Commission workers in the restaurant industry

Restaurant owners often employ people on a commission basis within their restaurant usually in an attempt to gain assistance.  What many employers do not realise is that this type of employment, which is almost always verbally concluded, has its own requirements and rights conferred which must be adhered to. Often employers end the contract summarily when they don’t want or need the employee anymore for whatever reason and then have to face the consequences of an unfair dismissal at their respective Bargaining Councils*.

COMMISSION WORK:  THE DEFINITION

In order to understand and adhere to the requirements, it is necessary to first explain its definition: in the restaurant industry “commission work” is defined as a worker taking on the role of a waiter and earning a salary through the commission or “tips” he/she earns. The worker will then be paid on the day or as agreed in terms of the contract or the respective Bargaining Council’s main collective agreement.

The most important requirement that employers need to be aware of, is that this agreement between the parties needs to be in writing. This is to protect both the employer and employee’s rights should a dispute arise. The contract should also state whether the employee would be employed permanently or only for a fixed term.

ADDRESS THE FOLLOWING

The following points need to be addressed in the contract:

• The worker’s rate of commission.
• The basis for calculating commission.
• The period over which the payment is calculated (the Bargaining Councils’ main collective agreements restrict this period to one month).
• When the employer shall pay the commission to the employee (the Bargaining Councils’ main collective agreements restrict this period to not more than seven days after the end of the earning period).
• The type, description, number, quantity, margin, profit or orders (individual, weekly, monthly or otherwise) for which the employee is entitled to earn commission.

COMMISSION VS A MINIMUM WAGE?

Because these workers do not earn a fixed salary, there is a possibility of them not earning any, or enough commission even if they have worked in terms of the agreement. Therefore, the respective main collective agreements require employers to comply with the regulations of the National Minimum Wage Act 9 of 2018 to ensure that commission workers are still paid the minimum wage if they do not earn an amount equivalent or exceeding that of the minimum wage. Employers should therefore compare the amount of commission the employee has earned to the number of hours worked. If the commission does not reach the equivalent of the minimum wage per hour worked, then the employer has the responsibility to pay the difference.

AVOID THIS MISTAKE

Many employers make the mistake of thinking that because the employee only earns commission, the employee is not in fact an “actual employee of the business” and they therefore don’t have to comply with employment procedures as with a normal employee.  Legislation and case law confirms that commission workers are considered employees in terms of their contracts.  Non-compliance with labour law can have a huge financial impact, especially when it comes to termination of the employment relationship, and employers should take care to be informed about their duties and responsibilities.

EMPLOYMENT CONTRACTS

An employment contract is crucial in managing labour relations as it is the basis of the relationship between the employer and the employee.  It defines the terms and conditions as agreed upon between the parties and regulates their relationship.  Furthermore, the employment contract describes rules and responsibilities to be adhered to by both the employer and the employee.  The employment contract is vital to keep confusion and discontent in the working relationship to a minimum.  By including additional information in the employment contract employers empower themselves and can proactively manage possible future disputes, saving time and money.

*“Bargaining Councils” refers to the Bargaining Council for the Restaurant Catering and Allied Trades (Johannesburg); Bargaining Council for the Food Retail, Restaurant, Catering and Allied Trades (Pretoria) and the Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades (Rest of South Africa) as a collective.