Are Employers Allowed to Reduce Your Salary At Any Time? Here’s What You Need to Know

Are Employers Allowed to Reduce Your Salary At Any Time?

Here’s What You Need to Know:

In recent years several companies have been forced to make operational changes to remain competitive during these challenging economic times as the effects of the Covid-19 pandemic are still felt by individuals and companies. 

In light of the above, companies have had to make changes such as amend working hours, change shifts or reduce salaries. These changes could potentially alter an employee’s terms and conditions of employment. 

Terms and conditions of employment are usually reduced to writing in the form of a contract of employment between employee and employer. It cannot be amended without the consent and agreement of the employee. An employee’s salary is a part of their terms and conditions of employment. Therefore, an employer may not reduce an employee’s salary at any time. 

If an employer changes the terms and conditions of employment initially agreed to, such as reducing the salary of an employee, without any negotiation and agreement, such an act constitutes a unilateral change to terms and conditions and amounts to a breach of the contract of employment. 

What remedies are available to the employee?

The Labour Relations Act affords employees, or unions acting on behalf of such employees, certain recourse in terms of section 64 (4):

“(4) Any employee who or any trade union that refers a dispute about a unilateral change to terms and conditions or employment to a council or the Commission in terms of subsection (1)(a) may, in the referral, and for the period referred to in subsection (1)(a) –

(a) require the employer not to implement unilaterally the change to terms and conditions of employment; or

(b) if the employer has already implemented the change unilaterally, require the employer to restore the terms and conditions of employment that applied before the change.”

The employer will need to comply with the requirement of subsection (4) within 48 hours of service of the referral on the employer. This means that the employer will be required to not unilaterally implement the change to the terms and conditions of employment, or if the employer has already implemented the change unilaterally, to restore the terms and conditions of employment that applied before the change. Should the employer not comply, the employee may embark upon strike action without the need to give notice of the proposed strike action or without having to wait 30 days from date of the referral. 

It is important to mention that resorting to strike action is only an interim remedy until the dispute is resolved through conciliation, thereby putting pressure on the employer to negotiate with the employee regarding the dispute at hand.

In the event that the employer complies, the matter will be set down for determination through conciliation and should the parties not resolve the issue at conciliation, a certificate of non-resolution will be issued by the Commissioner stating that the employees can embark on a protected strike and that picketing rules must now be established between the union/employees and employer.

Apart from the aforementioned remedy available to and allowing employees to engage in protected strike action, the unilateral change to terms and conditions of employment also constitutes a breach of contract. That being the case, the employees have the right to: -

a.  Sue for damages: An employee can claim for contractual damages upon acceptance that the employer refuses to fulfil their obligations as outlined in the contract. The Labour Court has concurrent jurisdiction with the civil courts to hear and determine any matter concerning a contract of employment. 

b.  Sue the employer for specific performance: If the employer breached the provisions of the employment contract, the employee is entitled to reject the employer’s refusal to fulfil their obligations as outlined in the contract and bring an application to hold the employer to the agreement. 

Case law 

In the case of Macsteel Service Centres SA (Pty) Ltd v National Union of Metal Workers of South Africa and Others (J483/20) [2020] ZALCJHB 129 (3 June 2020) the court held that, “any variation to an employee’s salary, irrespective of whether it is increased or decreased, amounts to a change in terms and conditions of employment and cannot be effected unilaterally. Salary is a quid pro quo for work rendered and any change that has the effect of affecting an employee’s salary or remuneration package, constitutes a change to terms and conditions of employment.” 

Significantly, this case dealt specifically with a reduction of salaries of employees who were working full time during Covid-19 and whose employers reduced their salaries due to loss of business. 

It is clear, in terms of the Labour Relations Act and case law, that employers are not allowed to reduce an employee’s salary at any time, without the necessary consent of the employee. Any changes to the terms and conditions of employment should be negotiated and agreed upon in writing before they are implemented. 

For more information and legal assistance do not hesitate to reach out to our team of experienced attorneys. Contact us at: info@duvenage.co.za 

We are happy to assist you!