Can a company withhold an employee's salary if the company's client did not pay them?

The long answer

In terms of section 34(1) of the Basic Conditions of Employment Act (BCEA), which applies to all workers earning less than R17,634 per month, an employer may not make any deduction from an employee’s salary without the employee agreeing to it in writing, in the case of a debt or damages caused by the employee. (This is besides the lawful deductions for Unemployment Insurance Fund, tax or in terms of a law, collective agreement, court order or arbitration award.) Any deductions made outside of these would be unauthorised deductions, which are illegal.

But there is a case in which the employer can deduct from an employee’s salary without the employee’s consent: In terms of section 34(5) of the BCEA, the employer can require an employee to pay back wages that were paid to an employee in error. 

This was explained in an article by Pule Shaku for derebus.org.za on 1 February 2022, concerning the court case Stein v Minister of Education and Training and Others. 

Pule Shaku explains the background to the Stein case; the employee failed to submit leave forms that were given to him, arguing that he was not on leave but working outside the office on work that had been assigned to him. So, because the employee didn’t complete and submit the leave forms, the employer said that the days that the employee was not at work would be taken as unpaid leave and deducted from the employee’s salary for those days. 

The employee objected as he said he had not given his consent for the deduction under section 34 of the BCEA, and so it was an unauthorised and illegal deduction. (Shaku points out that Section 34 does not deal with a situation where there is no agreement between the parties on the deductions.)

Judge Dephny Mahosi of the Labour Court said that in the Stein case, the employer had notified the employee that the days he had been absent would be treated as unpaid leave. The employer went on to obtain approval for deductions to be made from the employee’s salary in respect of those days that he was not at work. The judge found that the deductions for the days the employee was not at work could be regarded as paying back the money the employee should not have been paid. In other words, the employer was taking back an amount that had been mistakenly paid to the employee.

If an employee is absent from work and fails to submit the leave forms in accordance with the policy, the employer is entitled to withhold payment. In instances when they had already paid the employee, the employer should be allowed to recover it without the employee's consent.

Shaku explains that the key principles of the judgement were:

• The employer must follow a fair procedure and give the employee a reasonable opportunity to show why the deductions should not be made;

• The total amount of the debt must not exceed the actual amount of the loss or damage; and

• The total deductions from the employee’s remuneration must not exceed one-quarter of the employee’s remuneration in monetary terms.

Shaku concludes by saying: “The principle of ‘no work, no pay’ is of paramount importance in the employment arena and the employer does not need the consent of the employee to deduct their remuneration for days on which the employee was absent from work. Section 34 does not preclude an employer from making such deductions.”

I have gone into the Stein case in detail in case it applies to your own situation.

If it does not, you should first take up the matter with the company through its internal grievance policy. If you don’t know what the grievance policy is, you should ask for a copy of it from the company.

If you are not satisfied with the outcome, you can take it up with the CCMA. These are their contact details:

• National call centre on 0861 16 16 16; 

• Visit them online on www.ccma.org.za;

• Email them at ho@ccma.org.za.

If you want to lodge a dispute or a complaint, you need to complete a CCMA case referral form (also known as LRA Form 7.11.). These forms are available from the CCMA offices, Department of Employment and Labour and the CCMA website.

Wishing you the best,
Athalie