A common misconception exists amongst employers that statutory monies can be withheld from an employee should an employee be dismissed, or that amounts owed by the employee to the employer upon termination of the employment relationship can be set off against the statutory monies the employer owes the employee. This is however incorrect.
Statutory monies are monies that, as required by law, must be paid to an employee regardless of how the employment relationship between an employer and employee is terminated. These monies include salaries, leave pay, notice pay and severance pay. An employer is not entitled to make any deductions from these monies owed to an employee should an employee have any debts due to the employer upon the termination of the employment relationship.
Should there be amounts owed by the employee to the employer, the employer is only entitled to set off these amounts against the statutory monies the employer owes the employee if the employee has given permission to the employer to do so in writing.
In instances where the employee owes the employer any sum of money, a civil claim must be instituted by the employer to recover these amounts.
As an employer is entitled to proceed with a civil claim against an employee for amounts owed, an employee is entitled to approach the Department of Labour to lodge a complaint regarding unpaid statutory monies. The issue then arises for an employer that an inspector of the Labour Department will investigate further into the complaint and will issue an instruction to the employer to pay the outstanding monies by a certain date.
An employee furthermore has the right to make application to the Labour Court for an order instructing the employer to pay all outstanding monies. Should the Labour Court be satisfied that the money is due and owing, the Labour Court shall grant an order instructing the employer to pay the outstanding statutory monies.
It is important to note that the Commission for Conciliation, Mediation and Arbitration (CCMA) does not have the jurisdiction to deal with matters relating solely to statutory monies except in cases where the referral is one of entitlement to severance pay.
The very fact that an employee has been paid all their statutory monies at the time of the termination of the employment relationship does not prevent an employee to refer a matter to the CCMA relating to the termination if an employee elects to do so.
It is of utmost importance that employers are aware that as statutory monies are accorded to employees by law, the payment of outstanding statutory monies at the time of termination of employment cannot be deemed to be a way of settling a dispute where an employee has referred a matter to the CCMA should the employee have been dismissed.
In conclusion, employers are advised to ensure that all statutory monies owed to an employee are paid upon the termination of the employment relationship and that documentation confirming such payments are kept due to the fact that an employer may face severe implications for not adhering to the law.
Article by: James Guthrie-Strachan
CEO Dispute Resolution Official – Durban