With South Africa’s lockdown well and truly underway, companies are facing unprecedented times. Even when the country was in the throes of the State of Emergency in the 80s and early 90s, work continued, albeit with strict social controls in place and a strong police and military presence. But business-as-usual has not been possible for many organisations, leaving employers perplexed about the issue of salary payments. Nicol Myburgh, Head of the HCM Business Unit at CRS Technologies, examines the situation.
“The legal basis of payment for employees is that where the contract of employment exists, the employer has a duty to tender work, and the employee has a duty to tender their services for such work,” he explains. “If the employer cannot provide work and instructs the employee to go home, the employer is required to pay the employee. The only example where this was not the case is contained in the Metal Industries Bargaining Council Main Agreement. This deals with the supervening impossibility of performance on the part of the employer, and if procedures are followed, the employer is liable for lesser payment to employees.”
No work, no pay
“The pandemic has created a situation outside the employer’s control,” Myburgh continues. “With employers forbidden to offer work to employees and employees not permitted to tender their services while in lockdown, a situation has arisen where both employers and employees cannot fulfil their contractual obligations to one another.
“Consequently, according to the letter of the law, for the period of the lockdown employers are not obliged to pay their employees. The situation is one of ‘force majeure’ and can be insured against.”
Myburgh advises companies to check whether the provisions of their business insurance policies contain such an indemnity. “While these provisions are standard practice in countries that frequently experience natural disasters, in South Africa, where natural disasters are less common, the provisions often do not exist in policies except in a limited scope.”
Fortunately, however, Myburgh says there are several steps employers can take to alleviate the burden on their employees:
- Allow employees to take their accrued paid annual leave entitlement.
- Extend unaccrued paid leave to employees. This would normally only accrue later in the leave cycle.
- Assist employees with UIF documentation.
- Provide part payment of wages and salaries.
- Where possible, apply for government assistance.
While the internet enables companies to implement remote working practices where it is possible to do so, this may only be suitable for certain sections of the workforce and, depending on the nature of the business, the work may be of reduced scope and would not attract full remuneration as specified in the contract.
According to Myburgh, in this instance, employers can come to an arrangement with these employees in respect to deliverables and associated remuneration. “In effect, this would be an agreement to temporarily modify or amend the contract of employment in respect of work and remuneration.
“Of course, once arrangements are put in place, the employer must document everything and make it reviewable once the lockdown ends. Should the lockdown period be extended, the employer needs to be able to change its arrangements.”
One of the key questions that remain is whether a company can engage in retrenchment proceedings during this time.
The lockdown does not suspend the contract of employment, Myburgh notes, it merely prohibits the physical proximity of employees in the workplace. “The employer is therefore still entitled to issue retrenchment documentation, provided it can consult with employees (even if this is done in writing). The employer is obliged to consult for a period of 60 days from the date on which the retrenchment notice is issued.”
“The long-term impact of the lockdown remains difficult to predict,” Myburgh concludes. “However, employers and their employees must work together to identify ways to mitigate some of the economic impacts on the business if companies are to continue operating once the lockdown is lifted.”