Newsletter – February 2018

Are Employers able to Recover Overpaid Remunerations?

Has it ever happened that you accidentally overpaid some or all of your employees as a result of a calculation error and did not know what to do?

Employees react stating that it was not an error on their side and argue why they must pay for a mistake made by the company. When addressing this problem, Section 34 of the Basic Conditions of Employment must be taken into account – Deductions and other acts concerning remuneration.
Section 34 (1)(a) and (b) clearly states that a deduction can only be made if the employee agrees to the deduction in writing or the deduction is permitted by law, collective agreement court order or arbitration award. Luckily for the employer, the legislature also included Section 34 (5) (a) and (b). Section 34 (5) allows the employer to make a deduction from an employee’s remuneration as a result of overpayment resulting from an error in calculating the employee’s remuneration.

The next question that now arises is, if section 34 (5) permits an employer to make a deduction, is written consent still required from the employee to make the deduction? This question was answered in the matter of Sekhute and Others v Ekurhuleni Housing Company SOC (J1862/17) [2017] ZALCJHB 318.

In this matter, the employer erroneously added the increased contributions to the pension and medical aid scheme to the employees’ remuneration and paid this over to the employees. The employer requested a deduction from the employees, however, the employees alleged that the deductions were unlawful as it was contrary to the employer’s HR policy.

The court found that the employer made a genuine mistake when calculating the remuneration and thus the employer could proceed with the deductions.

To answer the question, should you as the employer accidentally overpay your employees, you can make a deduction without the employee’s consent.

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