A practical guide to: Handling damages caused by employees

A practical guide to: Handling damages caused by employees

Employers are sometimes faced with a situation were an employee caused damage to the employer as a result of their actions or omissions. Employers must decide to either impose a warning or deduct the cost of the damages from the employee’s salary.

The question now arises whether you can issue a warning and deduct the damages – or whether this amounts to double jeopardy.

What is double jeopardy?

Double jeopardy occurs where an employee is punished twice for the same incident of misconduct or poor performance. An employee therefor receives another form of punishment for an incident that already has been dealt with.

A clarifying case study:

The courts addressed this issue in Solidarity obo Mohammed / Air Traffic and Navigation Services Ltd [2011] JOL 27921 (CCMA). In this case, an employee was ordered to reimburse the company an amount of R7 000 due to a transaction of R4m, which had negligently been paid to the wrong beneficiary. The R7 000 was incurred by the company to correct the employee’s mistake. The employee was also issued with a final written warning for his negligence. The employee had approached the CCMA claiming double jeopardy, stating that receiving the warning as well as being ordered to reimburse the company was unfair.

It was ruled that it is a right to reclaim fruitless spending of other people’s money. The principle is that the applicant should be given the opportunity to comment on the deduction before it is made and the deduction can only be to the extent of the loss or damage suffered by the company.

The conclusion made by the CCMA was that as soon as the employer suffered damages incurred as a result of the employee’s actions, the loss sustained could be deducted from the employee. Reason being that the warning addresses the misconduct whereas the employee is also liable for the damages. This does not amount to double jeopardy, as the employee is not punished only for his actions but also for the outcome thereof.

What does the law say?

Section 34 of the Basic Conditions of Employment Act (BCEA) sets out guidelines to ensure that these deductions are done in a fair and reasonable manner.

An employer may not make any deduction from an employee’s remuneration unless:

  1. The employee agrees in writing to the deduction in respect of a debt specified in the agreement.
  2. The deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.

These deductions can only be made if:

  1. The loss or damage has occurred in the course of employment and due to the fault of the employee.
  2. The employer must follow a fair procedure and give the employee a reasonable opportunity to show why the deductions should not be made.
  3. The total amount of the debt may not exceed the actual amount of the loss or damage.
  4. The total deductions from the employee’s remuneration may not exceed 25% of the employee’s remuneration in money.

The employee does not have to agree in writing that a deduction can be made.  The only requirements the employer must adhere to before such a deduction can be made is to give the employee a reasonable opportunity to comment on the deduction before it is made and the deduction can only be to the extent of the loss or damage suffered by the company.

It is therefore advised that employers ensure that the above mentioned be part of an employee’s employment contract under which circumstances deductions may be made and the procedure that will be followed prior to making such a deduction is clearly set out.

About the author

Stephan le Roux obtained his BCom, LL.B and LL.M degrees from the North-West University. He was admitted as an Attorney of the High Court of South Africa in 2015 and is currently employed as a Senior Legal Advisor at SEESA Labour at our Pretoria office.


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