The practice of working for 12 months and, at the end of the period, distributing a bonus 13th cheque is common practice in many companies. When drafting the bonus policy in your company, you need to make sure that it is perfect. If it isn’t, you could find yourself in a bit of a pickle as the following case illustrates.

In National Union of Mineworkers obo Mathibela and others v Canyon Coal (2016)25 CCMA 6.7.12 also reported at [2016] 10 BALR 1104 (CCMA), after the employer decided not to award the employees an annual bonus, the union instituted an unfair labour practice case relating to the provision of benefits. The employer stated that an annual bonus was entirely discretionary and not a term of the employees’ contracts of employment.

What the CCMA Commissioner found

The Commissioner at the Commission for Conciliation, Mediation and Arbitration (CCMA) found that the unfair labour practice provisions of the Labour Relations Act (LRA) are not intended to create new rights. These are intended to confirm existing rights. (It needs to be noted that unfair labour practice disputes also include the fairness of employer’s conduct in refusing to exercise a discretion to grant a benefit.)

While the bonus constituted a benefit, and had been granted for several years in a row, there was no evidence that in refusing to grant the bonuses, the employer had acted in bad faith or in a discriminatory manner. The employees had also not proven that a 13th cheque was a condition of their employment. This means that the employer had not committed an unfair labour practice by declining to grant the bonus. The application was dismissed.

This case illustrates that it is essential for you to ensure that the wording of your contracts and/or policies, as well as notices on discretionary payments, are absolutely clear. The case also reinforces the principle that if a discretionary bonus has been issued over several years, it is not necessarily an entitlement to employees.

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