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Avoid disputes over salary increases with this one clause in your contracts of employment

by , 20 February 2015
Salary increases are the cause of many workplace disputes.

And things can get ugly very quickly. Your employees could embark on a go slow or go on strike for weeks to force you to give into their demands. Or worse, they could take you to the CCMA and accuse you of unfair labour practice.

The good news is you can easily avoid this by putting the following clause in their employment contracts...

With this one clause in your contract of employment, fights over salary increases could be a thing of the past

Before we get to the clause, we want to make it clear that, legally, your employees don't have a legal right to an annual increase. You don't even have to negotiate salary increases, unless:
  1. Your employment contracts say you will;
  1. You have a collective agreement with a trade union; or
  1. There's a bargaining council agreement or sectoral determination that applies to your sector that says you have to.
For the purposes of this article, we'll focus on point number one.
If your employment contracts say you'll provide annual increases, you must include a reviews/increases clause in your employment contracts.
The Labour Law for Managers Loose Leaf Service explains that if you decide that salary increases will take place annually, you must include a clause in your employment contracts saying when this review process will happen. This way, there won't be demands for salary increases out of the blue.
Over and above being clear when the review will happens, make sure the decision about whether or not you'll increase your employee's salary remains at the discretion of the company.
This way, you won't create an expectation that you guarantee one each year. And employees are entitled to it.
If you don't make it clear that your employees have no automatic right to an increase and you'll give them at your discretion, they'll accuse you of unfair labour practice when they don't get one.
Take a look at the clause you must include below...
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Here's a sample clause to include in your employment contracts when it comes to salary increases

'Salaries are reviewed annually in April, but any increases are at the sole discretion of the company.'
Putting this clause in your contracts of employment will help you avoid disputes over salary increases. And unfair labour practice claims from employees.
PS: This is just one of the clauses you must include in your contracts when it comes to remuneration and benefits. The other clauses you must have are:
  • What you'll pay your employee;
  • Other payments in cash and in kind;
  • When you'll pay your employee;
  • The rate of pay for overtime work; and
  • Deductions.
You can find example clauses of all these in the Labour Law for Managers Loose Leaf Service. You'll also find the five important things you must consider before you draft clauses in your employment contract that deal specifically with salaries and benefits.

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