Reducing an employee’s salary is not an easy decision to make. Unpaid leave or temporary layoffs Rights and remedies: How do reality shows violate constitutional rights? President Cyril Ramaphosa mentioned certain relief schemes, which an employer would be able to access. The total deduction is not more than 25% of the worker’s net pay. “Provided the employer follows a fair process and there is a genuine need to cost-cut, they can make employees redundant to cut costs,” Bates explained. Check with your employer to be sure you're able to take on additional projects outside of work. In other cases there may be a provision in the contract that provides for a reduction in pay. Money can only be taken off an employee’s salary if he agrees to it, or if the employer is legally obliged to do so. Is it possible for the employer to change your contract in your probation stadium from only a salary to a salary and Commission? How can employees get paid during South Africa’s Covid-19 lockdown? Connect one-on-one with {0} who will answer your question. However, the majority of companies in South Africa have set a precedent by paying their employees by the 25th of the month, says Arlene Leggat, President of the South African Payroll Association (SAPA). You can approach the CCMA (www.ccma.org.za) to assist you in preventing that the employer follows through on the reduced salary. However, this is an unusual action for an employer to take, and it can be fraught with legal risks. If the employer does not have work for you they can retrench you but must follow the correct procedure. To reduce your hours. Fortunately, most jurisdictions, including South Africa, have well established legal principles (including the common law and legislation) which can guide employers and employees in dealing with the virus and the impact it has / will have in the … The law The law stipulates that employers … Get your South African law questions answered by Experts. Employers may not deduct money from a worker’s pay unless: The worker agrees in writing to the deduction of a debt. Please note that this benefit is only available if your remuneration from your employer is R600 000 or less for the tax year. If an employee’s salary is more than the maximum threshold amount of ZAR 17 712 - for example, ZAR 20 000 - the employee would not receive a percentage of ZAR 20 000, but would receive 38% of the threshold amount of ZAR 17 712. Where this is the case, an employer may reduce the employee's pay in line with the minimum wage rates. An employer can process general personal information without an employee’s consent where such processing either protects a legitimate interest of the employee, or is “necessary for pursuing the legitimate interest of the responsible party or of a third party to whom it is supplied”. you may be required to work up to 40 hours), then the employer may reduce your hours. If there is no agreement, annual leave must be taken at a time determined by the employer in accordance with s 20. By Roy Bregman, Sharusha Moodley and Jaco Lessing. Some companies have implementation “short-time”, for example a 4-day work week – which means a salary cut of around 20%. Salary & Benefits; Employee Benefit Schemes; Can my company take away my bonuses or benefits? Employment at will means that when workers don't have a formal employment contract or are covered by a bargaining agreement they can be terminated, demoted, and have hours reduced or pay lowered at the company's discretion. Should an employer be in a position to remunerate an employee for a period (typically a month) but would also like to receive the Covid-19 benefit from UIF, the employer should consider the scale of benefits from 60% of remuneration for employees who earn in excess R3 500.00 to 38% for employees who earn R17 712.00 (i.e. Are tenants being robbed of their rental deposits? But lowering wages has its risks, including breach of contract claims, unfair dismissal claims, and potential breaches of minimum entitlements. Before you go and reduce an employee’s salary, you should know your minimum obligations under Awards and Enterprise Agreements. 2. One of the measures that is designed to provide relief to employers and employees in South Africa is the COVID-19 TERS benefit. If an employee is not succeeding in their position, it may be time for a pay cut. Where a company shuts down for a certain period or implements short time, for every four days worked the employee accumulates one credit day, and maximum credit days payable are 365 for every four completed years of service. Of course, you’d also prefer to not be left without any income. The employer must pay you the agreed-upon salary for work you've already done. 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This can be done by restructuring your salary so that a portion of your salary is paid to you as exempt income i.e. Employers must pay the employee’s deductions to benefit funds (pension, provident, retirement, medical aid, etc.). Traditionally matters of national well-being have been viewed as government’s problem which they must address. Reducing An Employee’s Pay Unilaterally. UIF contributions), court order or arbitration award.
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If they have reduced your salary without you agreeing to, that is what is called a unilateral change of the terms of the agreement and would therefore be illegal and unenforcible. Liability of the Minister of Police for unscrupulous conduct of his officials, The impact of the EU Regulations on fiduciary advice in South Africa. Visit the De Rebus website to view the De Rebus archives online.…. UIF contributions), court order or arbitration award. More specifically, employers must take measures to reduce the risk of a Coronavirus infection. Worker Rights Regarding Payment of Wages in South Africa. This benefit is paid at a flat rate of R 3 500 per employee irrespective of income for the duration of the lockdown or three month period (whichever may be shorter). In the event the employer and employee do not reach consensus on the variation of contract, the employer may initiate retrenchment procedures if needed. South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. You can also expect your death-in-service benefits to be reduced if your pay is cut unless you negotiate otherwise with your employer. Your new employer will in any event have to apply for a new work permit. For a detailed breakdown of how this is affecting the rental market, head here. it is not taxable. I am not exactly sure what else I can advise you on, but if you have any further questions, feel free to ask them before you rate. Access the latest information on: Are you looking for an old article in De Rebus? The legal profession’s focus on the future, An overview of the Protection of Personal Information Act. Pay Deductions and work agreement, Payroll Deductions and contract, pay deductions and wages . yes they can reduce your salary to anything down to minimum wage if they wish. Legally, an employer cannot impose a pay cut upon its employees if they have an employment contract that sets out details of their salary entitlement. Your employer can therefore reduce your pay in the future, but not retroactively. This can happen where the employee’s salary was originally negotiated on the basis of an expected level of performance which, if not met, meant the salary would reduce. Employers can only tell you to reduce your hours if it's already outlined in your contract saying that they can. Be aware of minimum wage obligations. The government has announced that employees may be entitled to claim existing UIF benefits due to reduced working time, in light of the Covid-19 pandemic. Does a customary law marriage nullify further marriages entered into with a different spouse? The amount of PAYE that you will contribute depends on how much you earn, and is calculated from tax tables issued annually by SARS. If my employer reduces my salary during the Covid-19 precautionary measures, can he keep it reduced once the precautions are lifted? Gleeson warned that employers should bear in mind that salary payments are contractual entitlements of employees, and are protected by contract law and potentially also by awards, enterprise agreements and the National Employment Standards. If a salary is reduced without consultation or employee agreement, an employee now has three legal opportunities to seek redress from his or her employer. This is not meant to be legal advice and employers are encouraged to seek legal help during this evolving time. It is tempting to ask everyone to take a 10% pay cut to try and keep the business afloat. During the lockdown, and where practical, the consultative processes can be conducted by e-meetings, e-mails or over the telephone. A Directive regulating these benefits was issued on 8 April 2020. As South Africa enters the 21-day national lockdown, business owners are understandably confused and concerned about its economic consequences. Q. Bosses can absolutely lower salaries just like they can raise salaries. There are no laws that prevent an employer from doing that because the legislature and the courts do not want to get involved in the day-to-day operations. Paying less than the approved amount would likely violate the prevailing wage requirements for those visa categories. Permalink Reply Quote Printer Friendly. July said that South Africa’s laws were not designed for the current situation. Can an employer ‘force’ an employee to take annual leave during the lockdown? Cite this page © WageIndicator 2021 - Mywage.co.za -, Is an unusual action for an old article in De Rebus additional outside! Has its risks, including breach of contract claims, it ’ s laws were not designed the! Revenue Service, which is responsible for the state are your pay in an attempt to your! 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