13th Cheque/Bonuses 

Payment of 13th cheques and bonuses of any sort is not regulated by labour legislation. There is no statutory requirement in labour law to pay bonuses or a 13th cheque to employees and is thus a contractual issue. Bonuses and 13th cheques are regulated by a contract of employment, internal company policies and/or a collective agreement, and if provision is made for it in any of these agreements or policies, the company must abide by it. 

But what would the situation be if provision is made for a 13th cheque or a bonus in the contract of employment which clearly stipulates that it is at the Company’s discretion and employees have no right and/or entitlement to a 13th cheque/bonus. 

  • If the company has never paid a 13th cheque/bonus to an employee, there is no obligation for the company to pay an employee a 13th cheque/bonus.
  • If the company has established a practice by paying employees’ a 13th cheque/bonus over the past few years, the 13th cheque/bonus payment can be seen as a term or condition of employment. 
  • This “custom and practice” will create the employees to have a reasonable expectation that the Company will continue to pay the 13th cheques/bonuses as it has done in the past. The employees could argue that they expect the payment of the 13th cheque/bonus as a right or entitlement.

13th cheque/bonus payments by the company is a contractual issue and not a labour law issue, except where the non-payment of the 13th cheque falls under the definition of unfair labour practice with respect to the provision of benefits, or may be construed as a unilateral change to terms and conditions of employment.

Whilst the right of expectation does not actually afford the employee the absolute right to demand and to be paid the bonus, it certainly does afford him the right to be heard before the decision not to pay the 13th cheque/bonus is made by the employer.

Should the Company want to change the status quo regarding the payment of the 13th cheques/bonuses, either by paying less, paying at different times of the year, splitting the amount into two separate payments, or discontinuing such payments of 13th cheques completely, the Company will have to consult with the employees, explain the reasons therefore, and try to get them to accept the ‘new system’ that they wish to implement.

Should the Company decide on its own to discontinue or change the structure of the 13th cheques/bonuses, such change will constitute a change to the employees’ terms and conditions of employment. The Company is encouraged to negotiate any change with the employees as this cannot be done unilaterally. Should the Company fail to negotiate the changes that they wish to implement, it could lead to claims of unfair labour practices from the affected employees. 

The Courts are in favour of Companies consulting with employees well in advance. Informing employees 2 weeks before their 13th cheques/bonuses are due that they will not receive it or of any changes made to the structure is deemed to be unfair labour practice.

Should employees refuse to accept the proposed changes after meaningful consultation, the Company can proceed to implement the changes, if it has good sound and reasonable commercial rationale for making the changes. Employees who are disgruntled by the decision will be able to refer an unfair labour dispute matter to the CCMA but will bear the onus of proving that the decision made by the Company was unfair.

Invictus Group is able to assist employers with their labour law challenges. Contact us on 0861 737 263, so our team of experts can provide you with best practice advice and assistance. Should you require any further assistance please don’t hesitate to contact the writer hereof.