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Deductions or contributions for damage or loss caused by an employee

Deductions or contributions for damage or loss caused by an employee

This summary would provide the employer with more certainty relating to the damages caused by employees, and the remedies available to the employer to mitigate damages or recover such damages from the employee. It is both unfair and unreasonable to assume that the employer should be held liable for damages caused by employees. For the reason that damages caused by employees is such a common event, the Department of Labour (DOL) has formulated clear elements which should be met before an employee may be held liable for damages caused to a company as a cause of negligence. The abstract reads as follows:

Deductions for damage or loss:

“Deductions for damage or loss caused by the worker may only be made if:

  1. The employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made;
  2. the worker agrees in writing; and
  3. the total deduction is not more than 25% of the worker’s net pay.”

One could glean from the context that only if the deduction is agreed upon, in writing, that the said deduction will be regarded as legitimate. Section 34 of the Basic Conditions of Employment Act (BCEA) deals with the allowed deductions from the employee’s remuneration. As the name of the Act reads, this would be considered the minimum requirements which should be present to be regarded as a reasonable deduction. The Section 34 reads as follows:

“Deductions and other acts concerning remunerations.

  1. An employer may not make any deduction from an employee’s remuneration unless-

(a) Subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or

(b) The deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.

  1. A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only if;

(a) The loss or damage occurred in the course of employment and was due to the fault of the employee;

(b) The employer has followed a fair procedure and has given the employee a

reasonable opportunity to show why the deductions should not be made;

(c) The total amount of the debt does not exceed the actual amount of the loss or

damage; and

(d) The total deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remunerations in money.”

A few elements within the Section 34 will be discussed to provide more clarity to the reader relating to key requirements which should be present.

Based on the correct drafting of this section, little room for interpretation is necessary to understand what the legislature intended by the wording of the Act. It is clear that a deduction from an employee’s salary would only be allowed if the employee agreed to such a deduction in writing or the deduction is allowed in terms of legislation, a court order or an arbitration award. In my view, it is only fair to agree to such a deduction in writing prior to the act of negligence. This could be done in a contract of employment, policy statement or an acknowledgement of debt. The reason for this train of thought is that one cannot be held responsible for a term of employment, if that person did not agree to such a term. If this was a possibility to hold an employee liable for any actions not agreed upon, prejudice towards the employee would most certainly be present.

Subsection 2 states that the deduction may only be in the amount equal to the damage suffered as a result of the negligent misconduct of an employee.

There are certain requirements that must be fulfilled before such a deduction may be made:

  1. The loss or damage must have occurred during the course of employment. One cannot be held liable for damages which occurred outside the boundaries of the work environment. For an example, if the employer instructed the employee to go buy himself a coffee and the employee is not in the possession of a valid driver’s licence, which the employer is aware of, it would be unreasonable to hold the employee liable.
  2. The damage must have been due to the negligence of the employee. In the case of a vehicle accident, if the employee was in a still standing position at a robot, and another vehicle drives into him, then the employee is obviously not negligent, and the employer should recover such monies from his insurance group.
  3. The employer must follow a fair procedure, to determine whether the employee should be held liable for damages caused by his/her own negligence. This could be done in the form of a disciplinary enquiry. It is always advisable to appoint an independent chairman in such proceedings, to eliminate the possibility of bias co-employees. This is one of the functions of the SEESA Labour Legal Advisors. Schedule 8 of the Labour Relations Act (LRA) gives foundation on what is considered a fair procedure: The employer or company should notify the employee of the allegations or alleged misconduct in writing and in a language that the employee can reasonably understand. If the employee cannot understand what the content of the writing entails, an independent translator could assist such an employee. What some companies also do in a case of misunderstanding is that a co-employee which the employee in question is comfortable with, could also translate to the said employee. The employee should be allowed the opportunity to state a case in response to the allegations. Thus, the employee could prepare his own statement and furthermore cross-examine the statement of the company. The calling of witnesses is also allowed to strengthen either the employer’s or the employee’s case. The employee should be entitled to a reasonable time to prepare for the enquiry. In practice, it has crystalized that 48 hours’ notice would be regarded as sufficient time to prepare.
  4. The total amount of the deduction may not exceed the actual amount of the loss or damage. The reason why I included the phrasing: “or contributions” in the title of this writing is, the employer an employee could determine the percentage of negligence present. Thus, the employer will only deduct the amount of damage applicable to the percentage fault of the employee.
  5. The total deductions from the employee’s salary may not exceed one-quarter of the employee’s remunerations, thus 25% of the employee’s salary in total. In the event where the damage is of a substantial amount, the deduction could be made over a longer period.

Companies are advised to upfront agree with employees in their contracts of employment under which circumstances deductions may be made and the procedures that will be followed prior to making such a deduction. Also, emphasis is placed on the necessity of an independent chairman at any enquiry or disciplinary proceedings.

ABOUT THE AUTHOR

Darius Zeederberg is currently a SEESA Labour Legal Advisor. He obtained his BComm Law degree and LLB Law degree from the University of Pretoria. In his final year, he also completed his practical law school (LEAD) at the same institution. He practised law as an admitted attorney of South Africa in Pretoria before he joined SEESA. He obtained his Compliance Management Certificate at the University of Cape Town in June 2016 and is currently completing his LLM Law degree at the University of Pretoria.

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