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One of the most common violations identified by inspectors from the Department of Employment and Labour during farm visits is the incorrect deduction from employees’ compensation. Sectoral Determination 13, as gazetted under the Basic Conditions of Employment Act, 1997 (Act 75 of 1997), provides clear rules governing deductions.
What does the law say?
Deductions required by law, such as income tax (PAYE) and contributions to the Unemployment Insurance Fund (UIF), must be made by the employer. These deductions are mandatory and non-negotiable. The same applies to deductions made pursuant to a court order or arbitration award against the employer.
Under certain conditions, an employer may deduct up to 10% of an employee’s regular wages for food and up to 10% for housing. However, the following conditions apply:
- Food or accommodation must be provided consistently and regularly as part of the employment.
- No additional deductions for food or housing may be made from the employee’s remuneration.
- The deduction may not exceed the actual cost to the employer of providing the food or housing.
- Regarding housing, no additional deductions may be made for electricity, water, or other services.
- Before a housing deduction can be made, the dwelling must comply with certain minimum standards: a durable and watertight roof; glass windows that can be opened; electricity inside the house if electricity infrastructure exists on the farm; safe water in or near the house (within 100 m); the dwelling must be at least 30 m² in size; proper toilet facilities inside or near the dwelling.
- In the case of communal housing (where more than two employees live together), the maximum deduction allowed is 25% of the minimum wage. The employer must divide the deduction equally among employees.
- No deductions for housing may be made for children under the age of 18.
Other deductions
An employer may also deduct repayments for loans or advances made to an employee, provided the deduction does not exceed 10% of the employee’s wages on payday.
Deductions for payments to third parties may be made only at the employee’s written request. Examples include medical aid contributions, pension fund payments, or trade union subscriptions.
Employers may recover the cost of damage to or loss of property only if the damage occurred during the course of employment and the employee was found responsible. The employer must follow a fair process and give the employee an opportunity to explain why the deduction should not be made. The employee must agree to the deduction in writing, and the total monthly deduction may not exceed 25% of the employee’s monthly remuneration.
The law strictly prohibits deductions for tools, work clothing, training costs, grazing for the employee’s livestock, or fines for misconduct or breach of the disciplinary rules. Deductions made without written consent, without a legal basis, or outside the limits prescribed by legislation are also prohibited.
Practical advice to producers
Ensure that every deduction is clearly reflected on the employee’s payslip, including the name, amount, and reason for it. Employers should keep accurate records of all deductions in the employee’s personnel file. Always obtain written consent where required. Verbal agreements are often not sufficient evidence in court. – Tiaan Botes, legal advisor, LWO Employers Organisation