The Provision of Benefits and its link to a possible unfair labour practice

One of the most common unfair labour practices relates to the provision of benefits. This category of unfair labour practice is also the most difficult to apply because of the following reasons:

  • The Labour Relations Act does not provide a definition of ‘benefits’,
  • The interpretation given to this term by the courts and arbitrators is quite narrow, and
  • There is confusion when a dispute about a benefit amount to a right dispute or an interest dispute.

The last bullet point above needs further explanation. A dispute regarding an unfair labour practice must amount to a rights dispute. A benefit is considered part of remuneration, and disputes about remuneration are regarded as interest disputes, which must be resolved through industrial actions (strikes).

Legal Implications of Defining Benefits vs Remuneration in Employment Law

For example, in Schoeman v Samsung Electronic SA (Pty) Ltd, the employer changed the employee’s commission structure, and the employee then claimed that this was an unfair labour practice. The court held that the commission received by the employee was not a benefit but was rather part of the employee’s remuneration.

The court, therefore, did not have the jurisdiction to hear the matter, and Schoeman had to rely on strike action to resolve her dispute. This was problematic since a single employee could not strike, which meant that Schoeman had no remedy.

A debate has ensued about the correct interpretation of ‘benefit’ because benefits often form part of remuneration packages, for example, laptop allowances, cell phone allowances and so forth. This ambiguity led to contradictory judgments, for instance, whether provident funds and transport allowance are benefits or remuneration.

A secondary Case Analysis

In Apollo Tyres South Africa (Pty) Ltd v Commission for Conciliation, Mediation and Arbitration and others, the Labour Appeal Court examined the interpretation of a ‘benefit’. In this case, the employer refused to include the employee in an early retirement scheme.

The commissioner and the Labour Court held that an early retirement scheme did not constitute a benefit. The Labour Appeal Court held that a ‘benefit’ in the context of an unfair labour practice should be interpreted to include any benefit to which the employee is entitled even though the benefit results from either the contract of employment, a policy or practise, or a judicial right.

This means that employees who wish to claim that the employer committed an unfair labour practice by denying them benefits do not need to prove a right if they challenge the fairness of the employer’s conduct. The employer who denies the benefit must be able to show a valid reason for excluding the employee from the benefit, in this instance, the early retirement scheme. In this case, it was found that the employer failed to provide a valid reason for excluding the benefit, which amounted to an unfair labour practice.

Employee Benefits in Labour Disputes

Similarly, in the United Association of South Africa obo Members/De Keur Landgoed (Edms) Bpk, the commissioner found that free transport to and from work, which the employer provided for 15 years, constituted a benefit. Consequently, discontinuing such transport by the employer was an unfair labour practice.

The CCMA ordered the employer to reinstate the benefit because the promises made by the employer, together with long-standing practice, made the provision of transport a contractual term.

A wider Interpretation

Considering the nature of modern-day salary packages, it becomes increasingly difficult to separate benefits from remuneration, and these difficulties in defining a ‘benefit’ will stay until the legislature has reviewed the concept.

It seems that the interpretation of a ‘benefit’ is much wider since the Apollo Tyres judgment. Any entitlement unreasonably withheld or taken away by the employer will amount to unfair labour practices. As indicated by the court in Apollo Tyres, an entitlement can arise from the contract of employment, from promises, from workplace practises and policies, and from the law.

Employers are, therefore, best advised to tread carefully when making promises to employees and providing tokens of goodwill if they are not prepared to provide these for the foreseeable future, as employees may very well turn around and refer to an unfair labour practice dispute.

Contact us at 0861 737 263 for assistance or queries regarding benefits or should you require assistance in the implementation or exclusion of workplace benefits.