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Three essential points you MUST know about salary increases so you're not guilty of unfair labour practice

by , 15 July 2013
Auditor General Terence Nombembe is smiling all the way to the bank. According to a letter published in a parliamentary document, Nombembe's salary will increase from R1 708 600 per annum to R2 650 000 per annum with effect from 1 December 2006. This meant Nombembe's salary package would increase by R941 400 a year, backdated for six-and-a-half years, a windfall of well over R6m. The date of 1 December 2006 is the day on which Nombembe - who replaced Shauket Fakie was appointed to the post, News24 reports.

As an employer it's crucial that you deal efficiently with salary increases. One wrong move could land you at the labour court for unfair labour practice.

Are you prepared to take that costly risk?

Here are three important points you that'll help you deal with salary increases efficiently

#1: You don't have to negotiate salary increases annually

'You're not legally obliged to negotiate or award annual salary increases. However, you'll have to negotiate if this is a term in a collective agreement with a union, or in an employee's contract of employment,' says the Labour Law for Managers Loose Leaf Service.

#2: You can base annual salary increases on performance

You can implement a performance reward system, which could include salary increases or bonuses based on individual or company performance.

These merit or performance-based increases reward good performance with the incentive of an annual salary increase (or bonus). An employee whose performance doesn't meet the required performance standards and who you didn't reward with an annual salary increase can't argue that he had a right to such an increase.

If you're planning not to give a salary increase because an employee or the company has allegedly underperformed, you must inform the affected employee in good time. Provide information and reasons to substantiate the decision. For example, where you believe your employee underperformed and make sure your evaluation system is fair and objective.

#3: Must you still pay your employee a performance-related increase if she's taken maternity leave?

You can't unfairly discriminate against an employee on the basis of her pregnancy or a matter relating to her pregnancy like taking her maternity leave.

If she's met the required performance standard for the period she did work, you must award her the same benefits as others who have met the standard. If her performance has been satisfactory and the only reason she didn't fully achieve the required outputs was because she took maternity leave, you should at least award her a pro-rata increase. You could be guilty of unfair discrimination if you don't.

Knowing these important points will ensure you deal with salary increases in a legal manner and avoid unfair labour practice claims.

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