UNDERSTANDING DEDUCTIONS - STATUTORY & NON-STATUTORY

The rules around deductions from an employee’s salary are clearly regulated under the Basic Conditions of Employment Act (BCEA) and Clause 19 of the Main Collective Agreement (MCA). Employers must understand which deductions are lawful, which require written consent, and what limitations are imposed to ensure fairness.

What Are Deductions?

A deduction is any amount subtracted from an employee’s remuneration. While certain deductions are compulsory and regulated by law, others are only lawful if there is an agreement between the employer and employee that meets the requirements of the BCEA and MCA.

Statutory Deductions

Statutory deductions are those required by law. These include:

• Pay-As-You-Earn (PAYE) tax, deducted in terms of the Income Tax Act.

• Unemployment Insurance Fund (UIF) contributions, payable under the Unemployment Insurance Act.

• Skills Development Levy (SDL), applicable to certain employers in terms of the Skills Development Levies Act.

• Pension/retirement fund contributions, where the employer is legally obliged to register with a fund or bargaining council.

• Council compulsory deduction , applicable to council regulated area’s where contribution and deduction like the Personal care sector has sick pay fund, basic council levy, sick benefit fund (if area applicable), and union / agency fee.

These deductions are non-negotiable and do not require employee consent, as they are legislated.

Non-Statutory Deductions

Non-statutory deductions are not automatically authorised by law and require the employee’s written consent before being made. Examples include:

• Repayment of staff loans.

• Deductions for medical aid (if not compulsory by law or bargaining council).

• Training costs.

• Uniforms, equipment, or any items purchased through the employer.

This list might not be limited too, therefor any thing other than statutory requires an agreement or consent.

Key Principles under Section 34 of the BCEA

Section 34 of the BCEA provides strict rules for non-statutory deductions:

Section 34(1)(a): Such an agreement is enforceable if the employee in writing agrees to the deduction.

Section 34(2): A deduction to reimburse the employer for loss or damage may only be made if:

a) The loss or damage occurred in the course of employment and was due to the fault of the employee.

b) The employer has followed a fair procedure and given the employee a reasonable opportunity to state why the deduction should not be made.

c) The total amount deducted does not exceed the actual loss or damage.

d) The total deductions do not exceed one-quarter of the employee’s remuneration in money.

Key Principles Under Clause 19 of the MCA (19.9 – 19.12)

General Rule (Clause 19.9)

Employers may not deduct from an employee’s wages/salary unless:

• Required/permitted by law, court order, arbitration award, or this Agreement.

• For union subscriptions or levies.

• For benefit fund contributions under the Agreement.

• In line with clause 19.10 (loss or damage) - The employee agrees in writing.

Loss or Damage Deductions (Clause 19.10)

Employers may deduct amounts to recover losses or damages only if:

• The loss/damage occurred in the course of employment and was due to the employee’s act/omission.

• A fair procedure was followed, giving the employee an opportunity to respond.

• The deduction does not exceed the actual loss/damage.

• Deductions do not exceed one-quarter (25%) of the employee’s monthly wages/salary.

Goods Purchased (Clause 19.11)

Deductions for goods purchased must specify the nature and quantity of goods.

Payment of Deductions (Clause 19.12)

• Deductions must be paid to the rightful beneficiary within the required legal or agreement timeframe.

• Statutory deductions (e.g., PAYE, UIF) are calculated on the actual remuneration received.

• Other deductions under this Agreement are calculated on the basic salary/wage, unless otherwise agreed or legislated.

In other words, an employer cannot arbitrarily deduct amounts without following the legal requirements.

Please refer to the Mian Collective agreement under downloads on the council website https://hcsbc.co.za/

What are the Legal Requirements for Employers?

To lawfully deduct from an employee’s salary, an employer must ensure:

• There is a written agreement signed by the employee specifying the deduction.

• The deduction is for a lawful purpose (e.g., repayment of a loan, recovery of training costs).

• The amount is accurate and does not exceed the actual loss or debt owed.

• The employee is given a fair chance to dispute or provide reasons against the deduction.

• Amount deducted along with statutory deduction does not exceed a quatre of an employee’s monthly salary.

Failure to comply may result in the deduction being declared unlawful, and the employer may be ordered to repay the employee.

Case Law Example: Petrus Ley v Gateway Technology (Pty) Ltd

In this matter, the employee challenged the deduction of training costs from his final salary when he resigned. The Labour Court found the deduction to be lawful because:

• The employee had signed an agreement in his employment contract to repay training costs if he left within a certain period.

• The deduction represented the actual training cost.

The court dismissed the employee’s application with costs, ruling that the employer acted within the BCEA and the employment contract. This case highlights the importance of having clear, written agreements on deductions, particularly regarding training and development costs.

Deductions from employees’ salaries are strictly regulated to protect workers from exploitation while allowing employers to recover legitimate costs. Employers must distinguish between statutory deductions (automatic, by law) and non-statutory deductions (which require written consent and compliance with section 34 of the BCEA and Clause 19 of the MCA).

The key to lawfully enforcing deductions lies in written agreements, transparency, accuracy, and fairness. Employers should ensure their employment contracts and workplace policies are aligned with the BCEA to avoid costly disputes.