“Commission only” employees

“Commission only” employees

“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…

Moonlighting…

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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Suspension: Punitive and precautionary

Suspension: Punitive and precautionary

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

Sale (transfer) of business and labour law

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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Bargaining Council – what about it?

Bargaining Council – what about it?

Bargaining Council – what about it?

Labour legislation applies to all employers and employees. The Basic Conditions of Employment Act (BCEA) defines the minimum terms and conditions of employment on which the parties may contract. However, if a business falls under an industry that is part of a specific Bargaining Council’s scope of application, the Bargaining Council’s collective agreement will regulate labour relations in that industry and employers are legally obliged to comply with this. Note that certain Bargaining Councils only apply to specific regions. The obligation rests with the employer to determine under which industry the business falls and then to comply with applicable legislation.

Employers that fall within a Bargaining Council’s scope of application must ensure that their employment contracts are drafted in line with this legislation.  Note that the minimum terms and conditions of employment as contained in the Bargaining Council’s collective agreement rank higher than those contained in the BCEA. If any labour disputes arise between the employee and employer, ʼn Bargaining Council will have jurisdiction to deal with these disputes, as opposed to referring the dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA).

Functions of a Bargaining Council include to:

  • conclude and apply collective agreements;
  • prevent and resolve labour disputes;
  • establish and administer a fund to resolve disputes;
  • encourage and establish training and education;
  • to establish and administer pension, provident, unemployment and medical aid funds, as well as sick pay, holiday pay and training schemes for the benefit of one or more of the Bargaining Council’s parties or their members.
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COVID-19 and disciplinary action against employees

COVID-19 and disciplinary action against employees

COVID-19 and disciplinary action against employees

All employers must comply with the Occupational Health and Safety Act. This law requires that employers, as far as is reasonably practicable, provide and maintain a work environment that is safe and without risk to the health of employees, customers, members, visitors, contractors, etc. who may be directly affected by their activities, or who enters the workplace.

In addition to this general obligation, additional regulations have been published in terms of COVID-19 that must be complied with. Each workplace is unique with regards to, among other things, the space and setup, activities, working methods, types of interaction, etc. Although COVID-19 regulations are legally enforced, it is a good idea to implement a COVID-19 policy and procedure in the workplace to clarify the required behaviour as well as the consequences in cases of non-compliance. In order to be able to apply discipline in the workplace, the employer must implement clear rules and also be able to prove that employees are aware of the rules as well as the consequences if these rules were broken.

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What should be included in the COVID-19 policy and procedure?

  • Availability and use of safety equipment
  • Daily screening
  • Handling of shared facilities, such as a kitchen, bathroom, cafeteria, etc.
  • Procedure when other persons enter the premises
  • Rules with corresponding sanctions

Beware of these pitfalls

It is an established principle in labour law that a violation of the employer’s health and safety policies and procedures will result in disciplinary action and may justify the termination of the employee’s employment. Apply discipline in line with the disciplinary code, but beware of these pitfalls:
  • Be fair and just
  • Act consistently
  • Always follow the correct procedure continuously
Employers should note that failure to comply with the Occupational Health and Safety Act may result in serious consequences such as fines, imprisonment and an order to cease business activities, depending on the nature and seriousness of the offence.

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