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May an employer withdraw or change employee benefits?

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There are four main categories of grounds on which employers may be taken to CCMA for breaching employee rights. These are unfair dismissal, unfair discrimination, unfair labour practice and failure to comply with minimum wage legislation.

The unfair labour practice category includes claims for:

  •  Unfair discipline,
  • Unfair suspension,
  • Unfair demotion,
  • Unfair promotion,
  • Unfair training,
  • Unfair labour practices related to probation,
  • Unfair detriment as a result of the employee making a protected disclosure, or
  • Unfair provision of benefits. This relates to benefits to which the employee is entitled in the course of his/her employment. Such as:  leave, retirement, medical aid, life insurance, funeral, and other benefits.

Unfair provision of benefits occurs where the employer unfairly: 

  • provides such benefits to some employees and not others. For example, employers might provide retirement benefits for office workers only or may provide inferior benefits for factory workers. 
  • cancels the benefit. For example, an employer that had been giving employees paid study leave might decide to stop providing such benefit. This would require employees to use annual leave or unpaid leave should they need to write or study for examinations. 
  • halts the benefit temporarily. For example, in the case of Van Amstel vs ESKOM (2002, 9 BALR 995) the employer halted payment to the employee of his vehicle allowance while it was in the process of reviewing the payment of such allowances. The employer required the employee to reapply for the allowance. When he did so his application was turned down. The CCMA found that the employer had indeed committed an unfair labour practice and ordered the employer to reinstate the benefit. 
  • fails to facilitate the provision of the benefit to employees. For example, should the employer fail to pay over the benefit scheme contributions the service provider might halt the benefits. This will mean that the employees lose those benefits permanently or temporarily. 
  • reduces the employer’s contribution to the benefit fund resulting in the employee having to pay more. This often occurs when the employer decides to cap its share of the benefit contribution. For example, when the benefit scheme administrators impose an increase in contributions the employer might unilaterally decide that, in order to control costs, it will not increase its portion thereof. This would require the employee to pay his/her own portion of the increase as well as the employer’s increased portion.

Alternatively, the employer might change the policy mind about contributing towards the benefit costs of employee’s dependents. A case in point is that of Solidarity obo Du Plessis vs ABB Services (2005,8 BALR 820). When the employee joined the business his employment contract stated that the employer would pay half of the medical aid contributions for himself and his family. For a while the employer kept to this agreement. However, after he got married the employee discovered that the employer had changed its medical aid policy and no longer paid any contributions for employees’ spouses. As a consequence, the employee had to bear the full cost of the contribution in respect of his wife.

The employee therefore referred a dispute to the Metal and Engineering Industries Bargaining Council for unfair labour practice. The arbitrator found the employer’s action to be unfair and ordered the employer to: 

  • Pay its portion of all future contributions in respect of the employee’s wife, and
  • Refund to the employee the amount of the contributions that he had had to pay since his marriage. 

It is very often true that employee benefits in the modern day can be extremely expensive for employers. However, the cost to employers of interfering with employee benefits can be even higher than the cost of the benefit itself!

Such costs include:

  • Legal fees,
  • The time wasted by management in preparing for and fighting CCMA cases,
  • Lump sums paid to the employees in accordance with arbitration awards, or
  • The negative effect on employee relations of removal or reduction of benefits. 

Employers are therefore advised to obtain expert labour law advice before embarking on any changes that affect their employees.

 

 BY   Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: [email protected]. Web Address: www.labourlawadvice.co.za.

To get a free viewing of our ongoing Labour Law Debate go to www.labourlawadvice.co.za and click the Labour Law Debate item in the menu.

 

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