Employers not obliged to pay employer’s contributions during strikes

Employers facing strike action from employees should remember that the right to withhold remuneration for striking employees could also include the right not to make employer contributions to medical aid, pension or provident funds or other social contributions that fall outside of basic salary. This is according to Johan Botes, Employment Director at Cliffe Dekker Hofmeyr business law firm.

“While most employers are comfortable with the notion of “no work, no pay”, some still continue to make payment of employer contributions during the period of the strike.”

Botes says that in terms of the Labour Relations Act, employers are obliged to continue making payment of the employee’s remuneration if the remuneration includes payments in kind for accommodation, provision of food and basic amenities of life. Where the employee requests the continuation of these payments during a strike or lock-out, the employer is obliged to pay this, but may recover it after the strike.

“However,” he notes, “payment to medical schemes and pension or provident funds arguably fall outside of the definition of “...basic amenities of life...” and, as such, need not be continued by an employer during a strike. Unless the employer has committed to make such payments (for example by agreeing to do so in a collective agreement or employment contract), the employer is not obliged to continue making such payments whilst the employees are on strike.”

In SA MUNICIPAL WORKERS UNION v CITY OF CAPE TOWN & OTHERS(2010), the Labour Court agreed that it was not an unfair labour practice for the employer to withhold its contributions to medical aid and pension funds as part of its withholding of remuneration during a strike.

“Employers should scrutinise their contractual obligations on making payments of employers’ contributions, but could withhold these contributions to medical aid and pension or provident funds in the absence of any other obligation to continue making these payments. The withholding should, of course, be pro-rated for the period of the strike,” Botes adds.