DEDUCTIONS FOR DAMAGES AS A RESULT OF AN EMPLOYEE’S ACTIONS

The Basic Conditions of Employment Act indicates that an employer may deduct damages suffered as a result of negligence or other forms of misconduct committed by the employee  resulting in losses to the company.

Deductions form part of the remuneration of employees and are addressed in section 34 of the Basic Conditions of employment Act, which states that-

“Deductions and other acts concerning remunerations-

1. An employer may not make any deduction from an employee’s remuneration unless–

1. subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or
2. the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.
3. A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only if–

1.  the loss or damage occurred in the course of employment and was due to the fault of the employee;
2. the employer has followed a fair procedure and has given the employee a reasonable opportunity to show why the deductions 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 deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remunerations in money.”

Section 34 does however dictate that an employer may only make deductions from an employee’s remuneration when specific requirements have been met in terms of the Act.

This means that a deduction in terms of section 34(1) may not be made unless the requirements set out in section 34(1)(a) and (b) as well as section 34(2)(b) are met. A deduction from an employee’s remuneration would therefore only be possible if the employee agreed to such a deduction in writing; the deduction is allowed in terms of legislation, a court order or an arbitration award or the company has followed a fair procedure and given the employee an opportunity to show why such deductions should not be met.

The most often implemented and recommended manner in holding an employee accountable for damages suffered would be through following a fair procedure in terms of a disciplinary inquiry where the employee’s actions, the loss suffered, and value of the loss are investigated by an independent chairperson and a finding made thereon.

In order to ensure that such deduction is fair the employer will have to present evidence on the loss suffered in the disciplinary inquiry and certain requirements need to be adhered to for the employee to be held accountable for such loss as per subsection 2 of the Act, which are as follows:

• The loss or damage must have occurred in the course of employment.
• The loss or damage must have been as a result of the fault of the employee.
• The employer must follow a fair procedure and give the employee a reasonable opportunity to show why the deductions should not be made.
• The total amount of the debt may not exceed the actual amount of the loss or damage.
• The total deductions from the employee’s remuneration may not exceed one-quarter of the employee’s remunerations in money (unless expressly indicated otherwise in terms of a main agreement or other relevant legislation).

The employer requiring reimbursement for such loss, will be required to present actual evidence of the loss during a disciplinary inquiry, which can most often be indicated through a quote or invoice for the damages suffered and where applicable an assessment done on the damages and further evidence to indicate that the damages and or loss suffered was as a result of the actions of the employee.

The employer will need to indicate to the employee on the notice to attend through raising the relevant charges that such claim is being made against the employee and as such, Schedule 8 of the Labour Relations Act will be applicable in that the employee should be entitled to a reasonable time to prepare the response (48 hours) and to the assistance of a trade union representative or fellow employee.

It is also advisable that the employer should ensure that in its employment agreement with the employee that it clearly indicates that the employee may be held accountable for damages suffered as a result of their negligent and or intentional actions.

Should a fair procedure be followed, and the employee be given a reasonable opportunity to show why deductions should not be made as described above, then the requirements of Section 34 of the BCEA would be met and the employer would be able to make the deduction based on the Chairperson’s ruling without it constituting double jeopardy.

Invictus Group is able to assist employers with the legalities surrounding deductions from the remuneration of employees. Please contact Invictus Group on 0861 737 263 for assistance.