During the last few months, we have noticed a concerning trend whereby employers deduct moneys from employee wages without realising that this practice may lead to costly consequences at the CCMA.


Questions that are often asked include “when is this permissible?” “My employee caused me damage as a result of his negligence, do I have recourse to set this off against his salary?” or “What is the worst thing that can happen if I do?”


In recent times, in the light of the current economic circumstances and in the context of the CCMA’s expanded jurisdiction to deal with section 73 matters (or so-called pay-disputes), the tribunal’s caseload has sky-rocketed to an alarming extent. Many of these claims arising out of the Basic Conditions of Employment Act concerns deductions which were made from employee’s wages without due process or without pre-existing agreement.


Section 34 of the Basic Conditions of Employment Act sets out the requirements which need to be adhered to before making any deduction from an employee’s salary. This does not mean that an employer cannot recover damages caused by an employee. The section merely implies that a more hands-on or cautious approach needs to be taken regarding procedure and amounts (quantum) of deductions. The same can be made from an employee’s wages by agreement, subject to certain requirements, or when an employer is obligated to do so by law (in terms of a garnishee, court order, taxes etc).


Legislation and applicable case law

The BCEA specifically codifies the requirements with regards to deductions in respect of damages.  Section 34 (2) permits an employer to deduct from an employee’s remuneration for reasons related to loss or damage subject to the following requirements:

  • the damage must be as a result of the fault of the employee;
  • fair procedure must be followed in that the employee is given a fair opportunity to make representations why the deduction should not be made;
  • the total amount of the debt cannot exceed the loss or damage; and
  • the total deduction does not exceed one-quarter of the employee’s remuneration in money.


In the case of Shenaaz Padaychee and Interpak Books (PTY) Ltd, the Court determined the compliance of a deduction which was made from an employee’s wages due to damages caused where no agreement to such had been concluded.


In casu, the employer left it for the chairperson of the disciplinary hearing to determine the quantum of the damages caused. The Court held that a deduction might only be made from an employee’s wages if fair procedure is followed and an opportunity is afforded for the employee to make representations as to why the deduction should not be made.


In addition, such deduction should be agreed to in writing, does not exceed one-quarter of the employee’s monthly remuneration, and the repayment is in accordance with the actual damage caused. In this case, it was confirmed that the deduction should be paid back in full to the employee on the basis that the employer had not secured an agreement for such and that the quantum had not been justified.


Employee’s recourse for an illegal (or non-compliant) deduction

As addressed by previous CEO articles, the CCMA’s jurisdiction has now been expanded to deal with claims arising out of the contract of employment or the Basic Conditions of employment. To provide for expedient dispensing of justice, the CCMA sets these matters down as con/arbs which cannot be postponed or objected to. Employees reserve the right to refer a Section 73 dispute even if the issue had not been raised with the employer previously. An employee who claims that a deduction had been illegally made from his/her salary and did not comply with section 34 of the BCEA may refer this issue to the CCMA and seek reimbursement for such.


Practical guidelines

The following guidelines are not prescribed by law but go a long way to avoid comebacks at the CCMA, and potentially ensure that disputes are dealt with before they are referred.

  • Paperwork is of utmost importance as documentary evidence is needed to show compliance with the act can avoid costly comebacks at the CCMA. Ensure that where an employee acknowledges debt, such agreement is reduced to writing. Never accept a verbal undertaking to repay or verbal undertaking from an employee that deductions may be made from his/her salary;
  • Ensure that claims for damages are properly quantified before the employee signs the acknowledgement of debt;
  • The contract of employment should be signed at the commencement of employment and provide for all outstanding debts to be made when employment is terminated;
  • Before advancing any moneys, ensure that an acknowledgement of debt is signed by the employee with a witness present. Make sure that it sets out exact payment dates, and the instalment amount does not exceed the threshold of section 34 (does not exceed one-quarter of the employee’s income);
  • Ensure that employees receive their payslips in advance so that they are notified timeously and have an opportunity to make representations or challenge deductions made from their salaries. A process for doing so can be incorporated into the company’s grievance procedures, and employees should be aware of the procedures to follow;
  • Above cannot be a substitute for following fair procedure. Parties can come to an agreement with regards to the employee paying for the damages caused and willingness to do so shows remorse and can be considered as a mitigating factor.


Article by: Janeske Greeff

Dispute Resolution Official – Cape Town