In an imperfect world where mistakes and human miscalculations sometimes occur, it often happens that an employee receives a salary payment in excess of what is due to them. Employers may find themselves in a situation where a genuine mistake has been made resulting in employees receiving payment that they have not earned. This article discusses the way forward.
In Sekhute and Others v Ekurhuleni Housing Company SOC (J1862/17)  ZALCJHB 318, the applicants had received an erroneous overpayment. The employer, after realising that staff had been overpaid, corrected the error by making certain deductions from the employee’s salaries. Before executing, the employer consulted with the employees and offered a repayment plan which they refused. The employees challenged the employer’s actions on the basis of its HR Policy which prohibits any deductions without an employee’s consent other than statutory deductions, court order or arbitration award.
The Labour court reasoned as follows:
- The employer had made a genuine bona fide error regarding the overpayments.
- In determining whether the employer was within its rights to recover overpayment in the absence of a repayment agreement, it referred to section 34 of the Basic Conditions of Employment act 75 of 1997
- In considering legislation above, it confirmed two types of deductions from an employee’s remuneration
– Deductions for repayment of debt – which require the employee’s consent;
– Deductions not requiring consent (for example, court order, authorised by law or statutory
Section 34(5) of the BCEA provides that an employer may not require or permit an employee to repay remuneration except for overpayments as a result of a calculation error in remuneration. The court confirmed the lawfulness of recovering overpayments from employees. Prior consent from the employee is therefore not required. When interpreting the applicable legislation the court paid due regard to the intention of the legislature in that it intended to permit moneys to be recovered under these circumstances. In furtherance to the above, it held that the employer was permitted to make these deductions regardless its human resources policy.
In another, more recent matter of Jonker v Wireless Payment Systems CC (2010) 31 ILJ 381 (LC), the employee received a monthly vehicle allowance for using her own vehicle in performing her functions. The employee was subsequently provided a company vehicle for this purposes, yet continued to enjoy a benefit that she was not entitled to. The employer erroneously continued paying her a vehicle allowance for almost a year thereafter. The applicant’s services were terminated as a result of operational requirements and was instructed to pay back the amount in two instalments. The employee approached the labour court to recover the initial deduction and applied for an interdict prohibiting any further deductions as a result of the overpayment. The applicant was unsuccessful. The court held that, in general, deductions without consent are prohibited where it is not in terms of the law, court order or collective agreement. However, overpayments are considered an exception to this rule.
Even though these judgements may be reassuring to employers, members are urged to still apply due caution. Section 34(2) of the BCEA would still find application in that deductions may not exceed 25 percent of an employee’s salary.
In addition, employers should always consult with employees before making a deduction from their salary. If possible, concluding an acknowledgement of debt may assist employers with the recovery of overpaid funds.
Article by: Janeske Greef
Dispute Resolution Official – Cape Town