The principle of “no work no pay” has been widely discussed and enforced by employers during the Covid-19 pandemic. There has been some confusion regarding the topic, none more so than in our courts.
In the matter of Mhlopheni v Mezepoli Melrose Arch and Others [2020] ZAGPJHC 136 (3 June 2020) the Johannesburg High Court ruled that employees employed by the Mezepoli and Plaka chain of restaurants were in a position to tender their services during the Level 5 and Level 4 stages of the national lockdown, and therefore their salaries were due and payable by the employer. The employer was seen as being indebted, and as they indicated that they were not in a financial position to pay the relevant monies, it led to them being placed into business rescue.
The High Court further held that the regulations for Stage 5 of the National Lockdown were very clear in that employers could not hide from their obligation to pay the salaries of their their employees, “because the list of “essential services” under the Alert Level 5 Regulations included the implementation of payroll systems to ensure timeous payments to workers.”
The High Court stated that the employers were allowed to continue with various forms of limited trade under stage 5, 4 and 3 (such as the sale of cold foods and/or operation on a delivery basis), but chose not to as such limited trade would not be profitable. The High Court ruled that this did not excuse the employers from their obligation to remunerate their employees. The High Court further said that “economic hardship is not categorised as being a force majeure event” as “it does not render performance objectively and totally impossible”.
This judgment has been widely criticised, as it ruled that employees regarded as “non-essential” at the time, were by law entitled to tender their services during the first two stages of lockdown. A review of this judgment has since been suggested by various parties.
In the matter of Macsteel Service Centres SA Proprietary Limited v Numsa & Others (J483/20), the Labour Court fortunately also judged on the issue. The case dealt with an urgent application by Macsteel to attempt a prevention of a strike by Numsa. The judgement dealt much more accurately with the same issue as above. Macsteel was in a position to pay 100% of employees’ salaries for March and April, and 80% of employees’ salaries for May, June and July 2020. They then relied on the TERS-scheme (Temporary Employee Relief Scheme) to make up the balance. The judgment further states that Macsteel was under no legal obligation to pay the employees who were not legally allowed to work. The court further held that employees who “rendered no service, albeit to no fault of their own or due to circumstances outside their employer’s control, like the global Covid-19 pandemic or the national state of disaster, are not entitled to remuneration, and Macsteel could have implemented the principle of ‘no work no pay’.
A detailed analysis of the employer’s position was done, and it was found that where employees rendered 100% of their services, they were entitled to 100% of their salaries. The court further found that the salary reduction to 80% constituted a unilateral change to terms and conditions of employment.
This judgment was welcomed and confirmed the correct approach in law, in that where employees are legally disallowed to perform their duties, the tendering of such services is irrelevant. In such a case, the employer is legally entitled to enforce the principle of “no work no pay”, the reason being that it is legally impossible for both parties to perform.
The latter judgment from the Labour Court should rather be utilised by employers when dealing with the principle of “no work no pay”.