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Help! My employer’s business has been looted — what are my legal rights?


Tzvi Brivik is a director at Malcolm Lyons & Brivik and the founder of LegalLyons, the firm’s secure, online, legal consulting division. He has substantial experience in labour law, medical malpractice, personal injury and discrimination matters – including ground-breaking litigation regarding the rights of whistle-blowers.

It is the spaza shops, family-owned businesses and start-ups that were most severely affected by looting and will not be able to continue to offer employment. What does this mean for their employees?

We have witnessed severe looting both in KwaZulu-Natal and in Gauteng. The looters, orchestrated by agent provocateurs or acting on their own, destroyed many businesses. While those affected and the country as a whole count the loss which is escalating rapidly, there is one group of persons who have not yet been considered — the employees of the various looted businesses.

Many of the businesses that have been affected are small- to medium-size businesses. This category of employer makes up the bulk of employment within South Africa. They operate both in the formal and informal markets. It is estimated that there are about 2.5 million SMMEs in South Africa and that this number grows by 4.4% per annum. In the past year, 90% of the jobs lost in the South African economy were jobs that had been created and supported by SMMEs.

This means that it is the numerous spaza shops, family-owned businesses and start-ups that were severely affected and which will in turn not be in a position to continue to offer employment.

But what does this mean for those affected employees?

Historically, the foundation of the employment relationship within South Africa is based on the Roman Law principle of locatio conductio operis which means an employee places his or her personal services at the disposal of the employer in exchange for remuneration. In other words, an employee declares to the employer “I am here, I am available and I am ready to work”, usually in terms of a contract of employment and that it would follow that the employee should be remunerated. The content as well as the terms and obligations that are set out in a contract of employment are subject to negotiation.

Where there is no equilibrium in the negotiation process of that contract of employment, workers and employees are free to unionise to strengthen bargaining power.

In existing employment relationships where there are disputes relating to the terms of the contractual agreement and of employment, employees have a right to strike while employers can exercise the right to lock the employees out. These are collective bargaining solutions.

In an instance such as this where an employer’s business has been deemed unworkable and dysfunctional by circumstances beyond its control, what obligation does it have to its employees to remunerate them while it rebuilds the business?

This inquiry starts with the Basic Conditions of Employment Act (BCEA) Act 77 of 1997 as read with the amendments. The BCEA mandates that every employee who works more than 24 hours in a month for an employer, and where the employer employs more than five employees, be provided with a contract of employment. That contract of employment will record among other things the details of the employment, including the ordinary hours of work and days of work as well as what the wages and method of calculating those wages would be.

The act further goes on to state that remuneration must be paid no more than seven days after the completion of the period for which the remuneration is payable. In addition, the act makes provision for deductions from remuneration, but in limited circumstances, such as study loans, loss or damage to the employer’s property caused either negligently or deliberately, statutory deductions, garnishing orders or overpayments. The deductions can be effected either with the consent of the employees or alternatively once procedures set out in the BCEA have been followed.

A right to remuneration cannot be withdrawn unilaterally. This can only be done by agreement and with the consent of the employee as this is a contractual right.

If no payment is received by the employee, he or she has various options subject to the level of remuneration earned. The employee can report a complaint to the Labour Centre, refer a dispute to the Commission for Conciliation, Mediation and Arbitration (CCMA), in the alternative, and depending on the value of the claim, the employee can issue a civil demand for payment of the remuneration out of the Small Claims Court, Labour Court, Magistrates Court and/or high court.

An employee can also tender his or her resignation on the basis that the employer is in breach of a material term of the contractual agreement, namely a failure to pay the salary.

However, this does not assist our small-medium enterprise which is doing the best that it can to rebuild after the devastation of the past week. If rebuilding the business is not possible at all and the business must eventually close, then employees will have to be retrenched for operational requirements. The Labour Relations Act sets out the strict process of doing so and severance pay that would be payable to each of the employees.

In addition, in these circumstances, an employer has a duty in terms of the Occupational Health and Safety Act 85 of 1993 to ensure that each employee has, as far as reasonably practicable, a working environment that is safe and without risk to the health of the employees. The safe working environment can be interpreted to include not only the manner in which the work is carried out and its practicalities, but also that of the work environment itself.

There are a number of consequences that arise as a result of the various legislation cited above once read together. If the employer cannot make the environment safe and the employees tender their employment in terms of the contract of employment, then the employee must be paid the reasonable remuneration for those days until such time as it is safe to return to work.

Once employees stop tendering their services or refuse to do so the employer would be within its rights to withhold remuneration for those days. The alternative is that both the employer and the employee reach agreement with regard to either no payment of the remuneration or a reduced payment until such time as stability is restored.

Finally, if reopening the business is not possible, then unfortunately the employer would have to consider terminating the contract of employment of the employees on the basis of its operational requirement.

And it is this last option which is the most dastardly consequence of all and which will lead to the increase in unemployment which we are currently experiencing. This is is a devastating consequence. DM


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All Comments 3

  • Thank you. Very clearly set out and most informative. But how many people are not in a position to negotiate terms with their employers, or do not have the know how or information that would make this possible? The current circumstances are, to say the least, all very sad.

  • indeed well written, but in the end and under the current/very recent circumstances it proves, “the law is an ass.”

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