I am sure that many employers, HR representatives, labour consultants and employers organisations’ in South Africa have read or heard these words in a referral or at a CCMA/Bargaining Council sitting.
This is a very common request by employees whose services have been terminated and even more so after the amendment of the LRA at the beginning of 2019, broadening the CCMA’s jurisdiction to Section 73A disputes, which are commonly referred to as amounts owing disputes.
We believe that this request, as well as the belief in its validity, comes from previous labour practices and farmworker agreements with employers where farmers would remunerate employees for their service period at retirement.
It must, however, be clearly stated that this is not a requirement in accordance with the current legislation governing employment relationships in South Africa.
In a perfect world, these matters should be vetted by CCMA/Bargaining Council case management when employees refer them. Still, it has become clear that this is not being done and that referrals are being captured and matters are scheduled notwithstanding the lack in prima facie merit.
Taking into account the aforementioned, it does, however, seem as if the Commissioners do explain the situation to employees at the sitting, but the customary attempt to settle the matter is ever-present. The truth of the matter remains that the alleged “payment for years of service” is only applicable under the following circumstances:
Under section 41 of the BCEA (Severance Pay) which states the following under subsection (2):
An employer must pay an employee who is dismissed for reasons based on the employer’s operational requirements or whose contracts of employment terminates or is terminated in terms of section 38 of the Insolvency Act, 1936 (Act No. 24 of 1936), severance pay equal to at least one week’s remuneration for each completed year of continuous service with that employer, calculated in accordance with section 35.
Under section 198B of the LRA (Fixed term contracts with employees earning below earnings threshold) which states the following under subsection (10):
(a) An employer who employs an employee in terms of a fixed-term contract for a reason contemplated in subsection (4)(d) for a period exceeding 24 months must, subject to the terms of any applicable collective agreement, pay the employee on expiry of the contract one week’s remuneration for each completed year of the contract calculated in accordance with section 35 of the Basic Conditions of Employment Act.
(b) An employee employed in terms of a fixed-term contract, as contemplated in paragraph (a), before the commencement of the Labour Relations Amendment Act, 2014, is entitled to the remuneration contemplated in paragraph (a) in respect of any period worked after the commencement of the said Act.
Due to the above, we would, as always, advise that contact be made with CEO to assist in these types of matters at the CCMA/Bargaining Council so that an employer is not persuaded into a settlement where there is no amount owing in regards to an employee’s service period.
On a socio-economic platform, we would advise employers, where financially possible, to have a look at a provident or pension fund scheme for employees to alleviate the financial burden of retirement as many elderly employees are left in the cold after completion of their service, sometimes after many years of employment.
Article by: Jaundré Kruger
Provincial Manager: FS/NC