The Labor Act protects a worker’s remuneration by prohibiting unlawful deductions while allowing specific deductions where the law or the worker’s consent permits them.
At the end of the month, or whenever remuneration falls due, the expectation of a worker is simply that having rendered the service for which they were employed, they expect to be paid what they have earned. There is something almost instinctive about this expectation. A worker looks at the salary agreed with the employer and expects that amount to find its way, in full and without surprise, into their hands when payment is due.
Yet that expectation is not always what happens. Sometimes, a worker opens their payslip or checks their account and finds that an amount has been deducted. The employer may have what appears to be a perfectly reasonable explanation, but a deduction from one’s remuneration is rarely a pleasant experience. It is not always easy for the worker, faced with a reduced salary, to appreciate the fairness of the reason offered for taking away part of what they expected to receive.
The law recognises that deductions will sometimes be necessary. But that does not give an employer a free licence to deduct a worker’s remuneration at will, by subterfuge or in pursuit of interests which the law does not recognise. The power to deduct from a worker’s remuneration is regulated.
Duty to Pay Workers’ Remuneration Fully
Section 9 of the Labor Act, 2003 (Act 651) sets out the duties of an employer. Among these duties is the obligation to pay the agreed remuneration at the time and place agreed in the contract of employment or collective agreement or by custom. By the terms of the law, the remuneration is to be paid without deduction except where the deduction is permitted by law or agreed between the employer and the worker.
The Act also gives remuneration a broad meaning. It includes the basic or minimum wage or salary and any additional emoluments payable directly or indirectly by the employer to the worker on account of the worker’s employment. The protection is therefore not limited to the basic salary. Where an amount properly forms part of the remuneration payable to the worker because of the employment relationship, the law jealously guards against its being deducted.
The law goes further to ensure compliance with this general duty. By section 69 of the Act, an employer cannot make a deduction by way of discount, interest or any similar charge on an advance of remuneration made to a worker in anticipation of the regular period of payment.
The Act is also clear that an employer shall not impose a pecuniary penalty upon a worker for any cause whatsoever. That is significant. A worker may have breached a workplace rule or otherwise done something which the employer considers deserving of sanction. But the employer cannot simply convert that grievance into a financial penalty deducted from the worker’s remuneration.
There may be lawful ways of dealing with misconduct in an employment relationship. But the worker’s salary is not, by that fact alone, available to the employer as a means of punishment.
Permitted Deductions from a Worker’s Salary
To most general rules there are usually exceptions. That has been the life of the law. Indeed, life will be inexplicably hard to live if all rules are meant to be followed without recognised exceptions. Thus, the prohibition against deductions is not absolute.
Section 70 identifies circumstances in which an employer may make deductions from a worker’s remuneration and, in some cases, the consent of the worker is expressly required. First, an employer may, with the consent of the worker, deduct an amount due in respect of contributions to a provident, pension or other fund or scheme agreed to by the worker.
Secondly, the employer may also deduct an amount relating to a financial facility advanced to the worker at the worker’s written request or a facility guaranteed by the employer to the worker. The law also permits the recovery of remuneration paid to the worker in error in excess of what the worker was legitimately entitled to receive.
There is also provision for deductions, on the written authority of the worker, for membership fees or contributions to an organisation of which the worker is a member. These are not unusual arrangements in an employment relationship. A worker may voluntarily agree to a pension or provident arrangement. They may request a financial facility from their employer. They may belong to an organisation and authorise the deduction of membership fees.
How About Damages Caused or Losses Occasioned by a Worker?
Stories about deductions from a worker’s salary due to damage or losses allegedly caused by the worker are quite notorious in the corporate environment. What is the law’s take on that too?
Section 70 of the Act addresses loss or damage to property or things used in connection with, or produced by, the employer’s business and which are under the control of the worker. The law does contemplate deductions in respect of such loss or damage. That may be difficult for a worker to take, but it is understandable. An employer may suffer a genuine loss. The employer may also genuinely believe that the worker caused that loss. Some legal remedy should therefore exist where there is a legally recoverable loss. “Ubi jus, ibi remedium”, to wit where there is a right, there is a remedy.
But it does not follow that the employer can simply decide how much to take from the worker’s salary.Where the deduction is made pursuant to an order of the Commission, the law imposes a number of safeguards. The employer must be satisfied that the loss or damage was caused by the worker and that the worker is clearly shown to be responsible.
The amount to be deducted must also be fair. It must not exceed the actual value of the loss or damage suffered by the employer, or it must represent a fair estimate of that loss or damage. The worker must be given a reasonable opportunity to show cause why the deduction should not be made. The rate at which the deduction is made must also be such as to avoid hardship to the worker and their dependants.
So even where the employer’s grievance may be legitimate, the means of recovering the loss remain subject to the law.
Addressing Unlawful Deductions
The Labour Act provides that a worker who is aggrieved by a deduction made by the employer under subsection (1), and who is unable to resolve the matter with the employer, may present a complaint in writing to the Commission.
The Commission is required to investigate the complaint and its decision on the matter is, subject to any other law, final. This provides an important avenue for a worker who believes that an employer has gone beyond what the law permits.
The law does not say that every deduction from a worker’s remuneration is unfair. Nor does it prevent an employer from recovering money which the law properly allows the employer to recover. What the law does is place boundaries around the power to deduct.
A worker’s remuneration cannot be treated as a pool of money from which an employer may take whatever amount it considers justified. The fact that an employer believes a deduction is fair does not, by itself, make the deduction lawful.
The starting point remains the employer’s duty to pay what is due. Where an employer seeks to take part of that remuneration, there must be a lawful basis for doing so. The employer may have a legitimate grievance. The worker may even be responsible for the loss complained of. But the law still determines whether, and to what extent, that grievance may find expression in a deduction from the worker’s remuneration.
