This is what can be deducted from your salary when you leave your job
The end of the year often brings resignations as employees look to a fresh start in the new year. While employers may think they can dig out whatever they want from an employee’s salary or final payment, the reality is there are only certain instances where they can deduct monies.
Advocate Tertius Wessels, Legal Director of Strata-G Labour Solutions, said employers often experience a conundrum when someone resigns, and that person owes the company money.
“This is exacerbated in December when salaries and bonusses are paid earlier than usual and the departing employee decides to leave without working his or her notice.”
According to the Basic Conditions of Employment Act, there are only certain instances in which deductions can be made from an employee’s salary or final payment.
Ordinary statutory deductions
The Act allows for the employer to make ordinary statutory deductions off an employee’s salary, such as UIF, PAYE and the skills development levy. “These deductions are permitted by law and the employer is obliged to pay these over to the relevant authorities after deducting them,” added Wessels.
These are legally required deductions that are applicable whether an employee agrees to them or not. “This is the same as when employees gets a garnishee order against them. These are a court-orders that compel the employer to deduct a certain amount from the employee’s salary every month,” notes Wessels.
Deductions that are agreed to in writing
A second category of deductions that an employer can make are those agreed to in writing by the employee.
Wessels says this is where employers often get it wrong. “In a situation where an employee resigns and doesn’t work notice, the question often arises ‘can I deduct a notice period from his or her salary?’ The answer is ‘yes’, provided the employee has agreed to that deduction in terms of his or her contract of employment. The same applies to leave. An employer can only deduct leave owed if the employee has agreed to it in writing.
“Also, if an employee has taken a loan or signed a training bond with the company and, on terminating his or her services, still owes the company money, the employee must specifically have agreed – in writing – that the balance of that training bond or loan or advance may be deducted off his or her final payment,” explains Wessels.
He said the Act is very clear on the issue of deductions. “It stipulates that unless there is something in writing that authorises the employer to make the deduction, the employer would have no basis for making that deduction.
“This is why employment contracts are so important. A verbal agreement or handshake will not suffice. If an employer proceeds to make deductions and cannot show that a) it was a statutory deduction or b) that the employee agreed to it in writing, the employee can take it up with the Department of Labour. The employer will have to pay they money back and sue the employee afterwards, which can become a costly and time-consuming exercise,” added Wessels.
Another mistake often made by employers is to offset an employee’s accrued leave payments against monies owed. Once again, this is not legal unless it has been agreed to in writing.
Willful or negligent damage to company
If, after a proper investigation, it is determined that certain damage or loss to the company is a result of an employee’s negligence, then the employer is entitled to recover the loss or monetary value of the loss from the employee’s salary, as well as take disciplinary action against the employee.
“Many employees tend to see this as double jeopardy, that they are being punished twice by having to pay the money back and receiving a final written warning. The reality is, the person is being disciplined for being negligent in the execution of his or her job, and the money is being deducted to restore the company to the position it would have been in if it were not for the negligence,” notes Wessels.
Despite the law allowing employers to make deductions for negligence, they are capped at 25% of the employee’s salary every month. In addition, the employer must have a formal agreement in place whereby the employee consents to the deduction being made monthly. The agreement must also stipulate that if the employee leaves the company before the debt is paid off, the balance can be recovered from any payments that might be due and payable to the employee.
Payments made to an employee in error
If an employer pays the incorrect salary into an employee’s account, the employer is legally entitled to recuperate the money. In fact, if employees notice that the incorrect amount has been paid into their account, they should immediately notify the employer. Not doing so – and spending the money – could result in them being fired.
Wessels says employers need to make sure that their contracts of employment are in order. “The same applies in respect of any monies advanced or lent – there needs to be a proper agreement in place. Employers need to manage their finances properly. They don’t want to be on the backfoot when the business shuts down in December and everyone has been compelled to take their leave by January, leaving them no recourse to deduct money from employees who decide to leave.”
He offers one final word of advice: “Employers often experience absenteeism in December and they need to make it clear to employees that the principal ‘no work, no pay’ applies, and that they are entitled to dock employees’ wages if they don’t come to work or cannot produce a valid medical certificate.”