It frequently occurs that employers make deductions in terms of Section 34(1) of the BCEA. These deductions are usually for staff loans, damages to company property, traffic fines and sometimes the excess arising from an accident. If an employee disputes this deduction, they would ordinarily refer a Section 73A dispute to the CCMA; however, in the recent matter of O’Reilly v CCMA and Others JR 2395 19, it was established that the CCMA lacks jurisdiction to adjudicate such disputes.

Section 34(1) of the BCEA provides that:
“An employer may not make any deduction from an employee’s remuneration unless—
(a) subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or
(b) the deduction is required or permitted in terms of a collective agreement, court order or arbitration award.
(2) A deduction in terms of subsection (1)(a) may be made to reimburse an employer for loss or damage only if—
(a) the loss or damage occurred in the course of employment and was due to the fault of the employee;
(b) the employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions should not be made;
(c) the total amount of the debt does not exceed the actual amount of the loss or damage;
(d) and the total deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remuneration in money.

The above provision regulates how deductions can be made to an employee’s salary, with and without consent. The issue before us, however, is whether a dispute about these deductions can be referred to the CCMA for adjudication. The Basic Condition of Employment Act (BCEA) dealing with claims and disputes is regulated by Section 77 of the BCEA, which provides that the Labour Court has exclusive jurisdiction over such disputes. Section 77(1) provides that: “Subject to the Constitution and the jurisdiction of the Labour Appeal Court, and except where this Act provides otherwise, the Labour Court has exclusive jurisdiction in respect of all matters in terms of this Act”.

Before the recent case of O’Reilly v CCMA and Others JR 2395 19, the position was that any claims regarding monies being deducted from an employee’s salary were usually referred to CCMA under a Section 73A dispute. This dispute would be set down for an unobjected Con-Arb process, and the onus would be on the Applicant to prove that the deduction was unlawful and therefore needed to be repaid. However, in the recent case of O’Reilly, Acting Judge VG Mkwibiso clarified the answer to the question as to whether the CCMA could entertain disputes referred under Section 73A for deductions in terms of Section 34(1). The Judge stated, “There is no provision in the BCEA that says that the CCMA has jurisdiction to determine a claim regarding an alleged breach of Section 34(1) of the BCEA. In the absence of jurisdiction, the employee’s argument that the Commissioner was unreasonable by not upholding her claim is unsustainable and falls to be dismissed.”

It, therefore, stands that the only matters that the CCMA may adjudicate is for monies owed to an Applicant in terms of Section 73A, which includes salaries, bonuses, amounts due in terms of the New Minimum Wage Act, and any amounts that the employer is obligated to pay in terms of the BCEA, but not deductions disputes. The afore-mentioned judgment ultimately provides that where an employer has made deductions to an employee’s salary that is in terms of Section 34(1), any dispute arising out of this deduction cannot be referred to the CCMA. Should such a dispute be referred in terms of Section 73A, a jurisdictional point should be raised affirming that the CCMA cannot adjudicate such disputes, and the same should be referred to the Labour Court.

In considering the above, we should note that compliance with Section 34(1) should nevertheless be implemented in making deductions to an employee’s salary by obtaining their consent in writing or complying with Section 34(2) mentioned above. Compliance with these provisions will prevent the employer from unnecessary expenses and time wastage, as Labour Court processes are expensive and time-consuming. Although the Labour Court ruling finds that the CCMA lacks jurisdiction to adjudicate disputes pertaining to Section 34(1) deductions, we believe that the Bargaining Councils will most likely adopt the same approach when faced with these disputes and issue a jurisdictional ruling referring the matter to the Labour Court. Should you, as an employer, be unsure how to proceed with a deduction to an employee’s salary, please do not hesitate to contact your nearest CEO office to seek professional advice.

Article By: Shannel Arikum
Dispute Resolution Official – CEO Pretoria