Pay cut deemed an unfair dismissal

THE Labour Court found itself having to deal with the issue of an employee who resigned in the middle of the 2020 lockdown following a salary cut.

At the centre of the storm was whether she was constructively dismissed and, if so, whether this was fair, given the pandemic.

A Commission for Conciliation, Mediation and Arbitration commissioner earlier held that the employer, Westcor SA, had made continued employment intolerable for the employee, Tanya Mey. The CCMA ordered Westcor to compensate Mey by paying her six months’ salary. Westcor is a merchandiser of fashion accessories.

Westcor turned to the Labour Court to review the CCMA’s decision.

Mey worked as a jewellery product specialist. When South Africa went into lockdown at the end of March 2020, Westcor employees worked reduced hours and earned reduced wages. All employees consented to the arrangement. In June, Westcor announced that, as from July 1, staff were required to return to full working hours, but they would be paid 75% of their salaries.

Mey said she was unable to accept the salary cut but Westcor said it could not make an exception for Mey, who was the only one resisting the arrangement. Westcor expected employees to unite to “save jobs”.

Mey offered to work 75% of her hours in return for 75% of her salary (so that she could spend the remaining time on a side business, of which her employer was aware) but Westcor said it would, in that case, pay her 75% of her reduced salary.

Mey said her husband had lost his income and the family were struggling to cover expenses and were falling deeper into debt. She said it was unfair to put the burden of the pandemic on staff, whereas the company had performed well the previous year, and had passed on little of the benefit to employees. She recorded that Westcor had said the reduction could go on for months.

Mey resigned. Westcor said Mey could have waited to see whether things would improve.

The court said the CCMA was correct in concluding that Mey was constructively dismissed. It said that just as employees may not resign opportunistically, so employers were expected to refrain from opportunistically taking advantage of their employees’ insecurities in the middle of the uncertainties of the pandemic.

While an employer may have experienced financial distress during the lockdown in response to which a salary cut may have been fair and justifiable, a reasonable factual foundation for such a finding must exist.