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