This article was prepared by Neil Searle, Tshepiso Rasetlola and candidate attorney Kea Mathobela.
South African labour legislation does not impose obligations on an employer to pay bonuses to its employees, the right must have, by agreement – tacitly or impliedly – formed part of the terms and conditions of employment, apart from that the decision to pay bonuses is at the discretion of the employer. Employers are certainly not obliged to remunerate striking employees for services not rendered during strike action– this principle accords with the “no work no pay” standard. However, the forfeiture or selective payment of a bonus in such instances can be disputed as an unfair labour practice or unfair discrimination. The fact that the payment of bonuses under a bonus scheme may be at the discretion of the employer does not automatically place the employer’s actions beyond the scope of judicial enquiry. Employees have a constitutional right to strike and section 5(1) of the Labour Relations Act, 1995 ("LRA") prohibits an employer from discriminating against employees for exercising any of their rights in terms of the LRA.
Payment of bonuses to striking employees
These issues were assessed in the case in National Union of Mineworkers (“NUM”) obo Members v Cullinan Diamond Mine – a Division of Petra Diamond (Pty) Ltd (2019) 40 ILJ 1826 (LC). Members of NUM were in involved in wage negotiations and the parties reached a deadlock. NUM proceeded to embark on a protected strike. However, not all of its members participated in the strike. Prior to the commencement of the strike, the employees were anticipating payment of an annual production bonus. Management advised the employees that a production bonus would not be paid due to the impact of the strike on production. Ultimately the annual performance bonus was cancelled and no one received this bonus.
Instead, management created a new bonus scheme called the “exceptional performance reward or bonus” to reward those employees who continued to work and contribute to production during the strike. NUM contended that the so-called “exceptional performance bonus” was simply a different construct of the ordinary annual performance bonus. NUM approached the Labour Court to challenge the payment of this exceptional performance bonus on two grounds, namely that:
- the employer allegedly contravened section 5 of the LRA by discriminating against the employees for exercising their right to strike; and
- the payment of the “exceptional performance bonus” by the employer to non-striking employees constituted alleged unfair discrimination in terms of section 6 of the Employment Equity Act, 1998 ("EEA").
Was the exceptional bonus payment made to non-striking employees in contravention of section 5 of the LRA?
This section provides that no person may discriminate against any employee for exercising the rights conferred on them by the LRA. The court found that this right is a distinct, constitutional right that accrues to a worker and that section 5(1) of the LRA protects an employee from discrimination for exercising rights conferred by the LRA. .
The protection in section 5 protects employees from victimization for participating in strike action. The court found NUM’s case to have no basis because the annual performance bonus was not paid to all non-striking employees and thus there could not have been a basis for differentiation. The court stated obiter dictum that NUM could instead have referred an unfair labour practice claim to the CCMA, but that is not a claim over which the Labour Court would have had jurisdiction.
Did the payment constitute unfair discrimination against striking employees?
The Labour Court held that participating in a strike is not a ground listed in the EEA, nor could it be considered analogous to grounds such as race, gender or age as listed in section 9 of the Constitution. The discrimination prohibited by the EEA is considered to be unfair if it impairs the human dignity of an individual seeking to apply its provisions. The court concluded that when an employee is not paid any form of bonus his human dignity is not impaired.
Moreover, the basis for the differentiation between striking and non-striking employees was not that the employees who did not receive the bonus had participated in a strike, but rather that the employees who did receive the bonus had contributed to production achievements. The court further stated that an arbitrary ground as provided for in section 5 (1) of the EEA is a ground that is subject to personal notions and prejudices and for such a ground to originate in a claim under the preface of unfair discrimination it must be closely connected to any one of the listed grounds. This means that analogous arbitrary grounds of discrimination cannot exist or be applied in isolation of the other listed grounds which amount to unfair discrimination under the EEA.
In conclusion, the court found that paying a production bonus to non-striking employees does not necessarily constitute an infringement of section 5 of the LRA. However, given that such a bonus constitutes a benefit, employers should only grant a bonus to non-striking employees (and exclude striking employees from the bonus) after having consulted with all affected employees in order to mitigate the risk of potential unfair labour practice claims relating to the provision of benefits..