What does and does not constitute a benefit has not been defined in any act and this leaves the answer open to the interpretation of arbitrators.
The courts themselves are unable to agree with each other. For example, in HOSPERSA & Another vs Northern Cape Provincial Administration (CLL Vol. 15 No.1 August 2005) the Labour Appeal Court found that an acting allowance was not, in that case, a ‘benefit’ for purposes of the LRA because the right to it did not arise from statute or from a contract between employer and employee.
However, in Protekon (Pty) ltd vs the CCMA & others (CLL Vol. 15 No. 1 August 2005) the Labour Court departed form the Labour Appeal Court’s view. The Court found that, even where there was neither a statutory provision nor an express contractual provision in place the CCMA may still have jurisdiction. That is, where an employer has unfairly exercised its discretion as regards a benefit the CCMA would have jurisdiction to arbitrate the matter.
While the wording of this finding is confusing it appears to mean that the jurisdiction of the CCMA would be based on the grounds that the discretion was exercised unfairly and that the employer has a tacit contractual duty to act fairly.
Another question is how we separate ‘remuneration’ from ‘benefit’ in the light of the LRA failure to clarify this difference. Whilst it may be clear that salary, commission and overtime pay fall under the heading of remuneration, and that leave, medical aid and pension are benefits there are many other terms of employment that do not fall neatly into either category. For example, what are Christmas bonuses, long service awards, vehicle allowances, housing subsidies, leave pay, share options, acting allowances and canteen privileges?
One method of distinguishing these concepts might be to accept traditional usage or definitions. That is, historically, salary, overtime and commission have been seen as remuneration. Perhaps then, all other entitlements directly related to these payments should be seen as remuneration while all the rest should, for the sake of simplicity, be classed as benefits.
For example, using this approach, an acting allowance would be part of remuneration because it involves a payment of money to the employee for doing extra work in a similar way to that in which overtime is paid. On the other hand other employment conditions such as performance incentives, housing benefits and Christmas bonuses could be seen as benefits as they are add-ons rather than part of the direct remuneration for work done.
Until recently, where an employer withheld any part of an employee’s remuneration payment the employee could not refer such a dispute to the CCMA. Instead the dispute had to be referred to the Department of Labour or to a court. However, I have recently heard of cases where the CCMA accepted jurisdiction for salary based disputes. This means that it may no longer be so important to be able to distinguish between benefits and remuneration.
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Written by Ivan Israelstam, Chief Executive of Labour Law Management Consulting. He may be contacted on (011) 888-7944 or 0828522973 or on e-mail address: email@example.com. Go to: www.labourlawadvice.co.za.