The sustained economic difficulties have made it difficult for some companies to guarantee the payment of salaries and wages to employees. There are employees who have gone for months or even years without receiving their wages but they still continue to turn up to work day in and day out. There are many reasons employers advance for not paying wages but whatever the reasons it constitutes a breach of contract.
By MIRIAM TOSE MAJOME
We discuss the legal issues and the obligations of employers and employees regarding payment of wages. We also discuss the remedies open to employees seeking to recover unpaid wages. Labour matters are governed by the Labour Act Chapter 28:01
An employment contract is a legally enforceable agreement where the employee places his or her personal services at the disposal of the employer. Employees invest their time effort and skill for the employer’s benefit in exchange for a material reward. Remuneration is usually in the form of money or other material benefits. Each of the parties’ trades something in exchange for something. Unless there is prior agreement to perform voluntary work an employee should always be paid for services rendered to an employer. The employer and employee must both mean and intend to create reciprocal rights and duties between them that legally bind them to the contract. They agree that the other party can use legal remedies against them if they breach the contract.
Remuneration and all its various forms are described in Chapter 12A of the Labour Act and we shall highlight a few pertinent factors regarding it. Remuneration is in the form of money or other approved form.
However, it is prohibited for it to be in the form of promissory notes, vouchers, coupons or any form that is not legal tender.
The remuneration has to be fair and reasonable and must be appropriate for the personal use and benefit of the employee. This means under paying employees is unlawful and an employer can be sued by employees for underpaying them.
However, any such action will obviously depend on the employer’s means and capacity to pay higher wages in consideration of all the circumstances. Payment in kind is permissible, but it must not substitute money completely so a monetary component must still be present
The duty to pay employees
A nagging query many employees have is the implication of continuing to work and providing services for an employer when they are not getting paid for it. They fear that is may be deemed as having volunteered their services and that they forfeited their right to claim remuneration when they continued to work nevertheless. Does continuing to work for an employer, who isn’t paying them mean they have condoned (forgiven) the employer’s breach of contract and so they cannot claim wages after they became aware of the breach?
The most important contractual obligation an employer has is to pay employees for services rendered in terms of an employment contract. If an employee absconds or is dismissed no remuneration is payable payment during their period of absence. An employee suspended from work pending a disciplinary hearing or other investigation is ordinarily entitled to remuneration until the employment contract is procedurally-terminated.
This follows from the legal principle that people are innocent until proved guilty. There are exceptions where the infraction is so severe or if the circumstances compel suspension of the employee without pay.
Breach of employment contract
Either the employer or employee may fail, refuse or neglect to perform as agreed in the contract. The breach can be purposeful or be due to uncontrollable circumstances, but whichever way the results are the same because there is still non–performance of the contract. As soon as a salary is overdue the employee is entitled institute legal action to compel the employer to pay it. This is preferable compared to waiting optimistically for months or even years without getting paid.
Employees are entitled to sue an employer for non-payment of wages but people fear potential victimisation. They hold on indefinitely even when it is evident that the company is going down and has no hope of resuscitation.
Suing an employer
The employee is entitled to take legal action such as issuing a summons for breach of contract or compelling specific performance. The employee can claim damages for the breach of contract.
When remuneration is not paid or is delayed innumerable negative consequences follow. None payment of a salary causes a spiral of other problems. The unpaid employee will inadvertently breach contracts with third parties such as missing payments with their own creditors like credit stores, insurance premiums, school fees, utility bills, school fees, television subscriptions, medical aid subscriptions and many more. It will mean reduction in quality of life as the employee will not be able to purchase basic requirements for their sustenance like groceries, food, medications and other necessities of life.
The majority of employees have no savings and have to compromise and forgo a lot of their normal purchases or they borrow and take out loans just to make ends meet. The employee can also launch an action for specific performance to compel the employer to perform as agreed to in the contract.
If for example, an employer undertook to provide certain benefits or tools or safety equipment, but did not provide them the court can order the employer to uphold the employment contract as originally agreed.
When a court order is obtained for unpaid wages the employee is entitled to pursue his unpaid wages by attaching the company’s property or other means. Attaching an employer’s property for unpaid wages may seem extreme, but that might be the only way of securing unpaid wages.
We will continue looking at breach of an employment contract by both the employer and employee and the available remedies.