“Commission only” employees

Apr 28, 2022 | Articles, Business owners tips and advice

“Commission only” employees

Commission earning employees are no different from any other employee except for the fact that their remuneration is commission based. Employment conditions are regulated in terms of the Basic Conditions of Employment Act and any applicable Bargaining Council Agreement or Sectoral Determination, depending on the industry. All labour legislation still applies, including the National Minimum Wage Act, which clearly states that every employee must be paid at least the minimum wage published by the minister of Employment and Labour each year. Employees can always earn more, but an employer must ensure that they earn at least the prescribed minimum.

The purpose of a commission-based remuneration structure is to motivate and reward employees when they perform well. It makes sense especially in sales and marketing positions where you earn more if you sell more.

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What about performance?

If a commission only employee does not perform satisfactorily and does not meet the employer’s fixed standard, the employer has the right to act in terms of the poor work performance, incapacity, or disciplinary procedure (misconduct) depending on the merits of each case after due investigation.

It is very important that the employer implement a job description: a written document that sets out the tasks and duties expected of the employee to do. This document forms part of the employment contract and is an attachment to the employment contract. The use of a job description has many benefits for the employer:

This confirms the tasks/duties that the employer employs the employee to perform.
It links a fixed standard regarding quantity and quality to the above tasks/duties.
It forms the basis of regular performance appraisals when looking at increases and/or performance bonuses.
The job description is a critically important document when addressing poor work performance.

What about UIF and COIDA?

Employers must take note that legislation such as the Unemployment Insurance Act (UIA) and the Compensation for Occupational Injuries and Diseases Act (COIDA) also apply to commission earning employees. They should also be protected in cases of unforeseen unemployment or when they are injured at work.

UIA applies to all employers and employees (excluding employees working less than 24 hours a month for an employer). An employer does not have any discretion whether or not to register for unemployment insurance and to pay over the monthly contributions (1% deducted from the employee’s salary for the employee’s contribution and 1% of the employee’s salary for the employer’s contribution).

COIDA applies to all employers and casual and full-time employees who, as a result of a workplace accident or work-related disease are injured, disabled, killed or become ill. An employer carrying on business in South Africa, must register with the Compensation Commissioner, and pay the annual assessment fee.

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Moonlighting…

Apr 28, 2022 | Articles, Business owners tips and advice

Moonlighting…

Moonlighting is defined in the workplace as working a second job without informing your main employer, and employees earn extra money outside of working hours. A possible concern is that moonlighting may cause a decrease in productivity in the workplace. Data from the Momentum/ Unisa Household Index shows that an estimated 14% of households obtain an additional income from a second job. But does the employer have any right to object to an employee holding down a second job while being employed?

The general principle is that an employee cannot be unreasonably kept from supplementing their income. Employers can however take proactive measures to manage the situation by including a clause in the employment contract for employees to require or request permission to take up additional employment. Any possible conflict of interest must also be disclosed.

A workplace policy can also prohibit moonlighting. Rules regarding moonlighting need to be in writing, ensuring that employees are aware of the consequences if contravened. The Labour Appeal Court has held that for moonlighting to be effectively prohibited, there must be a specific rule stating that it is not permissible, and the rule should be known to employees. For a dismissal based on moonlighting to be fair, it must answer to the criteria mentioned, and the consequence thereto needs to very clearly stated.

The key to allowing employees to supplement their income from an additional work source, is to have an open line of communication, with a common understanding that performance in the workplace should not suffer as a result thereof.

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Restructuring: what to consider/what it entails

Feb 19, 2022 | Articles

Restructuring: what to consider/what it entails

Businesses operate in a challenging environment where the economic climate and other external forces can leave a business with little choice but restructuring: realign, restructure and reorganise to become more competitive or to maintain an existing position in the market. Operational changes can create opportunities for both the business and employees with regards to skill and personal growth, leading to better and more efficient use of human resources and the implementation of better procedures, ultimately improving efficiency and profitability.

What is restructuring?

Restructuring is the act of reorganising a business’s structures (legal, ownership, operational or other structures) for the purpose of making it more profitable or better organised for its present requirements.

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When does restructuring take place?

Restructuring will most likely take place in cases of operational changes, for example a change in structure (ownership, management, or departments), goals and vision, financial position (the economy, amended legislation impacting on the cost of doing business, entry of competitors into the market, the minimum wage, recent drought, etc.) and technology (progress in terms of new techniques and methods of completing tasks quicker, as well as technological inventions).

Follow the correct procedure

Section 189 of the Labour Relations Act specifies a strict procedure that employers must follow when considering restructuring and/or retrenchment. Employers must take care to follow this procedure and avoid making any unilateral changes to the employment contract.

Restructuring is a formal consultation process that allows both parties to engage in discussions to consider other alternatives, minimise changes, establish timeframes and reduce the negative impact of restructuring. The employer should in all good faith keep an open mind throughout the process and seriously consider proposals put forward by employees. Meetings should be held with all possibly affected employees as well as the trade union where applicable.

Employers should also take note of training as a means to avoid retrenchment. Where an existing or new position requires a higher performance level or new skills, the employer is obliged to consider any additional training that may assist the employee in achieving the level of performance required.

Communication is key

Change is difficult and can leave employees anxious. We advise employers to be open and clear with regards to why changes are needed and to explain the business’s needs and goals, as well as make regular announcements to all employees in terms of progress made. Restructuring is more likely to be successful when managers understand the fundamental strategic problem or opportunity the business faces.

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Suspension: Punitive and precautionary

Feb 19, 2022 | Articles, Business owners tips and advice

Suspension: Punitive and precautionary

Suspending an employee is a common occurrence in the workplace. Employers must however take care to follow the correct procedures when imposing both precautionary and punitive suspension to avoid putting their business at unnecessary risk.

What is precautionary suspension?

Precautionary suspension is imposed when an employer suspects that an employee might have breached either the business’s disciplinary code, or the terms and conditions of employment. Due to the nature of the alleged misconduct or breach and lack of proof of guilt, the employer can proceed to suspend the employee on a precautionary basis pending an investigation, especially if there is a possibility that the employee can interfere with the investigation in any way. Precautionary suspension is with full pay and benefits. The employee should understand that he/she is not being punished and should not suffer any prejudice in general or in respect of remuneration.

Before suspending an employee on a precautionary basis, the employer should ensure that there are justifiable reasons for removing the employee from the workplace pending an internal investigation.

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What is punitive suspension?

Punitive suspension is a form of punishment following a disciplinary hearing where an employee is found guilty of misconduct or a breach of the terms and conditions of employment. Punitive suspension is a sanction which can be imposed on the employee as an alternative to dismissal and is without pay and benefits. The employer should make it very clear to the suspended employee whether he/she is being suspended on a precautionary or punitive basis to avoid any confusion and possible subsequent Commission for Conciliation, Mediation and Arbitration (CCMA) referrals.

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Sale (transfer) of business and labour law

Feb 15, 2022 | Articles, Business owners tips and advice

Sale (transfer) of business and labour law

In terms of the Labour Relations Act (LRA), an employee’s employment contract is automatically transferred to the new employer when a business is sold as a going concern. Any dismissal associated with such a transfer of business, will be deemed as automatically unfair. An employer selling his/her business may also not dismiss the employees if the buyer does not want to keep the employed employees.

As with any form of alleged automatic unfair dismissal, the court will first have to determine that the dismissal is causally related to the transfer of the business. If the employee makes a prima facie case that the dismissal is linked to the transfer of the business, the employer must be able to prove that the dismissal was due to a valid reason or fair operational requirement. Otherwise, the dismissal can be automatically unfair.

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What about the new employer?

A new employer is entitled to restructure his business to the extend he deems necessary to accommodate the acquisition of another business, even if it involves the retrenchment of a transferred employee. Such restructuring may continue if there are sufficient and fair reasons to retrench a “redundant” employee shortly after the merger of the business, provided that the dismissal is justifiable. It is also very important that the employer follows the prescribed process in terms of labour law. The only way employers, who are involved in a transfer of business, can avoid a potential automatically unfair dismissal is to enter into an agreement with the employees or their recognised representatives, before the business is transferred.

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Refusal to vaccinate – dismissible offense?

Feb 14, 2022 | Articles, Latest in the industry

Refusal to vaccinate – dismissible offense?

Refusal to vaccinate – A recent arbitration award found that it was substantially fair to dismiss an employee who was opposed to compulsory vaccination in the workplace.

There are three recognised grounds for dismissal, namely: misconduct, operational requirements (retrenchments) and incapacity:

For an employer to take disciplinary action against an employee, there must be a violation of a rule in the workplace. For example, when implementing a policy that regulates employees’ behaviour, the employer can take disciplinary action if the employee does not respect and comply with this policy.

Secondly, an employer can retrench an employee due to operational requirements if there are no other alternatives, subject to section 189 of the Labour Relations Act.

The third recognised ground for dismissal is incapacity. Here, for example, it is first considered whether the worker can be placed elsewhere and whether his job description cannot be adjusted.

Regarding compulsory Covid-19 vaccinations and the refusal to vaccinate, there is currently tension between two sets of legislation: the Constitution and the Occupational Health and Safety Act. The employee has the right to exercise his choice about bodily integrity, but the employer again has the right and obligation to ensure a safe working environment for employees as well as visitors. The employer is entitled to implement a compulsory Covid-19 vaccination policy, provided that it is fair and complies with the requirements and guidelines set by the Department of Health as well as the government.

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If the employee is dismissed as a direct result of non-compliance with a Covid-19 vaccination policy, or due to his/her refusal to take the vaccine, the employee can refer an unfair labour practice dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

Each of us has a constitutional right to exercise choices, especially when it comes to bodily integrity. The real question is whether individual rights to bodily integrity and religion may be curtailed in favour of public interest. This question will have to be decided on constitutional provisions.

The LWO is not prescriptive regarding members’ Covid-19 vaccination policy. We believe in fairness and advise members to do business within the guidelines set by labour legislation, especially with regards to the Occupational Health and Safety Act.

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