Labour Court Reaffirms: Employers May Not Unilaterally Withdraw a Contractual 13th Cheque
A recent decision of the Labour Court has once again confirmed a fundamental principle of South African labour law:
Where a 13th cheque forms part of an employee’s contractual terms and conditions, it may not be unilaterally withdrawn.
The judgment, delivered by the Labour Court in Cape Town, arose from a dispute between employees of Barrs Pharmaceutical Industries Ltd (with Avacare Health Group cited in the proceedings) and their employer regarding the abolition of a long-standing 13th cheque benefit.
Background to the Dispute
During wage negotiations, the employer informed employees that it intended discontinuing the 13th cheque and replacing it with a performance-based bonus structure.
Employees were advised that:
- The revised structure would take effect from January 2022;
- Those accepting the change would receive a 5.5% salary increase; and
- Those refusing would not qualify for the increase.
Despite employees rejecting the proposal and asserting their contractual entitlement, the employer implemented the new structure and did not pay the 13th cheque. Instead, employees received a discretionary ex gratia payment.
While a number of employees ultimately accepted the revised terms, a group persisted with legal action seeking enforcement of their contractual right to payment.
The Central Legal Question
The key issue before the Court was whether the 13th cheque constituted:
- A contractual entitlement; or
- Merely a workplace practice, capable of being withdrawn.
The employer argued that the benefit had evolved as a practice over time and was therefore not legally enforceable.
The employees contended that the benefit formed part of their terms and conditions of employment.
The Labour Court’s Finding
After considering the evidence and applicable legal principles, the Labour Court found that the employees were contractually entitled to the 13th cheque.
The Court held that the unilateral withdrawal of the benefit constituted a breach of contract and infringed the provisions of the Basic Conditions of Employment Act (BCEA), which regulates terms and conditions of employment.
Significantly, the Court noted that the employer had previously conceded, during proceedings before the Commission for Conciliation, Mediation and Arbitration (CCMA), that the 13th cheque was contractually enforceable. It could not subsequently adopt a contradictory position.
The employer was ordered to pay the outstanding 13th cheque amounts to the remaining applicants for each year from 2021 to the date of final payment.
Alignment with Established SAFLII Case Law
The Court’s reasoning is consistent with established jurisprudence reflected on the Southern African Legal Information Institute (SAFLII), particularly in matters dealing with unilateral changes to terms and conditions of employment.
- Unilateral Variation of Contractual Terms
In National Union of Metalworkers of SA v Fry’s Metals (Pty) Ltd 2005 (5) SA 433 (SCA), the Supreme Court of Appeal confirmed that an employer may not unilaterally vary contractual terms without employee consent. Where a benefit forms part of the employment contract, it is enforceable unless lawfully amended.
- Contractual Nature of Benefits
In Apollo Tyres South Africa (Pty) Ltd v CCMA & Others (2013) 34 ILJ 1120 (LAC), the Labour Appeal Court clarified that a benefit is not limited to rights expressly stated in a contract, but may include advantages or privileges to which an employee is contractually entitled. Where a benefit is guaranteed rather than discretionary, it is enforceable.
- Changes to Terms and Conditions under the LRA
Section 64(4) of the Labour Relations Act provides employees with the right to strike where an employer unilaterally changes terms and conditions of employment. This statutory protection reinforces the principle that contractual terms cannot be altered without agreement.
Together, these authorities confirm that where a 13th cheque forms part of the employment contract — whether expressly stated or established through consistent incorporation — it cannot simply be reclassified as a workplace practice and withdrawn.
Practical Implications for Employers
This judgment serves as a critical reminder that:
- Long-standing remuneration benefits may acquire contractual force.
- Employers cannot rely on internal reclassification (“practice” vs “benefit”) to avoid contractual obligations.
- Wage negotiations do not permit unilateral implementation of changes.
- Pressure tactics during collective bargaining may expose employers to legal challenge.
Before restructuring remuneration or replacing guaranteed benefits with performance-based incentives, employers should:
- Review employment contracts and historical practices.
- Assess whether the benefit has crystallised into a contractual entitlement.
- Engage in proper consultation and collective bargaining.
- Obtain written agreement before implementation.
HR Consult Insight
The decision underscores the importance of proactive contract governance and remuneration audits. Employers should ensure:
- Clear drafting of discretionary vs guaranteed benefits;
- Periodic review of remuneration policies;
- Alignment between contracts, policies, and actual practice; and
- Compliance with both the BCEA and the LRA when implementing structural changes.
Failure to do so can result in retrospective liability, reputational harm, and significant financial exposure.
For organisations considering remuneration restructuring, HR Consult provides structured legal-aligned audits and advisory services to ensure compliance and mitigate risk.
🚨 Thinking of Changing Benefits or Restructuring Pay?
Before you touch bonuses, 13th cheques, or guaranteed benefits, pause ✋
Let HR Consult help you:
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👉 Chat to us before the Labour Court does.
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Office: 012 997 0037
E-mail: info@hrconsultsa.co.za
Adapted by HR Consult, specialists in South African labour and employment law compliance.
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