Upon termination of the employment relationship between an employer and an employee, a final payslip will be issued to the employee, which may indicate certain deductions. These deductions are often met with dissatisfaction and misunderstanding from employees who tend to seek some form of relief. Although certain deductions to an employee’s salary are permitted, employers must comply with the necessary provisions in the Basic Conditions of Employment Act (BCEA) to ensure such deductions are lawful.

Section 34(1) of the BCEA prohibits an employer from making deductions from an employee’s remuneration without the employee’s consent in writing and provides whether the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award. Even if the employee has consented to the salary deduction, sub-section (2) limits the scope of the consent by providing that if a deduction is made to reimburse an employer for loss or damage caused by the employee, it may be done only if:

  1. The loss or damage occurred in the course of the employment of the employee and was due to the fault of the employee;
  2. The employer followed a fair procedure and gave the employee a reasonable opportunity to show why the deduction should not be made;
  3. The total amount of the debt does not exceed the actual amount of the loss or damage; and
  4. The total deduction from the employee’s remuneration does not exceed one-quarter of the employee’s remuneration in money.

Statutory deductions include the Unemployment Insurance Fund (UIF), Pay-As-You-Earn (PAYE), provident fund, and leave pay due to the employer. In terms of Section 34(5) of the BCEA, an employer can also request an employee to pay back wages and money mistakenly paid. These amounts can further be deducted upon the termination of an employee’s employment, should they not have been reimbursed. Staff loans can also be deducted; however, for a loan to be deducted, certain elements should be met, such as the loan ought to be in writing, parties ought to have agreed to the loan amount, the period of the loan, and the repayment period thereof. The loan agreement between the employer and the employee should also include a clause allowing the employer to deduct the entire outstanding amount due at the time of dismissal.

Although Section 77 of the BCEA provides that the Labour Court (LC) has exclusive jurisdiction over all disputes arising from the Act, we still see voluminous referrals to the Commission for Conciliation, Mediation, and Arbitration (CCMA) disputing deductions. This principle was confirmed in the matter of O’Reilly v CCMA and Others JR 2395 19, where the Court held that “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 of the CCMA to adjudicate over deductions made in terms of Section 34, it follows that the only matters that the CCMA may adjudicate are for monies owed to an Applicant in terms of Section 73A, which includes salaries, bonuses, amounts due in terms of the National Minimum Wage Act (NMWA), and any amounts that the employer is obligated to pay in terms of the BCEA, but not deduction disputes.

The O’Reilly judgment thus provides clarity and precedent regarding the jurisdiction of disputes arising from Section 34 of the BCEA. Accordingly, if an employer has deducted an employee’s salary, such a dispute may not be referred to the CCMA. A dispute regarding deductions referred to the CCMA ought to be redirected to the Labour Court by raising a point in limine at the CCMA.

Article By: Takayedza Moyo
Dispute Resolution Official – CEO Pretoria