Recommendations
on employment
problems in Tunisia

1.1 Clear definition of employee benefits in the terms and conditions of the contract

Guideline for employment problems / PREVENTING: 1.1 Clear definition of employee benefits in the terms and conditions of the contract

Most plausible interventions

During the orientation process of the available literature, we identified the following interventions as most plausible for preventing conflicts on unfair employment benefits:

What constitutes a benefit? According to literature, undefined benefits are the cause of unfair labour practices and disputes. The Labour Relation Act (LRA) in South Africa ^[1] defines an unfair labour practice as “any unfair act or omission that arises between an employer and an employee involving unfair conduct by the employer relating to the promotion, demotion, probation (excluding disputes about dismissals for a reason relating to probation) or training of an employee or relating to the provision of benefits to an employee”^[2]. This means that an employee who has been the subject of an unlawful and/or illegitimate treatment by his employer on one or more of the listed practices has the right to challenge this conduct by denouncing a conflict based on an unfair labour practice. However, the resolution of disputes related to the provision of employment benefits remains quite controversial because of the uncertainty around the interpretation of the term benefits and the absence of definition of benefits on part of LRA. In a thesis entitled “An appraisal of the provision of benefits as an unfair labour practice in South African labour law”, K.Newaj explains that “there are two primary controversies regarding the definition of the term benefits. The first is whether the term falls within the definition of remuneration as contained in section 213 of the LRA. The second concerns the principles that must be applied by decision makers in establishing whether the benefit that forms the subject of the unfair labour practice dispute is indeed a dispute of right as opposed to a dispute of interest^[3]”. In his article entitled “Unfair labour practices: Benefits, where are we ?”, Aadil Patel^[4] explains how “the Labour Appeal Court (LAC) of South Africa held that benefits may be divided in two categories: (a) benefits which are the subject of rights-based disputes; (b) benefits which are the subject of interest-based disputes. The former category concerns disputes where the benefit in question is legally due to the employee (either through contract or through some statutory entitlement). The second category concerns benefits to which the employee is not yet contractually entitled (although he may wish to be)”^[5]. Employees are often referred to the Commission for Conciliation, Mediation and Arbitration (CCMA), which is a dispute resolution body established by the LRA^[6]. If an employee feels that his/her employer has acted unfairly in delivering the benefits owed to him/her, he/she may report a dispute to the CCMA. However, the CCMA must have the jurisdiction to resolve such disputes. Aadil Patel gives us an example: “In G4 Security v NASGAWU (unreported case DA 3/08), the LAC considered a situation where an employer who had previously provided free meals to his staff subsequently withdrew those free meals (…) the LAC held that the CCMA has no jurisdiction to resolve such a dispute because the parties could not prove that the free meal was ever a term of the employees’ contract of employment^[7]. And he adds: “(…) only a dispute regarding benefits that arise from contract or statute may be arbitrated in the CCMA”. For purpose of the PICO question, we compare employers and employees agreeing on a clear definition of employee (rights-based) benefits in the terms and conditions of the contract with not having one.

PICO question

For parties to an unfair employment benefits dispute, is employers and employees agreeing on a clear definition of the employee benefits in the terms and conditions of the contract more effective than not having a definition?

Search strategy

The databases used are: HeinOnline, Westlaw, Wiley Online Library, JSTOR, Taylor & Francis, and ResearchGate.

For this PICO question, keywords used in the search strategy are: employment, labour, disputes, conflicts, benefits, practice, unfair, solutions, service sector.

Assessment and grading of evidence

The main sources of evidence used for this particular subject are:

A. Patel, “Unfair labour practice: Benefits-where are we ?”, October 2011 (Cliffe Dekker Hofmeyr - Unfair labour practices: Benefits - where are we?)
E. Fourie, “What constitutes a benefit by virtue of section 186(2) of the Labour Relations Act 66 of 1995 ? Apollo Tyres South Africa (PTY) Ltd v CCMA 2013 5 BLLR 434 (LAC)”, Potchefstroom Electronic Law Journal, Vol. 18, No.1, January 2015 (https://hdl.handle.net/10520/EJC169690)
K.Newaj, “An appraisal of the provision of benefits as an unfair labour practice in South African labour law”, June 2019 (Newaj_Appraisal_2019.pdf (up.ac.za))
K.Newaj, “Resolving the benefits dilemma”, SA Mercantile Law Journal, Vol. 30, No.1, November 2018 (https://hdl.handle.net/10520/EJC-126eed78cf)
K.Newaj, “Establishing jurisdiction in respect of unfair labour practices relating to the provision of benefits”, SA Mercantile Law Journal, Vol.31, No.1, December 2019 (https://hdl.handle.net/10520/EJC-1a76f5f064)
S.Ebrahim, “The interpretation to be accorded to the term benefits in section 186(2)(a) of the LRA continues: Apollo Tyres South Africa (Pty) limited v CCMA (DA1/11) [2013] ZALAC 3”, Potchefstroom Electronic Law Journal, Vol. 17, No.1, January 2014 (https://hdl.handle.net/10520/EJC151918)
T.Cohen, “Employees’right to discretionary benefits”, South African Law Journal, Vol.127, No.3, January 2010 (https://hdl.handle.net/10520/EJC53932)

A.Patel gives examples of unfair employment disputes in South Africa where benefits claimed by employees were not based on common law or contract obligations. In a first case^[7], “the Court held that certain travel concessions constituted benefits within the meaning of the LRA even though those concessions were not contractually due to the employees. In this case, the employer’s unilateral withdrawal of this benefit, without consultation with the relevant employees, was considered an unfair labour practice and the employees were compensated accordingly”^[8]. In a second case^[9], “the Court follows the decision in Protekon stating that withholding an acting allowance which was granted to the same employee on a different occasion constituted an unfair labour practice (notwithstanding that the acting allowance was never contractually due to the employee)^[10]”.

This means that the employee’s benefits can be divided into two categories: those arising from common law or a contract and those dependent on the employer’s discretion, so his/her power to make a decision with varying degrees of freedom according to his/her managerial power, but with due regard for the principles of justice. In the latter case, the Court will have to judge whether it is a fair or unfair labour practice; emphasis is given to the (un)fairness of the employer conduct, also justiciable.

E. Fourie offers another case court example; this concerns the well-known Apollo case. She summarises the facts as follows: “Hoosen, a 49-year-old female, was employed by Apollo Tyres South Africa (Pty) Ltd (the appellant) from 1 April 1984. Apollo Tyres, a tyre manufacturing company, struggling under economic pressures, introduced an early retirement scheme for certain employees (…) applied only to staff between the ages of 46 and 59 who were paid on a monthly basis. The successful applicant would receive two months’ additional pay and an ex-gratia payment calculated on a sliding scale based on the age of the applicant. The third respondent (Hoosen) enquired about the scheme; however, she was refused entry into the scheme and was informed that to qualify for the early retirement scheme applicants had to be between 55 and 59. She enquired if she could appeal against the decision and mentioned that the phrase “subject to the management’s discretion” could be abused (…) Hoosen resigned and whilst serving notice she referred an unfair labour practice dispute to the CCMA^[11]”. E.Fourie explains that “the argument raised at the CCMA was that the early retirement package was not a benefit in terms of section 182(2) and in any event that it was not unfair not to grant Hoosen the early retirement package. The commissioner found that it was unfair to deny Hoosen entry into the scheme”^[12].

However, the Court found that the scheme constituted an employment benefit within the section 186(2)(a) of the LRA whose goal is to assist employees like Hoosen who have no legislative or legal recourse (through common law or contract). Thus, the Court had to determine the meaning of benefits. After several attempts at defining benefits the Court came to the following conclusion: “Clearly the notion that the benefit must be based on an ex contractu or ex lege entitlement in a case like this would render the unfair labour practice jurisdiction sterile (…) a benefit in terms of section 186(2)(a) can be defined to include a right or entitlement to which the employee is entitled, ex contractu or ex lege, including rights judicially created as well as an advantage or privilege offered or granted to an employee in terms of a practice or policy subject to the employer’s discretion”^[13]. E.Fourie adds “The court found that the early retirement scheme was a benefit, and that by not granting it to Hoosen the employer committed an unfair labour practice. Hoosen did not have a contractual entitlement to the early retirement benefits and the granting of this benefit was subject to the employer’s discretion (…) The employer kept on changing the criteria and it is evident that there was no fair (…) The employer was not exercising his discretion fairly. It was decided that the employer in this case had committed an unfair labour practice relating to the provision of benefits in terms of section 186(2)(a).”^[14]

Quality of evidence and research gap

According to our research method, we grade the evidence comparing having a clear definition of the employee benefits in the terms and conditions of the contract with not having one, as moderate. Most sources are of high quality and consist of recent, medium-sized/large empirical research – mainly thesis and scholarly articles in internationally reputable periodicals on law – based on courts cases and justice practitioners experiences in South Africa. In the same geographical area, the different studies report the same effects and interventions regarding conflicts on employment benefits. The research team does not upgrade or downgrade the evidence.

Identify research gap

The only resources dealing with this subject and used in the reflection on this first recommendation are exclusively drawn from South Africa’s experience in the prevention, management and resolution of conflicts at work. The resources found are usually theses and/or scientific articles on the subject. Thus, the results of this research have been limited by the limited resources available to deal with this issue in other geographical areas and by the large- scale studies such as lack of meta-analyses on this subject.

Recommendation

Desirable outcomes

Employers and employees agree on a clear definition of employee benefits in the terms and conditions of the contract	Not having a clear definition of employee benefits in the terms and conditions of the contract
It allows the employee to be better informed. The various case studies have shown that mentioning and defining the employee’s benefits in his/her employment contract allows the employee to be better informed about the rights to which he/she can claim, on the basis of the terms and conditions of the contract. This also allows the employee to be protected in the event of a dispute with his/her employer regarding benefits. For example, if an employer does not respect its commitment on granting one or more benefits mentioned in the contract, the employee is able to claim these rights in courts.	It allows the unfair labour practice jurisdiction to extend the definition of employee benefits and find other remedies to resolve a dispute on employment benefits, including those not those strictly based on an employment contract or a law. Conversely, a restrictive definition could, in some cases, leave the employee without recourse.. The definition and interpretation of ‘benefits’ was notably expanded to include those subjected to the employer’s discretion. In this case, if the employee feels that he/she did not receive a benefit to which he/she would be entitled, the employee may appeal to the competent authorities, even if that right is not mentioned in a contract or in a law. Take for example, a past practice can provide for benefits to the employee.
The definition of benefits in the contract between the employee and the employer also facilitates the management and resolution of the conflict by the competent authorities. This is because benefits defined in the contract are considered as ‘rights-based’ benefits and should be distinguished from ‘interests-based’ benefits which are the subject of collective bargaining or negotiation and do not need an arbitrator. For example, in the latter case, an institution like the CCMA or other equivalent authority, would not have the jurisdiction to deal with such dispute. Also, the Court would not have to determine or interpret the meaning of a benefit in a given case if the requested benefit is mentioned and defined ex contractu, in the employment contract between the employee and the employer. In that case, a conflict on unfair employment benefit is more likely to be resolved.	By extending the definition and interpretation of ‘benefits’, the recourse to jurisdiction for unfair labour practice related to conflicts on employment benefits also allows a situation where new rights may be created for the employee, because of the lack of clarity and respect for the rights/interest divide. Indeed, the courts used to “upheld the restrictive interpretation of benefits to uphold the divide between disputes of interest and disputes of rights”^[15] (…) Rights disputes are normally seen as disputes concerning the existence, content and extent of legal rights and the interpretation of a legal rule. Disputes of interest, on the other hand, are generally regarded as being concerned with the creation of new rights rather than the interpretation and application of existing rights”^[16].

Employers and employees agree on a clear definition of employee benefits in the terms and conditions of the contract

Not having a clear definition of employee benefits in the terms and conditions of the contract

It allows the employee to be better informed. The various case studies have shown that mentioning and defining the employee’s benefits in his/her employment contract allows the employee to be better informed about the rights to which he/she can claim, on the basis of the terms and conditions of the contract.

This also allows the employee to be protected in the event of a dispute with his/her employer regarding benefits. For example, if an employer does not respect its commitment on granting one or more benefits mentioned in the contract, the employee is able to claim these rights in courts.

It allows the unfair labour practice jurisdiction to extend the definition of employee benefits and find other remedies to resolve a dispute on employment benefits, including those not those strictly based on an employment contract or a law. Conversely, a restrictive definition could, in some cases, leave the employee without recourse.. The definition and interpretation of ‘benefits’ was notably expanded to include those subjected to the employer’s discretion. In this case, if the employee feels that he/she did not receive a benefit to which he/she would be entitled, the employee may appeal to the competent authorities, even if that right is not mentioned in a contract or in a law. Take for example, a past practice can provide for benefits to the employee.

The definition of benefits in the contract between the employee and the employer also facilitates the management and resolution of the conflict by the competent authorities. This is because benefits defined in the contract are considered as ‘rights-based’ benefits and should be distinguished from ‘interests-based’ benefits which are the subject of collective bargaining or negotiation and do not need an arbitrator. For example, in the latter case, an institution like the CCMA or other equivalent authority, would not have the jurisdiction to deal with such dispute. Also, the Court would not have to determine or interpret the meaning of a benefit in a given case if the requested benefit is mentioned and defined ex contractu, in the employment contract between the employee and the employer. In that case, a conflict on unfair employment benefit is more likely to be resolved.

By extending the definition and interpretation of ‘benefits’, the recourse to jurisdiction for unfair labour practice related to conflicts on employment benefits also allows a situation where new rights may be created for the employee, because of the lack of clarity and respect for the rights/interest divide. Indeed, the courts used to “upheld the restrictive interpretation of benefits to uphold the divide between disputes of interest and disputes of rights”^[15] (…) Rights disputes are normally seen as disputes concerning the existence, content and extent of legal rights and the interpretation of a legal rule. Disputes of interest, on the other hand, are generally regarded as being concerned with the creation of new rights rather than the interpretation and application of existing rights”^[16].

Undesirable outcomes

Employers and employees agree on a clear definition of employee benefits in the terms and conditions of the contract	Not having a clear definition of the employee benefits in the terms and conditions of the contract
Benefits depend on the discretionary power of the employer that can lead to abuse from the employer. Various court cases showed that the management and resolution of a conflict related to the granting of one or more benefits owed to the employee by the employer was complex and was not simply a matter of mentioning and defining them in a contract or in the law. In practice, there is what is called the employer’s discretionary power, which is defined above and which sometimes hides in the contract part of the benefits to which the employee could claim. If in certain cases these benefits, depending on the discretion of the employer, are mentioned in the contract (most of the time these benefits are not mentioned and are granted on the sole will and decision of the employer), the arbitrary and random nature of this power may lead to certain abuses by the employer against the employee to benefit from his/her rights on employment benefits.	It does not guarantee the employee any protection in the event of a dispute and it will not facilitate the management and resolution of a conflict on employment benefits. The examples showed that the absence of an explicit mention and definition of the benefits granted by the employer in the terms and conditions of his/her contract did not guarantee the employee any protection in the event of a dispute. Although the employee may always use the competent authorities to assert what he/she considers to be his/her right, the absence of an explicit mention and definition of benefits in his/her contract will not facilitate the management or resolution of the dispute. The absence of definition also helps to blur the lines and distinction between rights-based benefits and interests-based benefits. However, each type should have its resolution mechanism. The first ones are legally due to the employee – through contract or law, whereas interests-based benefits should be the subject of collective bargaining or negotiation between the employee and the employer – and would not need an arbitrator. Disputes based on rights-based benefits concern pre-existing rights, whereas disputes based on interests-based benefits are about the creation of new rights or alteration of existing ones. These two types of rights cannot be resolved in the same way. The first one should be resolved through arbitration and adjudication, and the second one should be resolved through collective bargaining and industrial action. So not having a clear definition of benefits would make the management and resolution of the dispute between the employer and the employee difficult.

Employers and employees agree on a clear definition of employee benefits in the terms and conditions of the contract

Not having a clear definition of the employee benefits in the terms and conditions of the contract

Benefits depend on the discretionary power of the employer that can lead to abuse from the employer. Various court cases showed that the management and resolution of a conflict related to the granting of one or more benefits owed to the employee by the employer was complex and was not simply a matter of mentioning and defining them in a contract or in the law. In practice, there is what is called the employer’s discretionary power, which is defined above and which sometimes hides in the contract part of the benefits to which the employee could claim. If in certain cases these benefits, depending on the discretion of the employer, are mentioned in the contract (most of the time these benefits are not mentioned and are granted on the sole will and decision of the employer), the arbitrary and random nature of this power may lead to certain abuses by the employer against the employee to benefit from his/her rights on employment benefits.

It does not guarantee the employee any protection in the event of a dispute and it will not facilitate the management and resolution of a conflict on employment benefits. The examples showed that the absence of an explicit mention and definition of the benefits granted by the employer in the terms and conditions of his/her contract did not guarantee the employee any protection in the event of a dispute. Although the employee may always use the competent authorities to assert what he/she considers to be his/her right, the absence of an explicit mention and definition of benefits in his/her contract will not facilitate the management or resolution of the dispute.

The absence of definition also helps to blur the lines and distinction between rights-based benefits and interests-based benefits. However, each type should have its resolution mechanism. The first ones are legally due to the employee – through contract or law, whereas interests-based benefits should be the subject of collective bargaining or negotiation between the employee and the employer – and would not need an arbitrator. Disputes based on rights-based benefits concern pre-existing rights, whereas disputes based on interests-based benefits are about the creation of new rights or alteration of existing ones. These two types of rights cannot be resolved in the same way. The first one should be resolved through arbitration and adjudication, and the second one should be resolved through collective bargaining and industrial action. So not having a clear definition of benefits would make the management and resolution of the dispute between the employer and the employee difficult.

Balance of Outcomes

Taken together, the available research suggests that the law or contract of employment should be an employee’s sole source of entitlement to benefits. However, it has been shown that a dispute between the employee and the employer over benefits can always arise because of the benefits granted to the employee based on the employer’s discretionary power. In this situation, the employee may appeal to the competent authorities, even if that right is not mentioned in a contract or a law. Then the competent authorities would have to define ‘benefits’ by adopting a broad definition.

This situation allows the jurisdiction to find other remedies to solve a dispute on employment benefits than those based on a contract or a law. It may also allow the creation of new rights for the employee because of the lack of clarity and respect for the rights/interest divide. However, some authors explained that benefits should be divided into two categories: (a) benefits that are the subject of rights-based disputes; and (b) benefits that are the subject of interest-based disputes. The first ones are legally due to the employee – through contract or law, whereas interests-based benefits should be the subject of collective bargaining or negotiation between the employee and the employer – and would not need an arbitrator.

Therefore, mentioning and defining the benefits to which the employee is entitled in the terms and conditions of the contract helps to prevent these conflicts. It allows the employee to be better informed about his/her rights and better protected in the event of a dispute, as well as to facilitate the management and resolution of the conflict by the competent authorities. This is because the Court would not have to determine or interpret the meaning of a benefit in a given case if the requested benefit by an employee is mentioned and defined ex contractu. In that situation, a conflict on unfair employment benefits will likely be resolved. Thus, employers and employees agreeing on a clear definition of the employee benefits in the terms and conditions of the contract are preferred.

Recommendation

Taking into account the balance of outcomes, the benefits for parties to an unfair employment benefits dispute, and the quality and consistency of the evidence, we make the following recommendation: For parties to an unfair employment benefits dispute, employers and employees agreeing on a clear definition of the employee benefits in the terms and conditions of contract are more effective than not having one for the employee right of protection.

View References

^[1] For further informations about the LRA: Labour Relations Act 66 of 1995 | South African Government (www.gov.za)

^[2] Chapter VIII, “Unfair dismissal and unfair labour practice”, 185-2 (OFFICE OF THE PRESIDENT (www.gov.za))

^[3] K.Newaj, “An appraisal of the provision of benefits as an unfair labour practice in South African labour law”, June 2019, p.5 (Newaj_Appraisal_2019.pdf (up.ac.za))

^[4] Aadil Patel is the Head of Employment Law practice at Cliffe Dekker Hofmeyr (Cliffe Dekker Hofmeyr – Patel)

^[5] A. Patel, “Unfair labour practice: Benefits-where are we ?”, October 2011 (Cliffe Dekker Hofmeyr – Unfair labour practices: Benefits – where are we?)

^[6] For more informations about the CCMA: About us – CCMA

^[7] E. Fourie, “What constitutes a benefit by virtue of section 186(2) of the Labour Relations Act 66 of 1995 ? Apollo Tyres South Africa (PTY) Ltd v CCMA 2013 5 BLLR 434 (LAC)”, Potchefstroom Electronic Law Journal, Vol. 18, No.1, January 2015, p.3300-3301

^[8] E.Fourie, Op.cit., p.3301

^[9] E.Fourie, Op.cit., p.3307

^[10] E.Fourie, Op.cit., p.3307

^[11] Case law reference : Protekon (Pty) Ltd v CCMA 2005 7 BLLR 703 (LC)

^[12] A.Patel, Op.cit.

^[13] Case law reference : IMATU obo Verster v Umhlathuse Muncipality 2011 9 BLLR 882 (LC)

^[14] A.Patel, Op.cit.

^[15] E. Fourie, “What constitutes a benefit by virtue of section 186(2) of the Labour Relations Act 66 of 1995 ? Apollo Tyres South Africa (PTY) Ltd v CCMA 2013 5 BLLR 434 (LAC)”, Potchefstroom Electronic Law Journal, Vol. 18, No.1, January 2015, p.3308.

^[16] E.Fourie, Op.cit., p.3304