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A 13th Cheque: Is there such an annual obligation

A 13th ChequeNovember is here. People are starting to think about the end of the year and some speculate about their annual bonuses. On the one side employers are asking questions such as:

“Business is tough at the moment. Must we pay year-end bonuses?” and on on the other side employees complain “I have not yet received a bonus this year, what are my rights?”

As a starting point it must be accepted that there is no automatic right to a 13th cheque or a bonus in South African labour law. However, specific provision for this could be in a contract of employment, company policy or maybe a collective agreement for a specific industry.

What do these documents say about bonuses? Is a bonus guaranteed? Are there conditions associated with this, such as, that  company profits must be achieved, that workers must achieve certain turnovers/performance goals or other contributions that have been agreed in advance? Does the employer have complete discretion over the payment of bonuses?

Even in the absence of a specific agreement regarding this, one must also look at the history and the payment of bonuses in the past. If there is a sudden deviation from practices that have been followed over the years regarding bonuses, employees could argue that it is a unilateral change in their terms and conditions of employment, that they have not been consulted on the change and that it is consequently considered to be an unfair labour practice.

Regardless of the provisions of the labour law, employers should consider the effect it could have on the morale of their employees when there is a general expectation of a bonus, which then does not materialise.