can an employer reduce your salary in south africa

The UIF will compensate affected workers through a new "National Disaster Benefit". Under current law, the predetermined contract of an exempt employee can be adjusted should the employer face financial … 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. By law, employers cannot unilaterally cut an employee's pay. Section 189 of the Labour Relations Act 66 of 1995 provides, inter alia, that an employer can dismiss one or more employees based on operational requirements. During the lockdown, and where practical, the consultative processes can be conducted by e-meetings, e-mails or over the telephone. What many companies in South Africa are doing during the lockdown is to negotiate amendments to employees’ salaries. Pay Deductions and work agreement, Payroll Deductions and contract, pay deductions and wages . Please note that this benefit is only available if your remuneration from your employer is R600 000 or less for the tax year. Can my boss deduct money from my salary? You can take this to the CCMA as an unfair labour practice. 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. Are tenants being robbed of their rental deposits? 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). 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 … 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. By Roy Bregman, Sharusha Moodley and Jaco Lessing. If my employer reduces my salary during the Covid-19 precautionary measures, can he keep it reduced once the precautions are lifted? 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. 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. The Department of Labour has published new regulations which outline South Africa’s new Covid-19 Temporary Employee/Employer Relief Scheme (TERS). yes they can reduce your salary to anything down to minimum wage if they wish. If an employee is not succeeding in their position, it may be time for a pay cut. R 6 730.56). Employers may not deduct money from a worker’s pay unless: The worker agrees in writing to the deduction of a debt. When it comes to exempt employees, pay can be reduced based on long-term business interests. This is not meant to be legal advice and employers are encouraged to seek legal help during this evolving time. This provision will only apply if that employee was not present in South Africa for a period exceeding 90 days during the tax year immediately preceding the date of arrival in South Africa. As South Africa enters the 21-day national lockdown, business owners are understandably confused and concerned about its economic consequences. It’s not an uncommon question. 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. Publications. Can an employer ‘force’ an employee to take annual leave during the lockdown? Employers can only tell you to reduce your hours if it's already outlined in your contract saying that they can. UIF contributions), court order or arbitration award. “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. Negligent loss of a firearm: A dilemma for the state? 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. It is tempting to ask everyone to take a 10% pay cut to try and keep the business afloat. Spouses, life partners, children and nominated persons, in that order, are eligible to apply. The amount of PAYE that you will contribute depends on how much you earn, and is calculated from tax tables issued annually by SARS. Accordingly, wage is the money payable or paid to an employee for ordinary hours of work, as agreed between employer and employee. 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. The deduction is made in terms of a collective agreement, law (e.g. For a detailed breakdown of how this is affecting the rental market, head here. 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. Your employer may look at reducing your pay in an attempt to reduce their overheads if they're struggling to stay afloat. 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. How does the Law Society of South Africa fulfil its functions? 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. 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. Labour law in South Africa, and more specifically the Basic Conditions of Employment Act, stipulates what “wage” means. The employer may legally reduce an employee’s salary if he or she violates its policies. 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. Establishment meetings for the LSSA provincial attorneys’ association, CV portal for candidate legal practitioners, Southern African Development Community Law Society, reduced working time and/or forced shutdown; and, copy of employee’s identity document (ID); and. Traditionally matters of national well-being have been viewed as government’s problem which they must address. The South African Labour Law allows employers leeway to pay their employees until the seventh day of the following month. Regulation 35(4) of the Pension Funds Act regulations is declared invalid and unenforceable, Pauperien liability: Strict liability reigns supreme again, Employment law update – Unfair dismissal referred to CCMA when pending automatically unfair dismissal claim in the Labour Court, Employment law update – Resigning after disciplinary inquiry but before sanction handed down and Labour Court’s jurisdiction to hear a claim for unlawful dismissal, Recent articles and research – December 2020, Electoral reform – constitutionality of the Electoral Act. But the salary is obviously reduced. South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. Workers also cannot be required to work additional hours without fair compensation. 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 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? Reply to Nchaka: If the contract makes allwance for 40 hours (i.e. 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. But can you ask your employees to take a pay-cut, and if so, do they have to agree? Q. 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. Part 2.9 Division 2 of the FW Act imposes rules about the payment of wages and what you can … 2. South Africa - Get a free salary comparison based on job title, skills, experience and education. In the event the employer and employee do not reach consensus on the variation of contract, the employer may initiate retrenchment procedures if needed. ... How does the Law Society of South Africa fulfil its functions? Reducing An Employee’s Pay Unilaterally. 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. Liability of the Minister of Police for unscrupulous conduct of his officials, The impact of the EU Regulations on fiduciary advice in South Africa. 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. 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. However, this is an unusual action for an employer to take, and it can be fraught with legal risks. You can also expect your death-in-service benefits to be reduced if your pay is cut unless you negotiate otherwise with your employer. The question of whether an employer can reduce an employee’s salary to make up for the superannuation guarantee charge (SGC) increase allows me to introduce some FW Act provisions which, in my experience, many employers do not know about. Alternatives include, but are not limited to, short-time implementation and/or temporary dismissal. 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… a letter from the employer confirming company shutdown is due to COVID-19. 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. What are your pay obligations under the Fair Work Act? Despite the strict rules for exempt classification, employers can still reduce employees' salaries in some situations. 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. This decision is therefore one the employees in questions will have to consent to. President Cyril Ramaphosa mentioned certain relief schemes, which an employer would be able to access. Pay Deductions and work agreement, Payroll Deductions and contract, pay deductions and wages. Check your Pay, Salary, Income with the Salary Check tool. An employer can change terms and conditions of employment through consultation and negotiation. Annual leave is regulated under s 20 of the BCEA. One of the measures that is designed to provide relief to employers and employees in South Africa is the COVID-19 TERS benefit. it is not taxable. Unfortunately, employers can, in most cases, cut your pay or reduce your hours since most employees are "hired at will." 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. Your employer will deduct PAYE from your salary on a monthly basis and pay it to SARS on your behalf. What follows is a summary of options open to employers. Your employer can therefore reduce your pay in the future, but not retroactively. But employers can land themselves in legal trouble if they cut an exempt employee's salary without adhering to wage laws. Salary & Benefits; Employee Benefit Schemes; Can my company take away my bonuses or benefits? Reduced working time and/or forced shutdown. Is it good management to do this it depends on the position of the company financially. Can my boss deduct money from my salary? The legal profession’s focus on the future, An overview of the Protection of Personal Information Act. There are laws you need to follow when reducing an employee’s 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). 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. Permalink Reply Quote Printer Friendly. Look for ways to help your employer cut back without cutting jobs or pay. “An employer cannot unilaterally reduce an employee’s salary,” she said. Read more about Employers not paying full salary must present balance sheet in court: Govt on Business Standard. South African COVID-19 Corona Virus. The total deduction is not more than 25% of the worker’s net pay.