The very foundation of the employment relationship is about the rendering of services by an employee, and payment in return for those services by an employer.
The current COVID-19 crisis has caused employees to stop rendering services to their employers. Therefore, the question is whether those affected employers are obliged to pay those employees who are no longer rendering services to them.
The answer is simply that the employment relationship becomes suspended. Simply put, there is an intervening impossibility of performance which leaves both the employer and employee unable to meet their obligations.
As a result, the suspension of an employment relationship has dire financial consequences for both the employer and the employee who will not be receiving income as a result of the lockdown.
However, what is expected, although not as a result of any legal obligations, is that those employers who can afford to continue paying employees who are not rendering services should allow those employees to take annual leave which they are statutorily entitled to. On the other hand, those employers who cannot afford the aforementioned could approach financial institutions for financial assistance on favourable terms.
Should the lockdown period be extended and cause for the employees to exhaust their leave days, those employees should be allowed to further invoke their other leave days (For example compassionate leave, sick leave, annual leave).
If the employees have exhausted all of their leave, the employer may have to resort to allowing the employees to take negative leave. This means the employer would be advancing the employees with leave days that are not due to them yet.
On the other hand, those employers who cannot afford the aforementioned could approach financial institutions for financial assistance on favourable terms.
Moreover, apart from approaching financial institutions, it is my view that if there ever was a critical time for employers to approach their own pension funds for financial assistance this is the time. It should however be those employers who are capable of reliably paying back the borrowed money who should be allowed to engage their pension fund.
The need to review employment laws post pandemic
Our laws were not designed for situations like the one we find ourselves in now. The establishment of the Temporary Employee / Employer Relief Scheme (TERS) is in no doubt capable of having immense potential with regards to reducing the adverse consequences of COVID-19.
But I am not convinced that it can address the crisis completely.
The Basic Conditions of Employment Act 75 of 1997 (BCEA) stipulates the minimum conditions of employment; it provides amongst other things, that the annual leave that an employee is entitled to take is 15 working days per annum (21 ordinary days) – this is in terms of section 20. Section 21 further provides that an employer is obliged to pay the employee for those leave days.
Therefore it is high time that legislation be either amended or enacted to compel employers to deduct two leave days, from the 15 that is due to an employee, so as to put them into what is termed a leave bank. This would be a scheme whereby you have both contributors (those who qualify), and donors.
The donors, in part, would consist of executives who do not qualify to benefit under scheme but rather make a donation towards those employees who would be most at risk of socio-economic devastation following a disaster. Furthermore, those employees who qualify and are contributors to the scheme would also have the option of donating to fellow co-workers.
It is important to note that this does not mean the employee forfeits the two leave days. The employee, to the extent that the leave bank reserve remains unused, would be entitled to a pay out of the monetary equivalent of the banked days in the event of them leaving the employer. Those who have donated their own leave days would not be entitled to the aforementioned pay out. In other words, donated leave days cannot be claimed back.
As an alternative to the leave bank, the employer should be required by statute to deduct money from the employee in the same way that is done for medical aid or the Unemployment Insurance Fund (UIF). That money should then go towards a dedicated disaster management fund that can act as a reserve to offset the financial implications of any disaster that may arise.
Sandile July is a director and labour law specialist at Werksmans Attorneys.