What happens when an employer cannot fund a promised promotion  

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 Financial constraints not an excuse for failing to promote employees already recommended for promotion. Employees have different reasons for wishing to be promoted. They want the increased remuneration that goes with it, they want the status, the feeling of success and recognition and/or the challenge of the higher level responsibility.

 

 Despite these aspirations, employees do not have an unfettered and automatic right to be promoted. Were such an automatic right to exist this would place an unfair and impossible burden on employers. However, where certain circumstances exist employees may have a legal right to be promoted. (Often such circumstances need to exist in combination but this will not always be the case.)

For example: 

  • The employer orally promises the employee a promotion; 
  • The employer signs an agreement that says that the employee will be promoted. Such a clause could exist in the employment contract signed when the employee was originally appointed; 
  • A signed agreement obliges the employer to promote the employee provided that a certain potential event takes place and that event does take place;

For example, this potential event could be that: 

    • The employee’s superior vacates his/her position for any reason including promotion, retirement, resignation, dismissal etc.;
    • The employee ‘proves himself/herself’;
    • A particular period of time elapses;
    • A suitable vacancy arises; 
    • A potential new customer places a large order; or
    • A new workshop is opened. Or
  • A vacancy is advertised, an internal employee applies for it and is legitimately recommended as the most suitable person for the job.

 

For example, in the case of Mokhobo and others vs Department of Education (2005, 8 BALR 836) the employees applied for posts advertised within the Department. Despite the fact that these employees were recommended for the posts they were not promoted. At the CCMA the employer maintained that there were insufficient funds to finance the cost of the promotions and that a moratorium had been placed on appointments. The employees maintained that they had a legitimate expectation that they would be promoted. The arbitrator found that: 

  • It was not relevant that the employees had legitimate expectations of promotion; 
  • No moratorium had been in place at the time that the employees had been recommended for the promotions; 
  • The shortage of funds was an insufficient reason not to promote the employees as they had already been recommended for promotion.

The CCMA therefore ordered the employer to promote the employees in question retrospectively, and to pay them compensation.

 

It is alarming for employers that, despite the fact that the Department’s lack of funds had not been disputed by the CCMA arbitrator, this fact was insufficient to persuade the arbitrator to find in its favour. This means that, even where an employer cannot afford to promote employees, it may be forced to do so if the employees have already been recommended for promotion.

 

In view of this employers are advised: 

  • Not to advertise posts if they are unable to fund the payment of the incumbents; and 
  • To make sure that those officials/managers authorised to recommend employees for promotion are competent to do so on a purely objective basis. 

Employees are advised not to raise promotion related disputes merely because they have expectations of promotion.

 

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

For free access to our ongoing labour law debate, LABOUR LAW ON TRIAL please go to www.labourlawadvice.co.za and click on the Labour Law Debate item in the menu.

 

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