Unpaid Salaries: Labour Law In A Nutshell April 2021

UNPAID SALARIES: How can an employee get his or her employer to pay unpaid salaries?

Some Q’s & A’s…

Q:           Can an employer reduce an employee’s salary unilaterally?

A:            No – an employer cannot reduce a salary without the employee’s consent. A salary is a contractual right. Reducing it without prior consent is a breach of contract. It’s also illegal in terms of s34 of the BCEA for an employer to make a deduction from an employee’s salary without consent or without following a fair procedure.


Q:           How can an employer reduce a salary or not pay a salary?

A:            The employer would first need a valid reason to reduce or not pay the contractual salary. (The Covid lockdown is an example of a valid reason for many employers.) The employer would first have to consult with affected employees to get their consent to the reduction or non-payment. Depending on the circumstances, the reduction or non-payment could be temporary or permanent. And there may or not be an agreed repayment plan to catch up on unpaid salaries over time when the employer’s financial position improves.


Q:           What can an employer do if an employee rejects a reduction or non-payment of salary?

A:            The employer could proceed with a s189 notice of possible termination of employment for operational reasons. In this case, the employer would have to show that that there was a valid operational reason to cut costs by reducing or freezing salaries during a period of financial hardship. It would also have to comply with the requirements for a procedurally fair retrenchment.


Q:           What can an employee do if an employer reduces or fails to pay a salary without consent?

A:            The first step would be to follow the internal grievance procedure. If this is unsuccessful, the employee can consider several legal options.


Q:           What are an employee’s legal options?

A:            Option 1: Report a complaint to a Labour Centre


Report a complaint to the nearest Labour Centre (Department of Labour). This option is available to employees who earn less than the BCEA salary threshold of R211 596.30 per year or R17 634 per month.

The Department will appoint an inspector to investigate the complaint. If there is merit in the complaint, they will issue a Compliance Order to compel the employer to pay the unpaid salary. This option is not available to employees who earn more than the threshold.


Option 2: Refer a dispute to the CCMA

Section73A (4) & (5) of the BCEA now gives the CCMA jurisdiction to deal with unpaid salary disputes involving employees who earn less than the BCEA threshold of R17 634 per month. The CCMA 7.11 LRA dispute referral form has been updated to provide for these disputes. Unfortunately, this option is not available to employees who earn more than the threshold. They would have to consider the other options.


Option: 3: Refer a constructive dismissal case to the CCMA

The CCMA does not have jurisdiction to deal with a breach of contract dispute such as a claim for unpaid salary if there is no dismissal. To get around this, the employee could consider resigning and referring a constructive dismissal dispute to the CCMA or Bargaining Council.

This would potentially give the CCMA the jurisdiction to consider and make an order for the payment of unpaid salary. It will have jurisdiction to deal with the unpaid salaries if the employee succeeds in proving that there was a “dismissal”.   

The employee could claim that he or she was forced to resign because the employer made the working relationship intolerable by failing to pay the contractual salary. This can be a risky option. The employee must first prove that the resignation constituted a “dismissal”. On the face of it, it would be intolerable to expect an employee to continue working when some or all his or her salary is unpaid.

If the employee succeeds in proving that there was a dismissal, the onus then shifts to the employer to prove that the “dismissal” was fair. This would put the employer in a difficult position. It would now have to prove that the dismissal was fair despite the intolerable working conditions which it caused. If the employer fails to prove it was fair, the CCMA could order the employer to pay the unpaid salary to the employee.


Option 4: Labour Court

The employee could go to the Labour Court to claim payment of the unpaid salary. Unlike the CCMA, s157 of the LRA gives the court jurisdiction to deal with a breach of contract dispute which does not also involve a claim for unfair dismissal.

Also, s77 of the BCEA also gives the court jurisdiction to deal with disputes about non-compliance with the BCEA – such as an illegal deduction or reduction salary.

The downside of this option is that it would take at least 2 years for the case to be heard in the Labour Court because of its huge backlog. And there would be legal costs for hiring a lawyer to deal with the case.


Option 5: Small Claims Court

This is a free service for claims less than R15 000. The employee can abandon the extent to which a claim is more than R15000 to bring the claim within the jurisdiction of the court. There are now about 500 Small Claim courts in the country, so they are easily accessible. The court is also an attractive option because the procedure is simple and cost-effective because no legal representation is allowed.


Option 6: Magistrates Court

A claim for unpaid salary is a civil claim. This gives jurisdiction to the Magistrates’ Court to deal with the case. The District Court has jurisdiction to deal with claims up to R200 000. The maximum claim in a Regional Court is R400 000.

These are not attractive options. The civil procedures are complicated, and it would also take a long time to conclude the case due to case backlogs. There’s also the potential for delays due to technical legal point-taking to frustrate the progress of the case. In addition, the environment of a Magistrates’ Court is not a particularly attractive place to pass the time.


Option 7: High Courts

These courts are for claims of more than R400 000. The procedures are also complicated so legal representation is advisable. In addition, to an Attorney, it is common practice to also hire an Advocate to present the case in court which pushes up the costs. This option is also not attractive because it takes at least 2 years to finalise a case – excluding more time for possible appeals.


TIP:        An employee should first use the internal communication and grievance procedures of his or her employer to recover unpaid salaries. If this fails, the option of forced resignation followed by a constructive dismissal claim in the CCMA can be considered. This gives the CCMA jurisdiction to deal with the unpaid salary claim within a short period of time – about 90 days. It’s also free and much shorter and less costly than the 2 years plus in the Labour Court or Magistrates Court options. If the CCMA option fails, the employee could still go to the Labour Court to claim the unpaid salaries.



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