The end of the year is often a time to consider your employment package, especially if you’re planning to take leave or are looking forward to a bonus.
But many South African businesses have experienced tough financial times over the last two years due to the COVID-19 pandemic and resulting economic downturn, and this may affect how much your employer can part with at the end of the year.
Here’s what you’re entitled to as an employee:
All employees are entitled to 21 consecutive days of annual leave for every fully paid 12-month cycle – whatever number of normal working days falls within that 21 consecutive days is the number of working days that the employee must be paid for . This equates to 15 days each year if the employee works a five-day week, or 18 days if they work a six-day week. Public holidays are not counted as leave.
You will be paid in full during your leave and this will usually form part of your usual salary payment. Companies are not permitted to reimburse the employee for the leave days except on the termination of employment.
The leave cycle starts on the day of employment and leave days are accrued. This means the number of leave days will start at zero and increase during the 12-month period. Most employers, unless another agreement is in place, will allow for the accrual of leave at the rate of 0.25 days per month in the case of a five-day week worker, or 1.5 days per month for a six-day week worker.
Only those employed for more than 24 hours a month for the same employer may take annual leave.
Some companies may close over the festive season and will require employees to take their annual leave over this December and January period. Employers are entitled to stipulate this in your contract. If you decide to take your leave at another time of the year, you may have to take unpaid leave during this shutdown period.
There is no labour law requirement for employers to pay bonuses. However, many companies do have bonus structures in place, especially to incentivise staff performance.
Because bonuses are considered as remuneration, your company must deduct tax from the bonus payment and pay it over to SARS. If the bonus is paid in a form other than cash, it must still be declared to SARS and reflected on the employee’s tax certificate.
There are primarily three types of bonuses employers can pay workers, and they should be stipulated in your employment contract.
1) 13th cheque: A 13th cheque is essentially an additional monthly salary, or 8.33% of the employee’s yearly salary, paid to the employee, most often in December. This payment should be stipulated in your contract and will appear on your payslip. This bonus is not tied to your performance and is instead part of your payment package.
2) Performance bonus: A performance bonus is based on an employee’s individual performance. The conditions around this performance and payment should be established ahead of time and be laid out in your employment contract, but it is usually based on a percentage of the worker’s salary.
3) Production bonus: This bonus is not measured against individual performance, but rather targets or a rate of production. This bonus is often paid to a team who contributes to the target and is usually divided fairly as a lump sum split between workers, or with each employee receiving the same percentage of their salary.
Overtime pay is money earned outside an employee’s regular working hours or standard shift.
According to the Basic Conditions of Employment Act, employees may only work a maximum of 45 hours weekly, or nine hours per day (excluding a lunch break) for five-day week workers. Those who work six days a week should work eight hours per day (excluding lunch breaks). Employees may work fewer hours depending on their employment contract.
Any time worked over the maximum 45 hours a week or the employee’s contract is considered as overtime. All overtime is voluntary and may only be worked by agreement between employer and employee.
Employees may only work 10 hours of overtime a week, or three hours on any one day.
Employees are entitled to remuneration of 1.5 times the normal wage rate for overtime work. Overtime work on a Sunday or public holiday must be remunerated at twice the normal wage rate. The employer may also offer the worker time off in compensation of overtime.
Overtime pay is taxed and must be clearly marked on the employee’s payslip. It may affect how much income tax an employee must pay.
South African companies and workers have a tough economic climate this year, and many businesses may want to play it safe and hold back on substantial bonuses to keep the company stable.
If your company has decided not to pay bonuses, that doesn’t mean you can’t negotiate extra benefits for yourself.
Consider approaching your employer for alternative perks that will not require extensive financial outputs. The biggest bargaining chips you, as an employee, have are flexibility and career development, and you can present these to your employers as a way to ease financial pressure and ensure improved future career prospects for both of you.
Some alternatives you may like are flexible work arrangements, mapped-out career progression, mentorship and coaching, additional time off and sabbaticals, or additional mental health benefits.
Most companies will be invested in finding ways to ensure they continue to attract and retain talent and would likely welcome creative ways to reward their employees.
Sources: BusinessTech | My Wage | Labour Guide | Sage | MJ
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