Do I still have to pay my employees’ salaries?

Understanding the debt collection process
October 12, 2020
Mediate rather than litigate
October 12, 2020

Many employers were left in the dark after the President of the Republic of South Africa declared a national state of disaster in terms of the Disaster Management Act, 2002, and implemented a national lockdown thereafter, as a means of reducing the spread of COVID-19. Employers who did not provide “essential services” were in an extraordinary position and due to the uncertain future, a lot of industries faced immense financial pressure.

Besides the grants the South African government made available to employees during the lockdown, to assist employers with their financial strain, , most employers were still left with the burdensome decision of possibly reducing salaries, retrenchment or finding another means to get through the difficult period. As both former options entail strict procedures, which may be both difficult and costly, the principle of “no work – no pay” became the desirable method of keeping businesses afloat.

On the 3rd of June 2020, the Labour Court handed down a judgement in Macsteel Service Centres SA (Pty) Ltd v National Union of Metal Workers of South Africa and others [2020] JOL 47372 (LC) (“Macsteel”). The case was brought before the court on an urgent basis to make an order regarding the status of an unprotected strike. The Labour Court, in order to address the problem at hand, discussed the options of employers during this national outbreak of COVID-19, with specific reference to the “no work – no pay” principle. Even though the Employer in the matter, did not apply the said principle to its employees and continued to pay its employees in full despite the fact that they were not able to render their services. The court made it clear that the principle would be ideally suited for the current circumstances that employers are facing. The court further held that:

The reality in law is that the employees who rendered no service, albeit to no fault of their own or due to circumstances outside their employer’s control, like the global COVID-19 pandemic and national state of disaster, are not entitled to remuneration and the Applicant could have implemented the principle of ‘no work – no pay’.

The said judgment provided clarity on the matter, especially during these uncertain times.

Ironically enough, on the same day, the High Court of Johannesburg, in Mhlonipheni v Mezepoli Melrose Arch (Pty) Ltd and Others; Lwazi v Mezepoli Nicolway (Pty) Ltd and Another; Moto v Plaka Eastgate Restaurant CC and Another; Mohsen and Another v Brand Kitchen Hospitality (Pty) Ltd and Another (2020/10556; 2020/10555; 2020/10955; 2020/10956;) [2020], did not uphold the “no work – no pay” principle and in fact held that employers have a legal obligation to pay its employees over the COVID-19 lockdown period. The facts of the matter, however, differ from Macsteel.

Even though there seems to be a stalemate regarding the “no work – no pay” principle, especially during the National Lockdown, the Macsteel matter seems to provide better reasoning regarding the hot topic. Due to the immense financial impact of the lockdown and the strict restrictions the government regulated during the lockdown, employers will be able to justify the implementation of the “no work – no pay” principle.

Reference List: 

  • Disaster Management Act, 2002.
  • Mhlonipheni v Mezepoli Melrose Arch (Pty) Ltd and Others; Lwazi v Mezepoli Nicolway (Pty) Ltd and Another; Moto v Plaka Eastgate Restaurant CC and Another; Mohsen and Another v Brand Kitchen Hospitality (Pty) Ltd and Another (2020/10556; 2020/10555; 2020/10955; 2020/10956;) [2020],
  • Macsteel Service Centres SA (Pty) Ltd v National Union of Metal Workers of South Africa and others [2020] JOL 47372 (LC).

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)