The impact of Covid-19 in the workplace

The COVID-19 pandemic has had a devastating effect on the financial wellbeing of various companies worldwide. South Africa has not been spared the wrath of the virus and as such employers are being called upon to take drastic measures to save their businesses and the jobs of thousands of workers. Employees are concerned about their job security and the recent downgrade of South Africa’s credit rating to “junk status” by Moody’s has brought more panic to a thinly stretched financial business infrastructure. This article will cover a brought aspect of concerns regarding employer- and employee rights in the category of essential/non-essential workplace.

1) Essential and non-essential businesses

In terms of the regulations issued under Disaster Management Act 57 of 2002 (Hereinafter referred to as “the DMA”) there is a distinction drawn between businesses which offer essential goods or services and businesses which do not offer essential goods and services.

Employers who provide essential goods or services may require their employees to work as usual during the nationwide lockdown.  If an employee’s work falls under an essential category, he/she must have a permit in terms of the prescribed form in the regulations. The onus rests with employers to provide employees with such permits to enable them to travel to work and to ensure that the Employer itself is also in possession of the relevant essential service permit as issued by CIPC.

Essential Services are defined in Section 213  the Labour Relations Act 66 of 1995 (Hereinafter referred to as “the LRA”)as follows:

• A service the interruption of which endangers the life, personal safety and health of the whole or part of the population;
• The Parliamentary service;
• The South African Police.

The above is by no means an exhaustive list and has been extended in terms of regulations published in the Government Gazette published on the 25 March 2020, as at Annexure B to Regulation 11A and was further amended on the 2 April 2020.

If an employer doesn’t provide essential services or goods, it cannot legally force employees to work during the current nationwide lockdown, however, two exceptions exist to the aforementioned, namely:

• an employer can require certain employees in terms of Regulation 11B(4) of the Disaster Management Act[1] to report for duty under exceptional circumstances, such as employees that perform duties related to the maintenance of the workplace; and
• employees who are able to work from home may also be required to continue to do so during the lockdown period.

2) The effect of being a non-essential services on the basic conditions of employment.

The legislation that sets out the basic conditions for all employees is the Basic Conditions of Employment Act 75 of 1997 (Hereinafter referred to as “the BCEA”). The BCEA regulates employment related aspects such as work hours, leave, payment of remuneration, termination of employment contracts and provides methods of enforcing its provisions.

The purpose of the BCEA is captured in section 2 of the said act and read as follow:

“2. The purpose of this Act is to advance economic development and social justice by fulfilling the primary objects of this Act which are—

• to give effect to and regulate the right to fair labour practices conferred by section 23( 1 ) of the Constitution—

(i) by establishing and enforcing basic conditions of employment; and

(ii ) by regulating the variation of basic conditions of employment;

• to give effect to obligations incurred by the Republic as a member state of the International Labour Organisation.”[2]

In terms of Section 3 of the BCEA, the Act is applicable to all employees, employers and persons undergoing vocational training.[3] Therefore, the BCEA has a direct and substantial impact on employers/employees and the decisions which will be made during the lockdown period. The question however is, what can an employer reasonably expect from his/her employees accordingly to the provisions of the BCEA?

[1] 398 of 2020

[2] Section 2 of the BCEA

[3] Section 3 of the BCEA

2.1) Deduction/Reduction of an employee’s remuneration

A deduction or reduction of an employee’s remuneration is one of the many options which an employer can use to save his/her business. Deductions of remuneration is regulated by section 34 of the BCEA. In the event that the employees are categorised as public servants, the BCEA must be read together with section 34 of the Public Service Act 103 of 1994 (hereinafter referred to as “the PSA”). Section 34 of the BCEA reads as follows:

“34. ( I ) An employer may not make any deduction from an employee’s remuneration

unless—

• subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or
• the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.”[4]

Section 34(1) of the amended PSA reads as follows:

“34. Section 38 of the principal Act is hereby amended— (a) by the substitution for subsection (1) of the following subsection:

“(1)(a) If an incorrect salary, salary level, salary scale or reward is awarded to an employee, the relevant executive authority shall correct it with effect from the date on which it commenced.

Paragraph (a) shall apply notwithstanding the fact that the employee concerned was unaware that an error had been made in the case where the correction amounts to a reduction of his or her salary.”[5]

Section 34(1) of the BCEA, subject to proper consultation with the employee, therefore enables an employer to make deductions from the remuneration which an employee will receive. However, such deductions must comply with a written agreement between the employer and employee, or, where the deduction is permitted by law, a collective agreement, a court order or an arbitration award.  Employers are entitled to make salary deductions in certain instances where employees are indebted towards the employer but this instance would in all likelihood not be applicable as a result of the COVID-19 regulations being applied by an employer.

[4] Section 34 of the BCEA

[5] Section 34 of amended PSA

Section 34 (2) of the BCEA, however, allows the employee to be given the reasonable opportunity to show his/her employer why the intended deduction should not be made.[6] It places a responsibility on the employer to ensure that fair procedure is followed which provides an employee with opportunity to make representation on why deductions should not be made.

The question that arises out of the implementation of section 34 of the BCEA, is whether an employer can rely on the “no work, no pay “principle and whether the said section applies when an employee does not report for duty.

The following was highlighted by the Court in Coin Security (Cape) v Vukani Guards & Allied Workers’ Union 1989 (4) SA 234 (C) at 230I:

“The employee is under an obligation to work and the employer is under an obligation to pay for his services. Just as the employer is entitled to refuse to pay the employee if the latter refuses to work, so the employee is entitled to refuse to work if the employer refuses to pay him wages which are due to him.”

Legally, an employer may implement the “no work, no pay” principle during the lockdown. However, implementation thereof is subject to each employer-employee relationship depending on the terms of the employment contract. If the employment contract includes a force majeure (act of God) clause, it is likely that the employer is able to implement the principle of “no work, no pay”. If not, the common law principle of impossibility of performance is applicable, which means that the employer can still legally implement no-work-no-pay.

In light of the above, an employer can change the terms and conditions of employment through consultation and negotiation with its employees. An employment contract can be varied relating to salary reduction and/or  bonus waiver or reduction during the lockdown period. As regulated in terms of Section 34(2) of the BCEA, the employer is obligated to ensure that a fair procedure is followed when considering deductions/reductions of remuneration. It is therefore important that employers consult with their employees regarding the issue being faced. This will prevent unilateral implementation of changes to the employment terms and conditions. If consensus is not reached then an employer may only consider and initiate retrenchment procedures if needed (see below).

[6] Section 34 of BCEA

2.2) Forced leave

In terms of the BCEA, each permanent employee is entitled to leave which consists of sick leave, annual leave, maternity leave, family responsibility leave. In light of the lockdown, annual leave and sick leave are considered to be two basic conditions of employment which will be influenced the most by the pandemic.

Annual leave is regulated by section 20 of the BCEA and reads as follows:

“20. (1) In this Chapter, “annual leave cycle” means the period of 12 months’ employment with the same employer immediate! following-

• an employee’s commencement of employment: or
• the completion of that employee’s prior leave cycle.

(2) An employer must grant an employee at least—

• 21 consecutive days’ annual leave on full remuneration in respect of each annual leave cycle; or
• by agreement, one day of annual leave on full remuneration for every 17 days on which the employee worked or was entitled to be paid;
• by agreement, one hour of annual leave on full remuneration for every 17 hours on which the employee worked or was entitled to be paid.”[7]

In light of Section 20 of the BCEA, an employee may be requested by the employer to take annual leave from his/her annual leave credits. The aforementioned is however not recommended and employers should utilise the financial assistance that the government has placed at their disposal through the various relief schemes.

Sick leave is regulated in terms of Section 22 of the BCEA and reads as follow:

“22. (1) In this Chapter. “sick leave cycle” means the period of 36 months’ employment with the same employer immediately following—

(a) an employee’s commencement of employment; or

(b) the completion of that employee’s prior sick leave cycle.

(2) During every sick leave cycle, an employee is entitled to an amount of paid sick leave equal to the number of days the employee would normally work during a period of six weeks.

(3) Despite subsection (2), during the first six months of employment, an employee is entitled to one day’s paid sick leave for every 26 days worked.”[8]

For example, an employee who works five days a week will be entitled to 30 days’ sick leave during his/her 36 months of employment.

[7] Section 20 of the BCEA

[8] Section 22 of the BCEA

An employer may request a medical certificate if an employee has been absent from work for more than two consecutive days or on more than two occasions during an eight-week period. If the employee fails to provide a medical certificate stating that he/she was unable to work, the employer may refuse to pay an employee for sick leave.

If an employee is absent from work due to a prolonged illness, such as the COVID-19 virus, alternatives must first be explored before considering dismissal. In terms of Schedule 8 of the Code of Good Practice on Dismissal, an investigation to the extent of the illness of the employee must be conducted by the employer to determine if said is temporary or of permanent nature. Factors which will be taken into account are as follows:

• The seriousness of the illness;
• The period of absence;
• The nature of the employee’s job;
• And if temporary replacement can be secured.

An employee is required to partake in the process and should be given the opportunity to provide recommendations. If the employer follows the above procedure and no alternative to dismissal is found, only then may dismissal be considered.

2.3) Retrenchment

One of the processes to be considered by employers is retrenchment. Retrenchment is a form of dismissal that is not based upon any fault of an employee and is a process in terms of which an employer reviews its business needs in order to increase profits and limit its losses, which process could include the reduction of the employer’s staff compliment.

Employers are allowed to retrench employees due to operational requirements which can be based upon the economic, technological or structural needs of employers. The COVID-19 pandemic has no doubt caused many employers to suffer economic losses and accordingly they need to restructure their business.

The retrenchment process is regulated by Section 189 of the LRA.

Section 189(1) as read with Section 189(2) of the LRA requires the employer to arrange consultations with certain interested parties with the view of reaching consensus on aspects such as measure to avoid possible dismissals, minimise the number of dismissals, change the timing of dismissals and mitigate the adverse effect of dismissals.

Section 189(3) of the LRA requires to employer to issue a written notice inviting the other consulting parties, which would include employees, to consult with the employer. The notice must be in writing and disclose all relevant information including, but not limited to, the following information:

• The reasons for the proposed dismissal;
• The alternatives the employer considered before proposing the dismissals and the reasons for rejecting the alternatives;
• The number of employees likely to be affected and the job categories in which they are employed;
• The proposed method for selecting which employees to dismiss;
• The time when, or the period during which, the dismissals are likely to take effect;
• The severance pay proposed;
• Any assistance that the employer proposes to offer to the employees likely to be dismissed;
• The possibility of future re-employment of the employees who are dismissed;
• The number of employees employed by the employer; and
• The number of employees that the employer has dismissed for reasons based on operational requirements in the preceding 12 months.

The employer, in terms of Sections 189(5), 189(6) and 189(7) must allow any consulting party to make representations during the consulting process, respond to the representations made especially in the event that an employer does not agree with the representations and must select the employees to be dismissed based on selection criteria.

The selection criteria must:

• Be agreed to by the consulting parties; or
• If no criteria has been agreed, the criteria must be fair and objective.

In the event that an employer employs more than 50 employees the retrenchment process is categorized as a large scale retrenchment and is also regulated by Section 189A of the LRA.

In terms of the aforesaid Section a facilitator needs to be appointed to facilitate the consultation process of the consulting parties.

A facilitator can be appointed by:

• The employer by way of a request to the Commission for Conciliation, Mediation and Arbitration (Hereinafter referred to as “the CCMA”) in the employer’s notice in term of Section 189A(3)(A) of the LRA;
• Within 15 days of receiving the Section 189(3) notice, the representative of the majority of the employees who the employer contemplates dismissing, may request the appointment of a facilitator and notify the CCMA; or
• The parties can agree to the appointment of a facilitator.

In terms of Section 189A(7) of the LRA, the employer would only be able to give notice of termination once a period of 60 days has lapsed, which is calculated from the date upon which a notice in terms of Section 189(3) is issued. It should however be noted that if the 60 day period lapses before the consultations have been completed the employer may not provide notice of termination until such a time as the consultation process has been exhausted.

The Covid-19 pandemic is declared a national disaster which neither the employer nor or the employee has control over. Many employees will not be permitted/able to tender their services and the employer is therefore faced with a complexed financial problem which must be resolved within the provisions of the BCEA and the LRA.

The requirements as addressed in this article are not an exhaustive list and we would accordingly advise employers/employees to contact our offices and utilise the services of one of our specialist attorneys to assist with this often complex process.

The requirements of the LRA and the BCEA have not been suspended due to the COVID-19 pandemic and as such employers are still required to comply with the procedures pertaining to retrenchments, reduction/deduction of remuneration and forced leave. The failure to do so could lead to a wave of unfair dismissal claims against the employer which would only further impact on the employer’s precarious financial position.

Should you require our assistance you are welcome to contact one of the following attorneys:

Pieter Walters                                                            Nel de Jager                                    

Cell:  082 858 3817                                                        Cell:  082 685 6212

E-mail:  pieter@nvsinc.co.za                                       E-mail:  dejager@nvsinc.co.za

Sources

• Books

Juta and Company (Pty) Ltd Workplace Law (Juta Claremont 2014)

• Legislation

Basic Conditions of Employment Act 75 of 1997

Amended Public Service Amendment Act 30 of 2007

• Internet sources

Department of Employment and Labour 2020 Employee leave during Coronavirus COVID-19 https://www.gov.za/nr/speeches/employee-leave-during-coronavirus-covid-19-26-mar-2020-0000

R Bregman, S Moodley and J Lessing 2020 Employers and COVID-19 http://www.derebus.org.za/employers-and-covid-19/

S Johnson and S Robb 2020 Covid-19: What are your rights as an employee? https://www.groundup.org.za/article/covid-19-knowing-your-rights-employee/

H Pienaar and R Kok 2017 ‘No work, no money’ upheld in recent judgement https://www.bizcommunity.com/Article/196/548/161530.html

C Schwenn 2020 Answers to some common COVID-19 related questions – rights,

obligations and tips for employers, employees and businesses https://www.mylexisnexis.co.za/Index.aspx

Government Gazette 2020 Disaster Management act, 2002: Amendment of regulations issued in terms of section 27(2) https://www.gov.za/sites/default/files/gcis_document/202003/4314825-3cogta.pdf

SAFLII 2017 Mpanza and Another v Minister of Justice and Constitutional Development and Correctional Services and Others (JS708/14) [2017] ZALCJHB 48; (2017) 38 ILJ 1675 (LC); [2017] 10 BLLR 1062 (LC) (31 January 2017) http://www.saflii.org/za/cases/ZALCJHB/2017/48.html#_ftn3

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)