Frequently Asked Questions About Remuneration and Benefits
Questions and answers to help you understand remuneration and benefits
HOW TO CONVERT OVERTIME INTO TIME-OFF
How must I calculate this?
I assume you have already agreed with your employee that she may take the time off rather than pay her out as required by Section 10 of the BCEA.
She is entitled to 90 min paid time off for every hour worked. If she has worked 40 hours over and above her normal working hours, you must calculate the overtime she is due by multiplying it by 1.5.
She is owed 60 hours on full pay. If her normal working hours are 8 hours a day, five days a week (Monday to Friday), you divide the 60 hours by 8.
She is entitled to 7.5 working days off on full pay.
If her normal hours are 9 hours a day, you divide the total hours by 9 which will equal to 6.67 days off on full pay.
HOW MUCH MUST I PAY MY HOURLY-PAID EMPLOYEES FOR PUBLIC HOLIDAYS?
If the public holiday is on a day they would normally work, the employees are entitled to double the rate that they would normally receive. If it’s a day on which they don’t normally work, then you must pay them their normal daily wage as well as for the hours worked that day at their normal rate.
MUST THE COMPANY PAY ME OUT FOR THE REMAINDER OF MY CONTRACT?
If the contract provides for early termination on the basis of operational requirements or in general, then the company may retrench before the end of the contract period without having to pay the balance of the contract (and provided they follow a proper and fair section 189 procedure). If the contract doesn’t provide for early termination, the company will have to pay out the balance of the contract period.
MUST I KEEP PAYING MEDICAL AID FOR A RETIRED EMPLOYEE?
Unless you have specifically agreed to provide post-retirement medical aid funding, you don’t have to pay it when an employee retires.
ARE BONUSES COMPULSARY?
You don’t have to pay bonuses unless the employees’ employment contracts state that you will. Even where bonuses may be paid by the company, there are no specified amounts set in legislation.
ARE SALARY INCREASES A BENEFIT OR A RIGHT?
Unless specifically agreed, there is no automatic right to salary increases. If there’s a guaranteed right to such increases, then the right can be enforced contractually. A line of cases have adopted the approach that remuneration is not the same as the benefits referred to in Section 186 of the LRA.
Salary increases, in our view, are matters of mutual interest and the manner to deal with them is through negotiation. Such an issue may not be arbitrable under the unfair labour practice jurisdiction. However, if you have provided for an inflation based increase in your employment contracts it is arguable that you have given that right contractually.
It would be better to say that increases will be considered annually but are entirely at the discretion of the company.
CAN I RETRACT A SALARY INCREASE?
You can’t decrease an employee’s salary unless you do so by agreement with the employee. In my view, withdrawing a salary increase you have granted because he’s underperformed would be an unlawful change to his terms and conditions of employment unless you can show that the employee gave his consent.
Salary increases are usually based on past performance so retracting the increase based on current performance would be unfair.
RULES TO FOLLOW FOR YOUR INCENTIVE SCHEME
Incentive schemes should be governed by a policy and have rules. When you develop your performance reward and incentive scheme you should consider the following things:
1. It should have clear, achievable, agreed and quantifiable objectives.
2. It should be affordable. The incentive awarded should not cost more than what is gained by the effort. Rather determine beforehand what the gain will be and set aside a portion of that to allocate to the incentive.
3. It should not put the company at risk, financially or otherwise. If a downturn in the economy or cut in funding is imminent, don’t commit the company to pay out incentives if it may not be able to afford it.
4. Your scheme should be reviewed regularly.
5. Clearly defined rules should govern the scheme.
6. It should be targeted and specify who will receive it, i.e. individuals, groups, departments or entire teams.
7. It should clearly indicate how the amount available for incentives will be determined, i.e. whether it will be a:
a) Percentage of profit
b) Percentage of sales
c) Percentage of sales increase
d) Percentage of costs reduced
8. It is also valuable to create rules around whether payment of incentive bonuses will be made in resignation months, etc. This can be quite an area of dispute if it crops up.
WHY DO YOU NEED A LOAN POLICY?
Companies are often asked by staff to lend them money. This happens even at senior levels as more employees find themselves in financial difficulty.
Employees are increasingly becoming victims of the debt trap. Typically they have little understanding of financial and banking systems and enter into financial agreements with a poor understanding of the consequences.
Many companies decide not to be banks for their employees, but still process an increasing number of garnishee orders because their employees are caught in legal debt processes. They become involved in resolving their employees’ problems, even if they are unwilling to do so.
“I recently had the pleasure of using FIC CONSULTING, and Tiaan Dwyer. He is very professional and incredibly knowledgeable, and an absolute gentleman. He focuses on small/ medium businesses. As an owner of a small business trying to navigate staff issues and labour law is a nightmare.
Should you need assistance with anything labour related, please do not hesitate to contact him. 5 star service is what you will get. Thank you Tiaan for all your help.”
Lisa Klimke – Owner Second Chance Clothing store
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