With the financial difficulties that most companies are currently experiencing and with the end of the year approaching, the question on everyone’s minds is “Do I have to give my staff an increase this year?”.
Salary increases are not regulated by Labour legislation, but whether an employee is entitled to an annual increase is determined by various factors.
Collective agreement/Sectoral determination:
If your company falls within the jurisdiction of a bargaining council/sectoral determination, which provides for an annual increase in their Main Agreement or publishes new minimum wages each year, then your company will be obliged to comply with this increase. It may be possible to apply for an exemption from this increase, however, a successful exemption application based on prescribed minimum wages proves challenging.
Contract of employment:
If an employee’s contract refers to an annual increase, it is a condition of his/her employment and must be complied with every year. This condition can only be amended through meaningful consultation with the employee and consent given by the employee.
Common practice within the company:
This situation is a bit more problematic. It was held in Cele and Others v Eskom Holdings SOC Ltd LC (JS1086/12  ZALCJHB 271 that terms and conditions of employment may be implied as a result of a “practice which has developed over a period time that has never been specifically agreed between the employer and the employee, but can be argued to have formed part of the terms and conditions of employment”.
If you have provided an employee with an increase every year, it can be reasonably expected by the employee that he/she will continue to receive this increase every year. Once there is a reasonable expectation based on a common practice there is an implied condition of employment.
Although this practice has now become an implied condition of employment, it is not a contractual right of employment (which cannot be changed without consent) but instead has created a right to be consulted with should the employer wish to deviate from this practice. Therefore, changes to implied terms and conditions of employment should be done through a consultation. If the company has a justifiable reason for deviating from this common practice it can do so – without the employee’s consent.
It may still result in a referral for a unilateral change in terms and conditions of employment and/or an unfair Labour practice, but in a struggling economy, which has been impacted further by the COVID-19 pandemic and subsequent lockdown, a Commissioner should deem the failure to implement this increase as justifiable if implementing an increase in wages will place the company in grave financial trouble and result in a subsequent retrenchment.
To maintain good working relations with your staff (and to prevent a referral to the CCMA) it is advisable to consult with the parties well ahead of the expected increase time and to discuss the position of the company and its inability to provide increases this year.
Source: https://blog.seesa.co.za/index.php/2020/08/31/are-employees-entitled-to-an-annual-increase/ utm_source=Facebook&utm_campaign=Articles&fbclid=IwAR0ZFVz3V10FH6ZYcY3J1ifKH_152YLaa9NrRkXMIEzDrzY-MeBvdAguJj4