by Christo Bester

A general misconception in the workplace is that employees are entitled to annual bonuses and salary increases. In fact, an employee can only demand such a bonus if it is prescribed as such by means of a Sectoral Determination or a Bargaining Council Agreement applicable to his/her specific sector. Sectoral Determination 13 regulates labour relations in the agricultural sector and does not prescribe any compulsory bonus. Payment of a bonus is consequently totally at the discretion of the employer.

To be able to apply this discretion equitably, it is of the utmost importance that the employer should inform employees, and confirm it in writing, that bonuses will be paid solely at the employer’s discretion in order not to create the expectation that a bonus is automatically included in his/her conditions of employment. It is imperative that the employer evaluates the work performance of the employee on a continuous basis so that this record can be used as motivation in the process of allocating a bonus and/or other forms of remuneration adjustment, if required.

It is compulsory for all employees to execute duties and tasks as agreed on when engaged, and that the work should comply with the determined standards regarding quality and quantity. It is the right of the employer to control workplace conditions regarding below standard execution of tasks.

Bonuses

Payment of a bonus can be a handy incentive to remunerate an employer for excellent execution of work, or as motivation and incentive to improve performance continuously. It is important to convey particulars regarding the terms and conditions for bonuses clearly to employees to prevent possible future disputes and unhappiness.

There are different types of bonuses for which an employee can qualify in the workplace:

A thirteenth cheque

Normally this type of bonus is a condition of employment and the employee may have the expectation of receiving an annual thirteenth cheque as part of his/her agreed remuneration. Should an employer wish to change or discontinue the practice of a thirteenth cheque, the employer has to consult with the employees and reach a new agreement. An employer cannot change conditions of service unilaterally. A viable reason to end the system of a thirteenth cheque would be when the financial situation of the employer no longer allows the payment thereof, and the discontinuation of the thirteenth cheque would be an alternative to personnel retrenchment.

Performance bonus

A performance bonus is granted at the discretion of the employer based on the performance of an employee over a given period of time. This bonus can be payable monthly or annually and may be forfeited if the performance of the employee in question is not up to standard. Employers have to evaluate employees continuously so that any sign of poor performance can be dealt with immediately.

Production bonus

A production bonus is granted at the discretion of the employer according to the production of a section or group compared with production objectives as set by management. It is important that the employer should set and explain objectives in clear terms to employees.

When an employee claims a bonus, the responsibility is on the employer to prove the opposite. For that reason it is critically important that the work performance of employees should be evaluated continuously and that the employer keep records of such evaluation.

Increases

Sectoral Determination 13 determines a minimum wage applicable to the Agricultural Sector. The present wage for farm labourers is R16,25 (hourly), R146,28 (daily, 9 hours per day), R731,41 (weekly, 45 hours per week), and R3 169,19 (monthly, 195 hours per month). A farm worker cannot demand an increase if the employee earns more than the minimum wage. Any increase, except to comply with the determined minimum wage, is dependent on the exclusive discretion of the employer.

Take proactive steps

It is important for employers to take proactive steps to strengthen the employer/ employee relationship. Explicit rules and guidelines in the workplace limit potential misunderstandings and conflict, simultaneously fostering productivity, as well as a positive working environment. We recommend the following:

• Ensure that all employees have written service contracts complying with the applicable labour law provisions and that employees understand the content thereof;
• Apply labour law to your advantage when drawing up service contracts by including proactive clauses which confirm that bonuses are paid according to the exclusive discretion of the employer so that no expectations are created;
• Regularly evaluate the work performance of employees. It is important that the employer keep record of such evaluation as proof that the employer has acted fairly by either or not giving a bonus or increase; and
• Consult regularly with employees to discuss any problems and/or changes in the workplace.

Farmers have to manage many risks on a daily basis. The best way in which a farmer can deal with labour as a risk, is to take proactive steps and ensure that service contracts, a disciplinary code, prescribed procedures and policies are documented and in place, and also that the documentation complies with the applicable labour legislation.