Cer­tain benefits may be left be­hind

Em­ploy­ers not keen to pay bonuses to those no longer em­ployed

Business Day - Business Law and Tax Review - - BUSINESS LAW & TAX REVIEW - HUGO PIEN­AAR

AWARD­ING bonuses to em­ploy­ees re­minds de­serv­ing in­di­vid­u­als of their value to the em­ployer and strength­ens the trust and loy­alty in an em­ploy­ment re­la­tion­ship. As the name sug­gests, the in­ten­tion of re­ten­tion bonuses is also to re­tain em­ploy­ees in the ser­vices of the em­ployer.

It fol­lows then that such a gra­tu­ity should in prin­ci­ple not be af­forded to em­ploy­ees who, by their own choice or oth­er­wise, no longer in­tend to work for the em­ployer.

The Labour Ap­peal Court in the case of Apollo Tyres SA (Pty) Ltd v CCMA & Oth­ers [2013], de­fined benefits as “ex­ist­ing ad­van­tages or priv­i­leges to which an em­ployee is en­ti­tled as a right or granted in terms of a pol­icy or prac­tice sub­ject to the em­ployer’s dis­cre­tion”. The de­ci­sion gave em­ploy­ees the op­por­tu­nity to re­fer un­fair labour prac­tices to the CCMA where the em­ployer failed to award such bonuses, even on the ba­sis of pre­de­ter­mined per­for­mance man­age­ment sys­tems, ex­pos­ing em­ploy­ers to a po­ten­tial spike in un­fair labour prac­tice dis­putes.

Are em­ploy­ees en­ti­tled to reten- tion bonuses af­ter they ten­der their res­ig­na­tion?

Res­ig­na­tion is a uni­lat­eral act by an em­ployee which only needs to be com­mu­ni­cated in a clear and un­am­bigu­ous man­ner. In Uthingo Man­age­ment (Pty) Ltd v Shear NO & Oth­ers (2009) the Labour Court made it clear that an em­ployer need not ac­cept the res­ig­na­tion for it to be­come ef­fec­tive. In ad­di­tion, while an em­ployer may hold the em­ployee to the no­tice pe­riod, it is ac­cept­able for the em­ployer to ter­mi­nate the em­ploy­ment im­me­di­ately and make a pay­ment in lieu of the no­tice pe­riod.

The Labour Ap­peal Court also had op­por­tu­nity to con­sider con­trac­tual terms re­lat­ing to ter­mi­na­tion of em­ploy­ment in the re­cent case of Bon­figli­oli South Africa (Pty) Limited v Panaino [2014]. In this mat­ter the em­ployee had signed an ex­ten­sion to a re­ten­tion and re­straint agree­ment.

In this ex­ten­sion the em­ployer in­serted a clause which ex­pressly made the bonus payable sub­ject to the em­ployee re­main­ing in the em­ploy of the com­pany un­til a spec­i­fied date. The par­ties agreed that, for the pur­pose of the con­tract, ter­mi­na­tion in­cluded the em­ployee ten­der­ing his res­ig­na­tion (as op­posed to re­main­ing in the em­ploy of the em­ployer un­til the end of the no­tice pe­riod, the nor­mal po­si­tion). The Labour Ap­peal Court agreed that the em­ployee’s con­tract ter­mi­nated when the em­ployee ten­dered his res­ig­na­tion, as agreed in the con­tract. The court held fur­ther that an em­ployer could make a re­ten­tion bond payable at the end of a spec­i­fied pe­riod with the in­ten­tion of in­cen­tivis­ing em­ploy­ees to stay in its em­ploy for a pe­riod, and that those who re­signed be­fore such pe­riod would not be en­ti­tled to it.

In a sce­nario where a com­pany bonus is payable at the end of De­cem­ber pro­vided that an em­ployee is still em­ployed at such date, and the em­ployee ten­ders his res­ig­na­tion at the end of Novem­ber, or­di­nar­ily the em­ployee should serve the no­tice pe­riod and con­tinue to work un­til the end of De­cem­ber, and thus be en­ti­tled to the ben­e­fit.

The par­ties could, how­ever, agree to a dif­fer­ent dis­pen­sa­tion whereby the em­ployee is no longer en­ti­tled to cer­tain rights (such as a re­ten­tion bonus) when­ever the em­ployee ten­ders her res­ig­na­tion.

Em­ploy­ers may con­sider in­sert­ing a clause in all of their em­ploy­ment con­tracts mak­ing pay­ment of re­ten­tion bonuses sub­ject to em­ploy­ment at the time that the bonus is due in or­der to safe­guard them­selves against un­nec­es­sary pay­ment of bonuses to peo­ple who are no longer in their em­ploy.

In­cor­po­rat­ing a clause that dis- qual­i­fies em­ploy­ees from such a pay­ment upon ten­der­ing res­ig­na­tion could as­sist em­ploy­ers to re­ward those em­ploy­ees who are in ac­tive em­ploy at the cut-off date.

Pic­ture: THINKSTOCK

ALL IN THE TIM­ING Em­ploy­ers may con­sider in­sert­ing a clause in em­ploy­ment con­tracts mak­ing pay­ment of re­ten­tion bonuses sub­ject to em­ploy­ment at the time that the bonus is due

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