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Deductions for damage or loss

Jan du Toit

 

The other day I stumbled across the Department of Labour’s (DoL) guide to deductions from employees’ remuneration with the following explanation:

 

“Deductions for Damage or Loss

Deductions for damage or loss caused by the worker may only be made if

  • the employer has followed a fair procedure and given the worker a chance to show why the deduction should not be made,
  • the worker agrees in writing, and
  • the total deduction is not more than 25% of the worker’s net pay.”

 

Based on the DoL’s interpretation of the Basic Conditions of Employment Act it seems as if employers are not allowed to make deductions form the remuneration of employees for damage or loss, unless the employee agreed in writing.

 

This is a very interesting interpretation of the Act since it would effectively mean that employers will almost never be in position to recover from employees remuneration damage suffered as a result of the employee’s negligence. Very few employees will agree to reimburse their employer for damage suffered, especially if the employee is in addition issued with a final written warning for the act of negligence.

 

Deductions forms the remuneration of employees are addressed in section 34 of the Basic Conditions of employment Act.

“Deductions and other acts concerning remunerations.-

(1) An employer may not make any deduction from an employee’s remuneration unless-

(a) subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or

(b) the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.

(2) A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only if-

(a) the loss or damage occurred in the course of employment and was due to the fault of the employee;

(b) the employer has followed a fair procedure and has given the employee a

reasonable opportunity to show why the deductions should not be made;

(c) the total amount of the debt does not exceed the actual amount of the loss or

damage; and

(d) the total deductions from the employee’s remuneration in terms of this subsection do not exceed one-quarter of the employee’s remunerations in money.”

 

I have underlined certain words used in section 34 which I believe would assist us in establishing the correct interpretation of the Act.

 

34(1) “An employer may not make any deduction from an employee’s remuneration unless”

 

This means that a deduction in terms of section 34(1) may not be made unless the requirements set out in 34(1)(a) and (b) are met. A deduction from an employee’s remuneration would therefore only be possible if the employee agreed to such a deduction in writing or the deduction is allowed in terms of legislation, a court order or an arbitration award.

 

34(1) and 34(1)(a) states - “An employer may not make any deduction from an employee’s remuneration unless, subject to subsection (2), the employee in writing agrees to the deduction..”

 

In terms of subsection 2 an employer may deduct from an employee’s remuneration an amount equal to the damage suffered or a loss incurred as a result of the negligent or deliberate behaviour of an employee. There are however certain requirements that must be fulfilled before such a deduction may be made. Section 34(2) clearly states “..only if-“, meaning that all of the requirements of subsection 2 must be satisfied. This is amplified by the use of the word “and” at the end of 34(2)(c).The requirements of subsection 2 are:

  1. The loss or damage must have occurred in the course of employment.
  2. The loss or damage must have been as a result of the fault of the employee.
  3. The employer must follow a fair procedure and give the employee a reasonable opportunity to show why the deductions should not be made.
  4. The total amount of the debt may not exceed the actual amount of the loss or damage.
  5. The total deductions from the employee’s remuneration may not exceed one-quarter of the employee’s remunerations in money.

 

In terms of schedule 8 of the Labour Relations Act a fair procedure means that:

  • The employer should notify the employee of the allegations using a form and language that the employee can reasonably understand.
  • The employee should be allowed the opportunity to state a case in response to the allegations.
  • The employee should be entitled to a reasonable time to prepare the response (48 hours) and to the assistance of a trade union representative or fellow employee.

 

Must there be a written agreement in terms of section 34(2)?

Section 34(1)(a) states “subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement”. The DoL’s interpretation of this is that the two sections cross reference each other. In other words, in addition to the requirements of subsection 2 an agreement in writing must be obtained from the employee in terms of 34(1)(a). This would mean that an employer will not be able to deduct without the employee’s permission even if all the requirements of subsection 2 have been met.

 

My interpretation of “subject to subsection (2)” is that 34(2) is excluded from the requirements of 34(1)(a). Nowhere in subsection 2 does it require that after a fair procedure has been complied with, that an agreement in writing must in addition be obtained from the employee. If this was the case then there would have been a clause (e) in terms of which the employee must agree in writing.

 

A provision that the employee must agree to a deduction for damages, after (a) – (d) have been complied with, was omitted with reason. Subsection 2 gives employers the option to deduct from the remuneration of an employee without having to obtain permission from the employee, limited to damage or loss as result of the actions of the employee. Subsection 2 would serve no purpose whatsoever if, after an enquiry where guilt was established, the individual still refuses to give permission for the deduction to be made.

 

Is it double jeopardy if the employee is issued with a final written warning and ordered to pay back the damages suffered by the employer?

It would be unfair to punish an employee twice for the very same offence (i.e. for the same incident). However, as a warning is not, in my view, a punishment it can be argued that a warning could fairly accompany another corrective measure. For example, where a driver is guilty of damaging the employer's vehicle it may be appropriate for the employer to give the driver a refresher driving course. He could, however, also warn him/her that, should he/she again damage employer property, stronger action will be taken.

 

The above mentioned was confirmed in Solidarity obo Mohammed / Air Traffic and Navigation Services Ltd (2011) 20 CCMA 7.22.2. A senior financial manager transferred R4m to an incorrect account and the company had to subsequently pay R7000 in interest charges as a result of this mistake. The manager was issued with a final written warning and ordered to pay the company R7000. The employee referred the matter to the CCMA claiming that the aforementioned constituted double jeopardy. the arbitrator disagreed, stating that the recovery of the money from the employee is not part of the sanction. It is a right to reclaim fruitless spending of other people’s money. The principle is that the applicant should be given the opportunity to comment on the deduction before it is made and the deduction can only be to the extent of the loss or damage suffered by the company.

 

Employers are advised to upfront agree with employees in their contracts of employment under which circumstances deductions may be made and the procedures that will be followed prior to making such a deduction. By doing this the DoL’s interpretation of section 34(2) will be irrelevant since the employee upfront agreed to the deduction after a fair procedure has been complied with.

 

Jan can assist employers with IR and HR related services and can be contacted for a consultation at  

 

The Protection of Personal Information


By Jan du Toit, Senior Consultant, SA Labour Guide

 

After more than seven years in the making, President Ramaphosa announced last year an effective date of 1 July 2020 for the Protection of Personal Information Act (POPI), Act 4 of 2013. “Responsible Parties” only have approximately 5 months left until 30 June 2021 to become compliant in full.

 

The duration of a typical POPI compliance project will differ from one business to another depending on the nature and size of the business, as well as the Personal Information processed by a Responsible Party. Business owners are therefore advised to, without delay, embark on a compliance project to meet the deadline.

 

Even though the Protection of Personal Information Act is welcomed by most, it has been long overdue and will require business owners (“Responsible Parties” in terms of the Act) to process Personal Information according to 8 processing conditions as set out in the Act.

 

The purpose of the Protection of Personal Information Act is in essence found in the title of the Act; to protect the Personal Information of “Data Subjects”. It gives effect to ones right to privacy as enshrined in the Constitution but also provides balance in terms of the right to privacy weighed up against the right to access to information.

 

The Act regulates the manner in which Personal Information must be processed and provides protection and recourse to those whose rights are infringed. Further to this, the Act makes provision for the establishment of an Information Regulator. Advocate, Pansy Tlakula has already been appointed as the Information Regulator a couple of years ago and has done a great deal of work in establishing her office.

 

Before I get into more detail about the eight processing conditions, it is important to note that the Act is “definitions driven”. It is therefore of utmost importance to first highlight some of the definitions found in the Act for readers to better understand the eight processing conditions.

 

The first definition is that of “Personal Information”. Personal Information is widely defined in the Act and includes, but is not limited to, information relating to an identifiable living natural person or a juristic person (“Data Subjects”), such as:

  • Race, gender, sex, pregnancy, marital status, nationality, ethnic or social origin, colour, sexual orientation, age, physical or mental health, well-being, disability, religion, conscience, believe, culture, language, birth

  • History - education, medical, financial, criminal, employment

  • Identifiers – number, symbols, e-mail address, physical address, telephone numbers, location, online ID or other assignment to a person such as a unique identifier (in example a student or patient number)

  • Biometric information – physical or psychological behavioural characterization, blood type, fingerprints, DNA analysis, retinal scanning, voice recognition

  • Personal opinion views or preferences

  • Correspondence implicitly or explicitly of a private and confidential nature

  • Views or opinions of another individual\

  • The name of the person with other information or the name alone

 

The second definition of importance is that of “processing”. The processing of Personal Information includes but is not limited to any operation/activity or any set of operations, whether automated or not, concerning Personal Information. It includes:

  • Collection / receipt / recording / organizing / collation / storage / updating / modification / retrieval / alteration of Personal Information

  • Dissemination by means of transmission distribution or making available to others.

  • Merging / linking / restricting / degradation / erasure / destruction of Personal Information.

 

A Responsible Party can either be a public body, private body or any other person or persons, domiciled in South Africa and that determines the purpose and means for processing of Personal Information.

 

Throughout the entire lifecycle of Personal Information in any business, eight processing conditions must be adhered to. The eight processing conditions are summarized below:

 

Condition 1 – Accountability. The Responsible Party must always ensure that the conditions set out in Chapter 3 of the Act and all the associated measures are complied with.

 

Condition 2 – Personal Information must be collected and processed lawfully in a reasonable manner that does not infringe the privacy of a Data Subject. The Personal Information may only be processed if it is adequate, relevant, and not excessive.
Personal Information may only be processed if the Data Subject consented thereto. Alternatively, where it is necessary to do so for the conclusion or performance of a contract, an obligation in terms of law, to protect the legitimate interest of the Data Subject, or to pursue a legitimate interest of the Responsible Party.

 

A further requirement is that the Personal Information must be collected directly from the Data Subject.

 

Condition 3 requires that Personal Information must be collected for a specific explicitly defined and lawful purpose related to a function or activity of the Responsible Party. Such Personal Information may not be retained any longer than necessary for achieving the purposes for which the information was collected and/or subsequently processed.

 

Condition 4 prohibits the further processing of Personal Information unless such processing is compatible with the initial purpose of collecting the information.

 

Condition 5 requires that Responsible Parties must take reasonable, practicable steps to ensure that Personal Information is complete, accurate, and not misleading. Such Personal Information must also be kept up to date, taking into consideration the purpose of the Personal Information.

 

The nature and purpose of the Personal Information will dictate as to how often such Personal Information must be updated.

 

Condition 6 addresses some of the rights of Data Subjects, such as the right to be informed by the Responsible Party before information is collected. The purpose of collecting and from where Personal Information will be collected must be disclosed to the Data Subject.

 

A Data Subject is entitled to the details of the Responsible Party and to be made aware of the consequences of not making Personal Information available to the Responsible Party.

 

Should it be required that Personal Information be collected and processed in terms of legislation, the Data Subject must be made aware accordingly.

 

As per Section 72 of the Act, the Data Subject must be advised if Personal Information will be transferred across the borders of South Africa. Under such circumstances the Data Subject is entitled to first be made aware of legislation in other countries that provides adequate protection of the Personal Information. In the absence of legislation, whether there are any binding corporate rules in place, alternatively a written agreement that offers adequate protection for the Data Subject, concluded between the Responsible Party and he third party.

 

Condition 7 requires that Responsible Parties must secure the integrity and confidentiality of Personal Information by taking appropriate reasonable, technical and organisational measures, to prevent loss or unlawful access of Personal Information under the control of a Responsible Party.

 

In this regard the Responsible Party is required to identify all reasonable and foreseeable internal and external risks, and to establish and maintain appropriate safeguards. Compliance with such safeguards must be regularly audited and measures updated if so required.

 

Condition 8 deals with the rights of Data Subjects and participation. In terms of condition 8, Data Subjects have the right to establish whether Personal Information is held by a Responsible Party and to have it corrected or destroyed if it is inaccurate, irrelevant, excessive, out of date, incomplete, misleading, or have been obtained unlawfully.

 

Responsible Parties are also further required to introduce Data Subject rights and participation in their PAIA (Promotion of Access to Information Act) manuals.

 

Responsible Parties are also not permitted to send direct marketing material to Data Subjects without their written consent as per from 4 four of the regulations of the Act.

 

Other important considerations in terms of the Act are that a Responsible Party may be issued with an administrative fine of up to R10 million for its non-compliance with the Act. Additionally, Data Subjects have the right to sue Responsible Parties and under specific circumstances, the Information Officer of the Responsible Party may be imprisoned.

 

Each Responsible Party must register an Information Officer (the head of the organization or a person acting in such capacity) with the Information Regulator. The Information Officer may appoint deputies to assist with ensuring compliance within the business.

 

From the above, it is evident that a POPIA compliance project is not something that should be undertaken without a solid understanding of the Act.

 

Our subscribers, a.k.a. “Responsible Parties”, are invited to attend our online POPIA presentations to better understand the Act and to ensure compliance. In-house training can also be arranged on request.

 

The author of this article is also available to assist employers with compliance projects in the form of awareness sessions, gap analysis, policy development / implementation and staff awareness.

 

For further information pertaining to training, readers are invited to visit www.labourguide.co.za or to contact Jan du Toit at .

 

 

 

 

 

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