Can an employer make deductions from remuneration for work not done?
In Mpanza and another v Minister of Justice and Constitutional Development and Correctional Services and others, the South African Labour Court dealt with a dispute about whether an employer was entitled to make deductions from the remuneration of two employees in circumstances where they were absent from work.
The two employees approached the Labour Court for an order declaring that the deductions made by the Department of Justice and Constitutional Development (the “department”) against their remuneration were contrary to section 34 of the Basic Conditions of Employment Act, 1997 (the “BCEA”), read with section 34 of the Public Service Act, 1994 (the “PSA”). The employees also sought repayment of the monies deducted. The department argued that the employees were not entitled to the deducted amounts because of the “no work, no pay” principle.
Both employees were appointed in the Directorate: Civil Litigation within the department and their terms and conditions of employment were regulated by the PSA, related regulations and other legislation. In October 2010, the unit in which the employees were employed was disbanded, leaving them (and other employees) with no properly defined work to do. Various discussions took place on where the employees could be placed. They were then reassigned to different units on a temporary basis until permanent positions could be found for them. The employees lodged a grievance with the department regarding their placements but failed to report for work in their temporary positions. As the employees were not tendering their services, the department addressed a letter to each of them seeking representations as to why deductions ought not to be made from their remuneration for not reporting for duty. When no representations were forthcoming, the department made deductions from the employees’ remuneration accordingly. This led to the employees raising a further grievance regarding these deductions. When this grievance could not be resolved internally, they approached the Labour Court.
The Labour Court decision
The disputes before the court primarily involved two issues. The first was whether the assignment of the employees to the temporary positions had been in accordance with the provisions of the PSA. The second was whether the employees had tendered their services properly. The employees contended that their assignments to the temporary positions were invalid as the reassignments amounted to unilateral changes to the terms and conditions of employment and they had tendered their services at the Directorate: Civil Litigation.
The department maintained that the reassignments were valid and that the employees had not reported for work. They were invited to make representations as to why leave without pay ought not to be implemented for their unauthorised absence from work. Having received no representations from the employees, leave without pay was implemented.
After assessing the evidence, the court found for the department.
It held that as the employees’ refusal to regularly tender their services occurred long before they were reassigned to their new units, it could not be said that their failure to attend work was a reaction to their reassignment. Importantly, it was held that, in light of this, the department was entitled to refuse to pay the employees as they refused to work and carry out their side of their respective employment contracts. Due to the employees’ failure to render their services to the department, it was lawfully entitled to implement the “no work, no pay” principle. The court relied on the decision in Coin Security (Cape) (Pty) Ltd v Vukani Guards and Allied Workers Union and others, where it was held that:
“A contract of employment is a contract with reciprocal rights and obligations. The employee is under an obligation to work, and the employer is under an obligation to pay for his services. Just as the employer is entitled to refuse to pay the employee if the latter refuses to work, so the employee is entitled to refuse the work if the employer refuses to pay him wages which are due to him.”
The court then considered whether the department had followed a proper procedure when it made the deductions from the employees’ remuneration. It considered section 34 of the BCEA, which provides that deductions from employees’ remuneration are prohibited unless, in relation to a specified debt, the employee has agreed to it or the deductions are required or permitted in terms of a law, collective agreement, court order or arbitration award. Section 34(2) of the BCEA goes on to provide that deductions for loss or damage may only be effected to reimburse employers if:
- the loss or damage was caused by the employee in the course of their employment and was the employee’s fault;
- the employer followed a fair procedure and gave the employee a reasonable opportunity to show why the deduction should not be made;
- the total amount of the debt does not exceed the actual amount of the loss or damage; and
- the total deductions made do not exceed one-quarter of the employee’s remuneration in money.
While it was common cause that the employees did not consent to the deductions, there was a dispute as to whether they had been given a reasonable opportunity to make representations before the deductions were made. The employees’ arguments in this regard were mutually destructive as they had, on the one hand, claimed that they had not been given a reasonable opportunity to make representations, while, on the other, they contended that they had made representations, which the department had not taken into account. When requested by the court to provide proof of such representations, the employees were unable to do so. As a result, the court held that the probabilities were that the employees had not made representations to the department, and the department was entitled to implement the “no work, no pay” principle and to make deductions from the employees’ remuneration. Therefore, the employees’ application was dismissed.
Thoughts on the judgment
It is not clear from the judgment why the department believed that its refusal to pay the employees was a deduction that had to comply with section 34 of the BCEA. The court also deemed it necessary to deal with this issue – despite the court stating that the “no work, no pay” principle applied. The question that remains unanswered and which was not considered by the court was whether the department’s refusal to pay the employees their salaries constituted “deductions” as envisaged in section 34. A deduction for purposes of section 34 can only be made in respect of something that is due by an employee. In this case, the employees had not reported for work and were therefore not entitled, in terms of the “no work, no pay” principle, to be paid for the days they did not report for work. Arguably, the refusal to pay for work not performed is not a deduction and there is therefore no need to comply with section 34.
This article was reviewed by Peter le Roux, an executive consultant in ENSafrica’s employment department.
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