Everything you need to know about pay cuts and loadshedding

When it comes to loadshedding, everyone is in the same boat in trying as best they can to navigate life without electricity at home as well as at work.

 

With reduced productivity levels as a consequence of loadshedding, and with employees sitting idly waiting to resume work when power is restored, employers may be tempted to reduce wages to compensate for hours of downtime and a loss of income, but is this legal?

 

Under Section 34 of The Basic Conditions of Employment Act 75 of 1997, any deductions from an employee’s salary, for whatever reason, are prohibited unless there is a written agreement between both parties. This means that prior to docking employees for duties that were not performed because of loadshedding, there must be a discussion and agreement reached that allows the employer to make these deductions. The idea is that the agreement is to mitigate losses suffered by the company so that the company does not need to look at alternatives which may include restructuring the business. The principle of ‘no work, no pay’ does not apply during loadshedding except if the employee is paid hourly, is a commission earner, or there is a bargaining council agreement between the parties.

 

What happens if employees and employers don’t agree on deductions?

The employer may choose to restructure operations according to loadshedding schedules and reduce the working hours of the employee, adjusting wages accordingly. However, employers should also bear in mind that should they re-allocate shifts outside of normal working hours, they will be liable for overtime pay, and this may cancel out the savings made with salary cuts.

 

Last resort

Employers may ultimately face the difficult decision to lay off workers, and implement retrenchment procedures in terms of Section 189 or 189A of the Labour Relations Act 66 of 1995 (as amended). Employers are required to demonstrate that they face operational constraints due to loadshedding which requires them to let a certain number of their staff complement go.

 

Many employers are in a precarious financial position during this difficult time, but they must nevertheless stick to the letter of the law when managing their employees, or it may cost them even more in the long run.

 

For more information, please contact Tania Abbotts: TaniaA@hammondpole.co.za at Hammond Pole attorneys.