Demotion is defined as a reduction of dignity, importance, responsibility, power or status of an employee even if his or her salary and benefits and rank are retained. 28. of salary and benefits at the time of JF Kern’s departure that he would have had a legitimate claim of demotion at the time of the reduction of salary and when other conditions occurred”. Do you know when it is legal to make a pay deduction from a salary in South Africa? However, if the employer attends to a full and proper investigation and there is still no real or justifiable reason for concern or fear about contracting the virus (e.g. In terms of Ngxowa v Sebenza Manufacturing System [2009] 11 BALR 1122 (MEIBC], a demotion occurs when the employer diminishes the status of the work or responsibilities of an employee even when their remuneration remains the same. Inform employees of any salary reductions before changing their pay rate. JR1658/01 Award Date 26 Sept 03 Jurisdiction Labour Court Jhbg Judge Judge Ndlovu Subject Review: Grievance Unfair Labour Practice Unfair Demotion … 5. It can arise through the reduction of salary, change in terms and conditions of employment and indeed transfer. Reduction of an employee's salary is often a consequence of the employer's decision to demote the employee for some reason. In the case of a dismissal for operational requirements, an employer may suggest that the employee consider accepting a more inferior position to the one previously held, with a reduction of salary as an alternative to retrenchment. Should such refusal of demotion, as opposed to retrenchment be unreasonable, the employee will not be entitled to severance pay in terms of Sub-Sections 41(2) and 41(4) of the Basic Conditions of Employment Act 75 of 1997. Demotion may be one of the ways to assist employers with financial issues due to COVID-19:Demotion can occur in the following ways: The employer gives the employee a letter stating that he/she has been demoted due to:• The employee’s pay and/or responsibilities are reduced. As employee costs spiral and the economy labours, more and more employers are facing difficult business decisions.One option that might be preferable to downsizing is to consider asking staff to work short-time or take a pay cut. Demoting an employee can only be done under certain conditions. Demotion may be one of the ways to assist employers with financial issues due to COVID-19: Demotion can occur in the following ways: The employer gives the employee a letter stating that he/she has been demoted due to: The employee’s pay and/or responsibilities are reduced. overtime, salary and/or wage bill costs. South Africa Law. This is a difficult situation to navigate, because refusing to take the pay cut could mean losing your job altogether. If the employee earns below the income threshold a complaint can be lodged with the department of labour. Demotion may be one of the ways to assist employers with financial issues due to COVID-19: Demotion can occur in the following ways: The employer gives the employee a letter stating that he/she has been demoted due to: *The employee’s pay and/or responsibilities having been reduced. A salary reduction is when you reduce the salary of all - or a group - of your employees to reduce the overall payroll costs of your organization. The Basic Conditions of employment Act allows only certain deductions from salary for debt and damages caused to the employer. I understand that this voluntary demotion will result in a decrease in salary and per our recent discussion, my new annual salary will be $52,000. There is little room on a R50 pm policy for advisers to be remunerated for the time it would it would take to educate & fulfil admin function. The employees must, in principle, agree to the salary changes. Should an employee refuse the demotion, the employee will be entitled to severance pay, as long as the reason for refusal is justifiable. There was a target to reduce expenses by R68 000 000.00 (sixty eight million rands) which meant that the company had to achieve a 10% reduction of its entire expenditure.5 29. ... News From Africa. Such payments are however granted to employees at the discretion of the employer. Pay Deductions and work agreement, Payroll Deductions and contract, pay deductions and wages. The main reason for this is that a person would rather have a job with less money than no job at all. The change made may be in the form of a sudden reduction in salary for some or other reason, changes to commission structure or a reduction in the amount of commission paid, the removal of or reduction in some other benefits such as a bonus, or something of that nature. *Apply any other corrective measure that he/she deems to be appropriate. Many large South African employers, … Demotion and payroll Sometimes a demotion comes with a reduction of pay. Mywage.co.za. The employees must, in principle, agree to the salary changes. A number of international and local companies have requested that their employees work from home due to the dire consequences of the COVID-19 coronavirus pandemic. Demotion as an alternative to retrenchment – one way to assist employers with the COVID-19 outbreak ... with a reduction of salary as an alternative to retrenchment. ArcelorMittal South Africa has announced short-time and salary reductions for all employees with effect from April 2020. It is sometimes negotiated and agreed to at the start of the employment relationship and the terms are embodied in the employment contract. ... "My boss says he is going to take R50 off my salary each month for expenses in the workplace, such as coffee, tea etc. This, in turn, led to even senior management having to agree to a salary reduction of 10%. If an employee is not sick and still willing to attend work, but it is a direct instruction from their employer to remain at home, such employees will still be entitled to earn and receive their normal salary and benefits.3. Should an employer demote an employee without affording the employee the right to be heard, it could amount to an unfair labour practice with the employer being liable to the employee for either reinstatement or compensation. Your employer can offer a demotion with reduction in pay as alternative to dismissal. If, however, the employee has travelled to an “at risk” area or has been in direct contact with people who have the COVID-19 disease, the employer may consider flexi/remote working, unpaid leave or sick leave if the employee is sick. As South African cases of the Covid-19 ... they are advised to take all labour law considerations into account before imposing demotion on an employee. ... Demotion may be one of the ways to assist employers with financial issues due to COVID-19: Demotion can occur in the following ways: ... with a reduction of salary as an alternative to retrenchment. If you are reducing a demoted employee’s wages, make sure you tell the employee first. Heard: 29 October 2015. In … • An employee acting temporarily in one position gets transferred back to his/her old position. Improving the knowledge and skills of South Africa’s teachers is an important part of strengthening our education system. Although the reason for the demotion and salary cut was seen as fair, the demotion and salary cut itself was not. Despite trying circumstances, employers are advised to take all labour law considerations into account before imposing a demotion on an employee. as an alternative to retrenchment. … A demotion usually means a reduction of the responsibility or power or status which an employee previously enjoyed. An employer cannot just say: ‘I’m going to demote her because she […] A refusal to pay salary is breach of contract and contra to the BCEA. All rights reserved. And even without a reduction in salary, a transfer may in itself constitute a demotion. These include: 1. You Share, We Compare. Since a Demotion without consent is a repudiation of the employment contract, it, therefore, entitles the employee to sue for breach of contract. She earned R12 000 per month. Can an employer drop the current salary of an employee for the following reasons demotion, succession planning, poor - Answered by a verified Lawyer ... where the husbond is General Manager in a Private Game Reserve in South Africa with app. There are many reasons that could result in lawful demotions. A pay cut is a reduction in an employee's salary. Pay cuts are often made to reduce layoffs while saving the company money during a difficult economic period. This means a demotion cannot be imposed unilaterally by an employer without consulting with the employee. The … ... with a reduction of salary as an alternative to retrenchment. If they have reduced your salary without you agreeing to, that is what is called a unilateral change of the terms of the agreement and would therefore be illegal and unenforcible. Can an employer drop the current salary of an employee for the following reasons demotion, succession planning, poor - Answered by a verified Lawyer ... where the husbond is General Manager in a Private Game Reserve in South Africa with app. years earlier. If an employee refuses to attend work because of concerns of contracting the virus (given the declaration of a disaster by President Cyril Ramaphosa), each case should be dealt with based on its own merits. What is the solution? As previously mentioned, the legal way to make changes to an employee’s salary is in consultation with them. The employee must have agreed to the deduction. A demotion occurs if changes to the employee’s conditions of employment are such that they result in a material reduction of the employee’s remuneration, responsibility or status. This may assist with small, medium and large businesses having to accommodate the financial distress that the COVID-19 has and will still bring to the economy of South Africa.Remember, consultation aimed at seeking alternatives to retrenchment is imperative.Please note, this content does not constitute legal advice and you are advised to seek professional assistance. South African companies hit by coronavirus could consider demotion rather than retrenchment South Africa turns to IMF and World Bank for … In view of the above decision employers should never implement demotion before obtaining the appropriate labour law advice as to: 1. The main reason for this being that in most cases a person would rather have a job with less money than no job at all. Hoffmann v South African Airways [2000] 12 BLLR 1365 (CC): “…An order of instatement, which requires an employer to employ an employee, is a basic element of the appropriate relief in the case of a prospective employee who is denied employment for reasons declared impermissible by the Constitution. Complete our Salary Survey and Win a Wage! In Plaatjies vs RK Agencies (2005, 1 BALR 77) the employer offered the employee an alternative position at a lower salary due to the fact that the employer had lost a major contract. Demotion may be one of the ways to assist employers with financial issues due to COVID-19: ... with a reduction of salary as an alternative to retrenchment. Improving the knowledge and skills of South Africa’s teachers is an important part of strengthening our education system. Together with this diminished power is the loss of the dignity of the employee and of course more often than not a drop in salary. Section 186(2)(a) of the Labour Relations Act 66 of 1995 provides that any act or omission involving the unfair conduct of the employer in relation to demotion constitutes an unfair labour practice. The demotion and reduction of remuneration are within reasonable ranges. As a disciplinary measure;2. as an alternative to dismissal for incapacity; and3. [33] It should be noted that this case is different to those cases where an employee in anticipation of the outcome of a disciplinary hearing resigns. This may assist with small, medium and large businesses having to accommodate the financial distress that the COVID-19 has and will still bring to the economy of South Africa. IN THE LABOUR COURT OF SOUTH AFRICA HELD AT PORT ELIZABETH REPORTABLE Case Number: P284/09 ... transfer was not to affect his salary and benefits. As the employee moves into their lower ranking position, their pay decreases as well. • The employee’s subordinates are taken away.• The employee is required to report to someone who used to report to him/her. However, did you know that demotion can also mean a reduction of a person’s dignity, even if the salary … Wrongful demotion occurs when an employer unlawfully bases the decision to demote an employee on discriminatory reasons. Together with this diminished power is the loss of the dignity of the employee and of course more often than not a drop in salary. Should an employee refuse the demotion, the employee will be entitled to severance pay, as long as the reason for refusal is justifiable. An employer should always consider a demotion as an alternative to retrenchment. Senior Associate at Christodoulou & Mavrikis Inc and the head of the Labour Law Department. Complete our Salary Survey and Win a Wage! Advertising. 28. The Basic Conditions of employment Act allows only certain deductions from salary for debt and damages caused to the employer. If a movement leads to a reduction in status, such is a demotion, irrespective what the employer may wish to term it. ... with a reduction of salary as an alternative to retrenchment. The reason for this is that should the CCMA or bargaining council find the demotion to be unfair the commissioner has the right to: *Reinstate the employee into the position from which he/she was demoted. The company demoted me to a position with lower salary … How to give affordable and appropriate financial advice to the low income market segment. An employer may look to demote an employee as an alternative to dismissal after If, however, the employee has travelled to an “at risk” area or has been in direct contact with people who have the COVID-19 disease, the employer may consider flexi/remote working, unpaid leave or sick leave if the employee is sick. While the arbitrator accepted this as a valid reason, the demotion was still unfair because the employer had failed to consult with the employee before making the offer. He then referred a dispute to the third respondent as a demotion within the contemplation of Section 186(2) of the Labour Relations Act as amended. Demotion may be one of the ways to assist employers with financial issues due to COVID-19: Demotion can occur in the following ways: The employer gives the employee a letter stating that he/she has been demoted due to: • The employee’s pay and/or responsibilities are reduced. ... with a reduction of salary … This may assist with small, medium and large businesses having to accommodate the financial distress that the COVID-19 has and will still bring to the economy of South Africa. A refusal to pay salary is breach of contract and contra to the BCEA. If an employee is not sick and still willing to attend work, but it is a direct instruction from their employer to remain at home, such employees will still be entitled to earn and receive their normal salary and benefits. This may assist with small, medium and large businesses having to accommodate the financial distress that the COVID-19 has and will still bring to the economy of South Africa. Post-Covid-19 business success is not about navigating the new normal, it’s about defining it. For instance if the employee has a particular health issue that would make them particularly vulnerable to the disease, this must be taken into consideration, or. Demotion is defined as a reduction of dignity, importance, responsibility, power or status of an employee even if his or her salary and benefits and rank are retained. South Africa’s new 2021 school calendar will come at a big cost Government plans more long-term rules for travel, weddings, and rentals in South Africa More … While the arbitrator accepted this as a valid reason, the demotion was still unfair because the employer had failed to consult with the employee before making the offer. Copyright © 2021 LexisNexis. Employers must always obtain the employee’s consent to a demotion, in writing, as it entails the changing of an employee’s terms and conditions of employment. The Demotion of Workers must be Procedural - South Africa The Labour Relations Act makes provision for the demotion of an employee in the right circumstances. The demotion and reduction in salary is a drastic step in particular when done without the consent of the employee. The procedure to be followed in implementing a fair demotion. … However, if the employer attends to a full and proper investigation and there is still no real or justifiable reason for concern or fear about contracting the virus (e.g. If an employer cuts pay without notifying an employee, it can be considered a breach of contract, depending on … South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. Section 186(2)(a) of the Labour Relations Act 66 of 1995 provides that any act or omission involving the unfair conduct of the employer in relation to Demotion constitutes an unfair labour practice.There are three contexts in which Demotion arises and such are:1. Demotion as an alternative to retrenchment. Should employees be forewarned about salary cuts? RELX Group and the RE symbol are trade marks of RELX Intellectual Properties SA, used under license. Demotions, that is the reduction in an employee’s job grade (or rank) and status, can be a tricky area for employers. There are three contexts in which demotion arises and they are: In Piki and Development Action Group Inc (2002) 23 ILJ 609 (CCMA)the CCMA held that an employer is not permitted to unilaterally change the employment conditions of the contract of employment without the employee’s consent. Y A demotion is a reduction in position, rank or grade, or a movement to a lower type of position, which may or may not be accompanied by a reduction in salary, as a result of a transfer. During these desperate times, desperate measures are … In Plaatjies vs RK Agencies (2005, 1 BALR 77) the employer offered the employee an alternative position at a lower salary due to the fact that the employer had lost a major contract. COVID19: What will my medical scheme pay for? A demotion usually means a reduction of the responsibility or power or status which an employee previously enjoyed. A salary reduction can’t occur unless you notify the employee of the pay cut first. South Africa Law. South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. Since a demotion without consent is a repudiation of the employment contract, it, therefore, entitles the employee to sue for breach of contract. The employee must have agreed to the deduction. How much will depend on the circumstances. Should an employer demote an employee without affording the employee the right to be heard, it could amount to an unfair labour practice with the employer being liable to the employee for either reinstatement or compensation. With some employees also opting to self-quarantine, there are a number of labour law considerations that South African businesses will have to consider. As Mr Moyle had not been dismissed at the employer's initiative, it was not necessary for the Full Bench to decide whether there had been a "significant" reduction in the employee's remuneration or duties for the purposes of the exception in s386(2). There is no requirement under South African employment legislation for employees to receive these payments. However, many employers unjustly demote their employees based on discrimination. The reason for this is that should the CCMA or bargaining council find the demotion to be unfair the commissioner has the right to: • Reinstate the employee into the position from which he/she was demoted;• award the employee compensation;• apply any other corrective measure that he/she may deem to be appropriate. The demotion and reduction of remuneration are within reasonable ranges. South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. South African workers will still be entitled to payment, should their employer ask them to remain at home during this crisis. In different circumstances alleged demotions can occur in numerous ways including: The employer gives the employee a letter stating that he/she has been demoted The employee’s pay and/or responsibilities are reduced The employee’s subordinates are taken away KEEP UP TO DATE WITH ALL THE IMPORTANT COVID-19 INFORMATION, Customer experience in the ‘now’ generation, How to keep brokers out of the firing line, Getting to grips with contractual versus delictual liability, International trusts and tax consequences, The COVID-19 pandemic and medical schemes, Affinity Health Talks About Long Covid And How To Manage The Effects. There was a target to reduce expenses by R68 000 000.00 (sixty eight million rands) which meant that the company had to achieve a 10% reduction of its entire expenditure.5 29. When a demotion occurs, and the previous salary is considerably above what other people in the new position are making, a pay cut makes sense. The most obvious cost-cutting mechanism is persuading employees to agree to a reduction in salary. While salary cuts and reduced working hours are realities many South Africans are facing currently, another mechanism employers can implement is to allow employees to identify what their suitable blend between cash and benefits are, based on their individual needs. If there is a reasonable concern that an employee may contract the virus while attending work, the employer must attend to an immediate investigation on an urgent basis. I am also aware that my request will require a six-month waiting period before consideration for a salary adjustment or rate increase. Remember, consultation aimed at seeking alternatives to retrenchment is imperative! This means a demotion cannot be effected unilaterally by an employer without consulting with the employee. Although the reason for the demotion and salary cut was seen as fair, the demotion and salary cut itself was not. if there is a reasonable concern that an employee may contract the virus while attending work, the employer must attend to an immediate investigation on an urgent basis. In Piki vs Development Action Group, the CCMA held that an employer is not permitted to unilaterally change the employment conditions of the contract of employment without the employee’s consent. She advises clients and appears at the Labour Court, CCMA and Bargaining Council, and disciplinary hearings and settlement negotiations where necessary.Kayla has completed a Labour Law Practice Course accredited by Wits University, attaining the top mark in the country. [34] In my view, the arbitrator misconstrued the juridical concept of demotion. 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