29/02/2024
Annual Salary Increases.
Annual salary increases are not required by law. This means employers are not obligated to grant an annual increase unless the employment contract contains an escalation clause that calls for a rise in remuneration from year to year. If increases are not specifically discussed in the contract, there is no obligation to grant any increase, unless for employees falling under the National Minimum Wage.
While there is no legal requirement for an employer to grant an annual increase, employees have the right to ask for one and negotiate an agreement that is favourable to both parties.
Ultimately, annual increases are not a legal matter, but rather a question of the specific contract in place between the employee and the company, as well as the relationship established between the employee and the management. If the employee is a valued asset of the company, then increases become a matter for two-way discussion, in which both parties would want a favourable outcome.
If an employee's contract refers to an annual increase, it is a condition of their 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.
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.
If you have provided an employee with an increase every year, it can be reasonably expected that the employee will continue to receive this increase every year. Once there is a reasonable expectation based on common practice, an implied condition of employment is created.
Although this practice has now become an implied condition of employment, it is not a contractual right of employment, but instead has created a right to be consulted should the employer wish to deviate from this practice. Therefore, changes to implied terms and conditions of employment should be done through consultation. If the company has a justifiable reason for deviating from this common practice, it can do so without the employee's consent.
A good HR practice is to have a remuneration policy in place and communicate with employees regarding salary increase possibilities. Together with employees who make a good contribution and are willing to negotiate, this usually results in a resolution that, while not necessarily optimum, can be an acceptable compromise for all concerned, especially in a struggling economy impacted by poor economic and political factors in South Africa
Please contact Elna Swart at 078 239 5365 or e-mail [email protected]
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