Thinking of scrapping your 13th cheque? A recent Labour Court case is a cautionary tale for employers.

 

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Can employers scrap a 13th cheque? A recent Labour Court ruling warns against unilateral changes to contractual bonuses in South Africa.​

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In Chemical Energy, Paper, Printing, Wood and Allied Workers Union obo Members v Avacare Health Group (Pty) Ltd and Another (C438/2024), the Labour Court found that an employer’s unilateral decision to stop paying a contractual 13th cheque and replace it with a performance‑based bonus amounted to a breach of contract.​

The employer:

• Abolished the 13th cheque and introduced a performance‑linked bonus.
• Offered salary increases to employees who accepted the change and did not challenge it.
• Indicated that strike action against the change would be “ineffective and futile”.​

Employees argued that the 13th cheque was a contractual benefit. The employer maintained it was merely a workplace practice. During the dispute process, the employer eventually conceded that the 13th cheque was in fact a contractual right, and the court ordered payment of the unpaid 13th cheques.​

The court criticised:

• The attempt to mischaracterise a contractual benefit as a mere practice.
• The “stick and carrot” approach of trading salary increases for relinquishing contractual rights, while discouraging collective action.​

Key lessons for employers:

• A 13th cheque is not a statutory requirement in South Africa – but once you include it in an employment contract, it becomes a binding contractual obligation.​
• You cannot unilaterally withdraw or change contractual benefits, even in the name of “modernising” remuneration structures.
• Distinguish carefully between:
• Contractual benefits (e.g. guaranteed bonuses, 13th cheques in the contract), and
• Workplace practices (customs or discretionary benefits not written into the contract).​
• If you need to change contractual benefits:
• Conduct a proper legal and HR review.
• Consult meaningfully with affected employees or unions.
• Obtain agreement to any variation.
• Avoid coercive incentives or threats that may later be viewed as undermining collective bargaining.​

Handled incorrectly, a well‑intentioned incentive scheme can result in findings of breach of contract, reputational damage, and unnecessary litigation.