Firstly, it is necessary to understand that there is no statutory requirement to pay bonuses of any sort, and any such payments that are made are not regulated by labour legislation. Generally, if the bonus is guaranteed such as into being a guaranteed payment stipulated in the employment contract then the employer is not left with much choice he must pay. However, where the payment of the bonus is dependent on certain criteria being met such as the employee’s hours of work, or the employee’s performance or to the performance of the company, or the branch, or the department in which the employee is employed, the employer is under no obligation to bonus unless those criteria are complied with.

In other instances, a bonus is paid which bears no relation to the employees hours of work, but is related solely to the overall performance of the company or the branch.
These bonuses are usually referred to as “a 13th cheque,” but it is usually stipulated that this is payable entirely at management discretion, and it specifically stated that it is not guaranteed. Whether or not the bonus is paid is dependent either on the terms and conditions of the individual Contract of Employment, or it may be dependent on Company Policy, or it maybe dependent on certain targets being reached in terms of production or sales, or it may be dependent upon Company performance in terms of gross profits or any other criteria stipulated by the employer.

It may also be a bonus that is paid simply because of established practice or “custom and practice” as it is sometimes termed. Because of the consistent “established practice” or “custom and practice”, the bonus payment becomes a term or condition of employment. Whatever the case, employers should note that where a bonus is contractual condition embodied in the employee’s contract of employment, or a contractual condition embodied in a Company Policy, or where the payment of the bonus has become a condition of employment through established practice, then the bonus must be paid.

For further information on any labour related matters, you can contact
Bernard Reisner:

W.Tel no.: 021 423 3959
Fax: 021 423 2105
Cell: 082 433 8714
E-mail: bernard@capelabour.co.za
Website: www.capelabour.co.za