EMPLOYER OBLIGATIONS & ONUS IN LABOUR RELATIONS

Written by Hulisani Ravhudzulo

Employers in South Africa have a legal responsibility to ensure that employees are paid correctly and that all statutory deductions, contributions and employment-related obligations are properly calculated, accounted for, declared and paid to the relevant authorities or institutions.

For employers in the hairdressing, cosmetology, beauty and skincare industry, these obligations go beyond PAYE and UIF. Employers must also comply with the applicable National Bargaining Council for the Hairdressing, Cosmetology, Beauty and Skincare Industry Main Collective Agreement, including obligations relating to employee registration, employer registration, wages, benefits, levies, contributions, record-keeping and other prescribed conditions of employment.

The current industry framework remains important because the Minister of Employment and Labour has extended the applicable collective agreements to non-parties. The 2026 Main Amending Collective Agreement was extended to non-parties in terms of section 32 of the Labour Relations Act and provides for the continued operation of the agreement until 28 February 2027.

Non-compliance should therefore not be viewed merely as an administrative problem.

Depending on the nature and seriousness of the breach, an employer may face interest and penalties, compliance orders, recovery proceedings, arbitration, employee claims, financial losses and reputational consequences.

1. Penalties and Interest

   One of the most immediate consequences of non-compliance is the accumulation of penalties, interest and outstanding amounts.

   
   

   Employers who deduct PAYE from employees’ remuneration have a legal obligation to pay the amounts deducted to SARS within the prescribed period. SARS confirms that an employer who fails to deduct or withhold the full amount of employees’ tax and/or UIF contributions can be personally liable for the shortfall. Late or outstanding amounts may attract penalties and interest.

   
   

   For example, where an employer deducts PAYE from an employee’s salary but fails to pay that amount over to SARS, the employer cannot simply regard the money as part of the establishment’s available cash flow. The amount remains payable to SARS and the employer may incur additional interest and penalties.

   
   

   The same principle applies to UIF. UIF contributions ordinarily consist of a 1% employee contribution and a 1% employer contribution, resulting in a combined contribution of 2% of remuneration, subject to the applicable earnings ceiling.

   
   

   SARS further confirms that interest and penalties can apply to unpaid PAYE, SDL and UIF amounts.

   
   

   For bargaining-council obligations, employers must similarly ensure that prescribed contributions, levies and other amounts are paid correctly and on time. Where the applicable Council rules or account terms provide for interest on arrears, the outstanding amount can increase significantly when payments are allowed to accumulate over several months.

   
   

   Practical lesson for employers: A small monthly shortfall can become a substantial debt if it is not addressed immediately.

2. Compliance Orders and Legal Enforcement

   Non-compliance with a bargaining-council collective agreement can trigger a formal enforcement process.

   
   

   Section 33 of the Labour Relations Act 66 of 1995 (LRA) allows the Minister, at the request of a bargaining council, to appoint designated agents to promote, monitor and enforce compliance with collective agreements. Designated agents may conduct inspections, investigate complaints and take steps to secure compliance.

   
   

   Section 33A of the LRA is particularly important for employers. It allows a bargaining council to monitor and enforce compliance with its collective agreements and permits a collective agreement to authorise a designated agent to issue a compliance order requiring an employer to comply within a specified period. An unresolved compliance dispute may ultimately be referred to arbitration.

   
   

   This is highly relevant to the hairdressing, beauty, cosmetology and skincare industry. The industry’s collective agreement provides for the use of designated agents to promote, monitor and enforce compliance. Employers, managers and employees are required to cooperate with a designated agent in the execution of the agent’s duties.

   
   

   Accordingly, an employer who has not registered the establishment and employees where registration is required, or who has failed to comply with prescribed wages, contributions or other collective-agreement obligations, may be investigated by the Council’s designated agent.

   
   

   The process should not be ignored.

   
   

   Depending on the circumstances, an employer may receive a compliance order, be required to pay amounts owing, participate in a dispute-resolution process or face arbitration. The industry’s collective agreement also provides that an arbitrator may make an award ordering payment of amounts owing, imposing a fine for failure to comply, confirming or varying a compliance order and, in appropriate circumstances, dealing with arbitration fees and costs.

   
   

   Where a debt has progressed through the appropriate enforcement process, and an enforceable order or award has been obtained, further legal execution steps may follow. Depending on the applicable enforcement process, this can ultimately expose an employer’s assets to enforcement procedures.

3. Financial Liability Can Extend Beyond the Original Amount

   Employers sometimes believe that their only liability is the original amount that should have been paid.

   
   

   This is a dangerous assumption.

   
   

   An employer’s eventual liability may include the original unpaid amount together with applicable interest, penalties, fees, arbitration costs or other amounts permitted under the applicable legislation, collective agreement or enforcement process.

   
   

   For example, if an employer has consistently underpaid employees against the applicable bargaining-council wage schedule, the employer may be required to pay the difference between what was actually paid and what should have been paid.

   
   

   A designated agent can investigate payroll records and assess an alleged shortfall. This is particularly important in an industry where employees may be paid through combinations of basic wages, commission, overtime, allowances or other remuneration arrangements.

   
   

   The employer should therefore maintain accurate payroll records, employment contracts, attendance records, leave records, payslips and proof of payments.

4. Employee Disputes and Claims

   Incorrect deductions and underpayments can quickly become employee-relations disputes.

   
   

   Employees may raise concerns where:

• PAYE or UIF information reflected on payslips does not correspond with the amounts actually deducted or contributed;

• UIF contributions have not been properly administered;

• prescribed bargaining-council wages have not been paid;

• commission has been incorrectly calculated;

• overtime or other remuneration has not been correctly administered;

• leave payments are incorrect;

• employees who are required to be registered with the applicable Council have not been properly registered; or

• prescribed benefits or contributions have not been paid.

  
  

  In the hairdressing and beauty industry, employers must pay particular attention to the applicable wage schedules and employment conditions contained in the collective agreement.

  
  

  The National Bargaining Council’s enforcement mechanism is specifically designed to address non-compliance with collective agreements. Section 33A provides a statutory framework through which bargaining councils can enforce collective-agreement obligations.

  
  

  An employer who receives a compliance order should therefore not simply ignore it. The employer should obtain professional advice, verify the calculations, identify any genuine disputes and engage with the Council within the prescribed time limits.

5. Loss of Good Standing and Establishment Consequences

   Being compliant is not only about avoiding penalties. It is also about maintaining the establishment in good standing.

   
   

   Where an employer accumulates arrears with a bargaining council or repeatedly fails to comply with its collective-agreement obligations, the consequences can extend beyond the immediate debt.

   
   

   The employer may experience difficulties in demonstrating compliance to employees, business partners, regulators or other stakeholders. Continued non-compliance may also result in enforcement action and additional costs.

   
   

   For an EOHCB member, persistent non-payment of applicable membership or Council-related obligations may also affect access to services and benefits that depend on the member’s account being in good standing, where provided for under the applicable membership terms.

   
   

   Employers should therefore not wait until an account has accumulated several months of arrears before seeking assistance.

6. Criminal Consequences in Certain SARS Cases

   Not every administrative mistake is a criminal offence. However, employers should understand that certain failures relating to employees’ tax can have consequences beyond civil debt recovery.

   
   

   SARS states that certain failures relating to employees’ tax can constitute offences. These include failing to deduct employees’ tax, failing to pay deducted tax to SARS within the prescribed period, failing to provide required tax certificates and using employees’ tax for purposes other than paying it to SARS. Conviction can result in a fine or imprisonment, depending on the offence.

   
   

   This distinction is important.

   
   

   An employer experiencing temporary cash-flow difficulties should not simply use PAYE, UIF or other statutory amounts to finance the establishment. Statutory deductions and contributions are not ordinary establishment income. Where an employer has deducted money from an employee for a specific statutory purpose, the employer must ensure that the amount is properly accounted for and paid to the relevant authority.

   
   

   Where financial difficulty exists, the employer should seek professional assistance and investigate lawful payment arrangements rather than allowing the debt to accumulate.

7. Damage to the Employer’s Reputation

   From a practical perspective, non-compliance can also damage the reputation of an establishment.

   
   

   An establishment in the hairdressing, beauty, cosmetology or skincare industry depends heavily on trust. Employees need to trust that they will be paid correctly, while clients and business partners expect the establishment to operate professionally.

   
   

   Repeated disputes involving wages, unpaid contributions, statutory deductions or bargaining-council obligations can undermine that trust.

   
   

   It is important, however, to distinguish this from employee misconduct that brings an employer into disrepute. If an employee commits misconduct that damages the employer’s reputation, that may constitute a separate disciplinary matter. It should not be confused with the employer’s own failure to comply with statutory or collective-agreement obligations.

   
   

   An employer facing employee misconduct may seek appropriate labour-relations assistance and follow a fair disciplinary process. Similarly, an employer facing its own compliance problem should address the matter through the applicable statutory and bargaining-council processes.

8. The Employer’s Onus: Prevention Is Better Than Enforcement

   The best way for an employer to deal with compliance problems is to prevent them from occurring.

Every establishment should regularly check:

1. Whether the establishment is correctly registered with the applicable authorities and bargaining council, where required.

2. Whether all employees who are required to be registered have been registered.

3. Whether employees are receiving at least the applicable minimum remuneration.

4. Whether PAYE, UIF and SDL obligations are correctly calculated and paid.

5. Whether bargaining-council contributions and levies are correctly calculated.

6. Whether payroll records correspond with actual payments made.

7. Whether payslips accurately reflect deductions and remuneration.

8. Whether employee records are complete and up to date.

9. Whether all required statutory returns and declarations are submitted accurately and on time.

10. Whether outstanding Council accounts are addressed before they become substantial debts.

SARS specifically emphasises that employers have a legal obligation to submit accurate employer information and that failure to comply can result in penalties, interest and adverse consequences for employees.

In conclusion, non-compliance with statutory deductions and bargaining-council obligations is not simply an accounting or payroll issue. It is an employer responsibility with potential consequences under tax law, labour law and applicable collective agreements.

For employers in the Hairdressing, Beauty, Cosmetology and Skincare Industry, compliance with the National Bargaining Council’s collective agreements is particularly important because those agreements may apply beyond the parties that originally concluded them when extended by the Minister in terms of section 32 of the LRA.

An employer who fails to register the establishment and employees where required, underpays employees, fails to submit accurate returns or allows Council contributions and other obligations to fall into arrears may, depending on the circumstances and applicable enforcement process, face a compliance investigation, a compliance order, arbitration, additional financial liability and further enforcement proceedings.

The message for employers is therefore straightforward: Do not wait for a compliance order before addressing compliance.

Proper registration, accurate payroll administration, timely statutory payments, compliance with the applicable bargaining-council agreement and regular review of employment records are essential elements of responsible employment practices.

For employers in the industry, compliance should not be regarded as a burden imposed on the establishment. It is an essential part of protecting the employer, the employees and the long-term sustainability of the establishment.