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Employee Salary Deductions for Damage or Debt

Article by Johanette Rheeder

Although sections 34, 73 and 73A of the Basic Conditions of Employment Act (“BCEA”) have been part of this legislation for long, employers still get it wrong when deducting money from the salary of an employee for damages caused or debt, especially when the employee resigns or is dismissed and still owing the employer money.

This was the topic of review in the matter of To Anywhere Carriers v CCMA and Others[1] where the jurisdiction of the CCMA and the interpretation of section 34 of the BCEA again came before court.

In this case, the deductions made by the Employer were for damages caused by the employee during his employment. The Court considered whether the employee ought to have pursued the claim under section 34 rather than section 73 of the BCEA and if the claim could be pursued under section 73A of the BCEA. It also considered whether the employer’s contentions that the deductions were lawful under section 34 of the BCEA should have been upheld or not.

The employee referred a dispute to the CCMA in terms of section 73A of the BCEA, for amounts which he alleged the employer failed to pay him. Section 73A applies where an employer fails to pay any amount. In this case it is not in dispute that the employer did not pay the employee his full salary for the period April to October 2022, because it believed it could deduct the damages it suffered because of the employee’s actions. This was deducted from salary, and the salary was due in terms of the employment contract. Because the employee earned below the earnings threshold, he could refer the dispute about the amounts (salary deductions) not paid to the CCMA for arbitration. Section 73A confers jurisdiction on the CCMA to determine claims for money that an employer failed to pay to an employee earning below the earnings threshold.

The court found that the CCMA or the labour court (on review) must determine the claim on the basis of the pleaded case. In CCMA proceedings, the referral form and the pre-arbitration minute constitute the pleadings. The employee’s referral form cites section 73A of the BCEA as the cause of action, and he was entitled to choose it. The CCMA has jurisdiction over that cause of action. It was not for the employer to say that he should seek relief under section 34 of the BCEA, which, in any event, would fall outside the CCMA’s jurisdiction. Nor is it for this court (on review) to say which cause of action he should have pursued. A litigant chooses a cause of action to pursue, and the claim should be decided on that basis, being section 73A of the BCEA. A related issue, the court found, is whether the employee failed to refer the section 73A BCEA dispute to the CCMA within a reasonable time, and whether he was required to apply for condonation for the late referral. Section 73A is silent on the issue. Employees earning above the threshold who cannot refer disputes under section 73A have three years to institute such claims in this Court. There is no reason why that same time frame should not apply to section 73A claims, as doing so would advantage employees who earn above the earnings threshold and disadvantage those who earn below the earnings threshold and are compelled to refer disputes to the CCMA in terms of section 73A. The CCMA therefore had jurisdiction to determine whether the employee is owed the money which the employer deducted for damages it suffered by the hand of the employee.

If the employee is therefore entitled to claim the money as salary, the questions is whether the employer has a valid defence against this claim, being that it is entitled to deduct the money from the salary and also to deduct the full outstanding amount from the last salary of the employee, when he leaves the employment.

Enters the section 34 argument of the BCEA. In defence of the employee’s section 73A BCEA claim, the employer’s case was that the deductions from his remuneration were for loss and damage he caused, and that this is permitted in terms of section 34(2) of the BCEA.

Section 34 of the BCEA provides as follows:

‘34 Deductions and other acts concerning remuneration

(1)   An employer may not make any deduction from an employee's remuneration unless-

(a)     subject to subsection (2), the employee in writing agrees to the deduction in respect of a debt specified in the agreement; or

(b)     the deduction is required or permitted in terms of a law, collective agreement, court order or arbitration award.

(2)   A deduction in terms of subsection (1) (a) may be made to reimburse an employer for loss or damage only 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 has given the employee a reasonable opportunity to show why the deductions should not be made;

(c)     the total amount of the debt does not exceed the actual amount of the loss or damage; and

(d)     the total deductions from the employee's remuneration in terms of this subsection do not exceed one-quarter of the employee's remuneration in money.

In terms of section 34(1), deductions are permissible in two instances. The first is in terms of subsection (1) (a), but subject to subsection (2), when an employee agrees to the deduction in writing, to pay a debt, which is specified in writing.

The second is subsection (1) (b), when the deduction is required or permitted in terms of a law, collective agreement, court order or award.[2]

The court found that:

“Therefore, the question is the meaning of section 34(1)(a) read together with section 34(2) of the BCEA. Do the provisions mean that deductions from an employee’s salary for loss or damage can be made only with the employee’s written consent and subject to compliance with section 34(2)? Or do they mean that an employer can make such deductions where the requirements in section 34(2) have been met, even if the employee has not consented to the deduction in writing in terms of section 34(1)(a)?

Because the requirement for a written agreement in section 34(1)(a) is subject to subsection (2), an employer seeking to make deductions from an employee’s remuneration for losses and damages must comply with section 34(2) and obtain the employee’s written consent to the deduction of ‘a debt specified in the agreement’. Compliance with section 34(2) alone is insufficient. A written agreement specifying the debt is also required.”

Should the employer rely on section 34(1)(a), therefore argues that the employee has a debt to repay, then there must be a written agreement which specifies the debt and the requirements of subsection (2) must be adhered to. Under this section, if the employee refuses to sign the agreement, then the Employee can only rely on section 34(1)(b) to deduct the money, as there is no agreement to re-pay the debt.

Can the employer rely on an agreement in the employment contract to deduct the damage caused? If the debt is not specified in the employment contract, then the answer is no. This is often the case as the employment contract was agreed to before the employee caused the damage to the employer’s property.

The only other option available to the employer is then to rely on section 34 (1) (b), which could be the legal principle of set-off for damage caused by the employee.

Johanette Rheeder

JR Attorneys Inc.

[1] Unreported case 2025-056945 Labour Court Cape Town.

[2] See South African Municipal Workers Union v Matjhabeng Local Municipality [2024] 7 BLLR 771 (LC).