JOHANNESBURG - At the end of every year, employees look forward to or even financially plan around the receipt of an end of year or Christmas bonus.
However, not everyone has a right to a bonus, and the award of a bonus may be subject to the employer’s goodwill, or any number of conditions which need to be reviewed and taken into account before an employee is awarded a bonus at the end of year.
Firstly, a bonus may or may not be what is referred to as a thirteenth cheque. A thirteenth cheque is a usually double payment of salary, made in December of each year, to an employee, perhaps as a thank you for good service, or company or employee success and performance during the year.
Any employee expecting a thirteenth cheque would need to check his/her individual contract of employment to see if the right to this payment is stated; if not, there is no right under law to this payment and an employer may fairly decide not to pay this amount, even if it has been paid in the past.
However, any employee who has habitually received a thirteenth cheque from the same employer would still be entitled to query why it has not been paid now. The employee may have a legitimate expectation of payment, or the practice of payment in the past may even have created a legal right to this payment.
But even if there is no legal right to insist on payment, the employer may still be required to justify its decision not to pay – if it is able to demonstrate that there is an objective reason why payment cannot be made or is not justified (such as bad financial performance), and its decision to not pay is not arbitrary, irrational or aimed at a single employee to unfairly treat him/her.
On the other hand, with a performance or other end of year bonus which is contractually stated (either in the contract of employment, or in a company bonus policy) to be subject to the discretion of the company, the most that the employee can hope for is that the employer will exercise this discretion in his/her favour and award a bonus. Such bonuses are usually linked to company and/or individual performance (rated on achievement of personal goals or targets for the year), and these factors would be taken into account by the employer in deciding whether the employee should receive a bonus. As above, the employer must take the decision in a fair manner and must not take arbitrary or irrelevant factors into account. Its decision can be subject to review, of the employee refers a dispute for unfair labour practice in regard to the provision of benefits, to the Commission for Conciliation, Mediation and Arbitration (CCMA).
An additional element for employees to be aware of, and for employers to take into account, is that under employment equity legislation, employees performing equal work are entitled to equal terms and conditions of employment, which can include bonus payments. Accordingly, unless there is a good reason to differentiate between them, employees who do the same job would be entitled to be equally treated in regard to the award of bonuses.
As with all aspects of the employment relationship, employees are entitled to fair and equal treatment by employers, and all employer decisions, even if contrary to the employee’s interest, must be justified on fair and rational grounds.
Bradley Workman-Davies, Director at Werksmans Attorneys.
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