Section 34 of the Basic Conditions of Employment Act, 1997 ("BCEA") prohibits an employer from making a deduction from an employee's remuneration unless this is by agreement, or it is required or permitted in terms of a law, a collective agreement, a court order, or an arbitration award.
In North West Provincial Legislature v NEWHAWU obo Members, the Labour Appeal Court ("LAC") was confronted with the question of whether the deductions that the North West Provincial Legislature ("Legislature"), intended to make, were lawful and in compliance with the provisions of section 34.
In this case, the Legislature's employees had engaged in an unprotected strike between 16 November 2020 and 15 December 2020. During this period, the Legislature sent out a communication to its employees notifying them that the principle of "no work no pay" would be implemented. In spite of this, the Legislature failed to halt its payroll run and proceeded to effect payment to all striking employees.
The Legislature, upon detecting the erroneous payment, advised the striking employees that it would deduct the remuneration that had been paid to them from future salary payments. This decision was met with resistance from the employees and their union, the National Education, Health and Allied Workers Union ("NEHAWU"). After negotiations to resolve the issue failed, the Legislature advised the affected employees that it would be proceeding with the implementation of the deductions. This resulted in NEHAWU approaching the Labour Court on an urgent basis for an order interdicting and restraining the Legislature from effecting the deductions from its members' salaries.
The Labour Court found that section 34 (1) applies to any deduction from an employee's remuneration. It further found that the deductions that the Legislature sought to make from the employees' salaries were unlawful and interdicted the Legislature from making any deductions until it had complied with section 34 of the BCEA.
On appeal to the Labour Appeal Court ("LAC"), the Legislature argued that the strict requirements of section 34 do not find application in circumstances where the principle of no work no pay may be resorted to. It further contended that the principle of no work no pay constitutes a "deduction effected in terms of a law" as permitted by section 34 and that the recovery of this unearned salary would not amount to self-help on the basis of set-off.
The LAC accepted that the principle of "no work no pay entitles an employer to withhold payment of remuneration to its employees where no services are rendered during an unprotected strike. It pointed out, however, that in this case, the Legislature had failed to exercise this entitlement. It found that the payments made during the strike constituted "remuneration" as defined in the Labour Relations Act, 1996. This meant that the restrictions as contained in section 34 applied. In this case, there had been no agreement to deduct amounts from the strikers' salaries and deductions had not been required or permitted by law, a collective agreement, arbitration award, or court order. The principle of no work no pay did not constitute a law as envisaged in section 34. The LAC also rejected the argument that the Legislature was entitled to apply "set-off" to the monies paid to the strikers against future remuneration payments. It pointed out that, for set off to take place the debts that are being set off against each other must be "liquidated" and fully due. The extent of any indebtedness, if any, of the employees to the Legislature was still in dispute and it could not be said that there was a debt that was due and payable.
During the course of its judgment, the LAC emphasised the primacy of the right to fair labour practices enshrined in the Constitution and that South Africa's obligations as a member of the International Labour Organization ("ILO") require compliance with the ILO's Protection of Wages Convention, 1949, Article 8 of which envisages the prohibition of deductions form an employer's salary in certain circumstances.
Comment
It should be pointed out that the question of whether a debt exists must be distinguished from the question of how a debt that has been found to exist can be recouped. In this case, the court accepted that it was possible that the employees may have been indebted to the employer but that this debt could not be recouped through deductions made in terms of section 34. Such a debt could possibly be recoverable through litigation.
Also of importance is that South African courts have, yet again, made it clear that the rule against self-help is a necessary adjunct to securing the protection of individuals against arbitrary and subjective decisions of an employer. It confirmed that the principle of set-off cannot be applied in circumstances where there is an unresolved dispute as to the extent of any liability, if any, that an employee may have towards the employer.
This judgment serves as a reminder to employers to ensure that any deduction from an employee's remuneration is based on an agreement with an employee or is permitted by law, a collective agreement, a court order, or an arbitration award. It also illustrates the importance of employers timeously applying the "no work no pay principle" when a strike takes place so as to avoid the difficulty of recouping any payments made.
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