by Juanne Jordaan
East Rand Branch Manager
1. What does remuneration consist off?
"Remuneration" is defined in chapter one of the Basic Conditions of Employment Act (hereinafter referred to as the Act), as any payment in money or in kind, or both in money and in kind, made or owing to any person in return for that person working for any other person, including the State.
The following payments are included in an employee's remuneration for purposes of calculating pay for annual leave, payments instead of notice and severance pay:
- Housing or accommodation allowance or subsidy or housing or accommodation received as a benefit in kind;
- Car allowance of provision of a car, except to the extent that the car is provided to enable the employee to work;
- Any cash payments made to an employee, except those listed as exclusion further to this article;
- Any other payment in kind received by an employee, except those listed as exclusions further to this article;
- Employer's contribution to medical aid, pension, provident fund or similar schemes;
- Employer's contributions to funeral or death benefits schemes.
The following items do not form part of remuneration for the purpose of these calculations:
- Any cash payment or payment in kind provided to enable the employee to work for example: equipment, tools, laptops or similar allowances or the provisions of transport or the payment of transport allowance to enable the employee to travel to and from work;
- A relocation allowance;
- Gratuities, for example, tips received from customers and gifts from the employer;
- Share incentive schemes;
- Discretionary payments not related to an employee's hours of work or performance, for example: a discretionary profit sharing scheme;
- An entertainment allowance;
- An education or schooling allowance.
The value of payment in kind must be determined as follows:
- A value agreed to in either a contract of employment or a collective agreement, provided that the agreed value may not be less than the cost to the employer for providing the payment in kind; or
- The cost to the employer for providing the payment in kind.
2. How to calculate remuneration:
According to section 32 of the Act, an employer must pay remuneration no later than seven (7) days after the employment contract is terminated.
An employee's monthly remuneration or wages is four and one-third times the employee's weekly remuneration or wages, thus to calculate an employee's weekly remuneration, the employee's monthly salary must be divide by four and a third (4.33).
Example:
The employee's monthly remuneration is R12,000.00, divide the salary by 4.33 = R2,771.36. This is the employee's weekly remuneration.
To calculate the employee's daily remuneration, simply divide the weekly remuneration with the amount of days worked by the employee per week.
Section 35 (4) of the act further assists with the calculation where an employee's remuneration or wage is calculated, either wholly or in part, on a basis other than time or if an employee's remuneration or wages fluctuates significantly from period to period. An example would be a sales person or an employee earning commission. Payment to these employees must be calculated by reference to the employee's remuneration or wages during -
- The preceding thirteen (13) weeks; or
- If the employee has been in employment for a shorter period, that period.
3. What must be paid to the employee on termination?
Section 40 of the Act states that on termination of employment, an employer must pay an employee the following:
- Any paid time off that the employee is entitled to and that the employee has not taken;
- Remuneration for any period of annual leave due to the employee and that the employee has not taken.
Instead of giving an employee notice of termination, an employer may pay the employee the remuneration the employee would have received if the employee had worked during the notice pay. This however is not applicable where the employee has been summarily dismissed as this is dismissal without any notice.
Should the employee give notice of termination of employment, and the employer waives any part of the notice, the employer must pay the remuneration referred to above, unless the employer and the employee agree otherwise.
Should the employee waive any part of the notice, the employer is under no obligation to remunerate the employee for the notice period. The "no work, no pay" rule will be applicable and the employee will only receive remuneration up to the last day worked. A claim can be lodged against an employee who refuses to work his/her notice period through civil action.
Please take note that according to section 34 of the Act, no deductions can be made from the remuneration due to the employee who ended the employment relationship without working the notice period.
Please contact the Labournet Helpdesk on 0861 522638 should you require any assistance or have any questions.
Disclaimer
The information published in this article or newsletter is of general nature and should not be used without obtaining specific advice as to its application in your business or under your specific circumstances. LabourNet will accept no liability if the information is used without first obtaining specific advice from one of our consultants