Apart from looking forward to a long break, most employees are
excited about receiving bonuses. But what is a bonus? Is every
employee in South Africa entitled to receiving a bonus? What
happens when your employer does not pay you a bonus?
Chapter 1 of the Basic Conditions of Service, Act 75 of 1997
describes bonuses as "any payment in money or in kind, or both
in money and in kind, made or owing to any person in return for
that person working for any other person, including the State, and
'remunerate' has a corresponding meaning".
In the South African job market, there are three common types of
bonuses, namely, Christmas bonus or 13th cheque, annual performance
bonus, and production bonus.
The 13th cheque is usually paid by the employer as a gratuity in
acknowledgement of a job well done and for going the extra mile in
the performance of work by its employees. The second type is a
performance bonus, which is normally paid for good performance and
is based on a percentage of the employee's earnings. The
payment or non-payment may be influenced by a score obtained by an
employee in a performance appraisal.
Lastly, there is the production bonus, which is based on the
assessment of whether the employee or a particular department
within the employer's enterprise has met its targets and the
quality of performance in meeting those targets. Such a bonus will
be paid where the joint efforts of that team are responsible for
the consistent outstanding performance in a department and it
meeting its targets. This amount can be paid as a percentage of the
profit made by that department.
There is no requirement in our law for an employer to pay
bonuses. Payment of bonuses can be contractual. That means they
will be recorded in the terms of a contract of employment.
A bonus may be paid arising from an established custom and
practice of the employer. The employer must have, in previous years
or occasions, habitually paid out the bonuses for it to be regarded
as an "established custom and practice". In such cases,
the payment of a bonus becomes a term or condition of employment,
and therefore, the bonus must be paid because of an expectation
that it will be paid.
In the case where an employer fails to pay out a bonus, the
employee can refer an unfair labour practice dispute relating to
the provision of benefits to the CCMA. Where the payment of a bonus
has become an established custom or practice, the failure to make
payment could constitute a unilateral change of the terms and
conditions of employment by the employer, or could result in a
breach of contract.
It is important for employees to be mindful of the fact that the
payment of bonuses is not guaranteed.
The employer has a duty to consult with its employees or their
representative trade unions to inform them of any possibility of
bonuses not being paid or being reduced, or if absolutely no
bonuses will be paid for a particular year. Where an employee is
unlikely to receive a bonus due to performance or production
related issues, the affected employee has to be informed within a
reasonable period and should be afforded the opportunity to make
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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