Leave Enhancement Pay (LEP)

LEP

(LEAVE ENHANCEMENT PAY)

DISPUTES UNDER THE MEIBC

Dear Steel Industry employer

NEASA has dealt with a number of Unfair Labour Practise disputes after the conclusion of the 2017-SEIFSA/NUMSA settlement agreement which, to date, has not been extended to non-parties.

In the main these disputes centred around the non-payment of Leave Enhancement Pay (LEP) by employers who are not affiliated to any of the SEIFSA organisations and therefore not bound by their agreement.

The question that arose is whether such employers are obligated to pay LEP as they have done so in the past. The legal position, confirmed by the Labour Appeal Court, is as follows:

Non-payment of a benefit by an employer may be unfair if the employer has an obligation to pay such benefit by virtue of legislation, contract or where the employer has a discretion to pay.

In the context of the MEIBC, employers had a legislative obligation to pay LEP by virtue of (previously) extended MEIBC main agreements. The extension of these agreements has been set aside by the Labour Court and as a result this legislative obligation no longer exists.

Employers may however still have a contractual obligation to pay LEP if the individual contracts of employment with employees guarantees such payment. If payment of LEP is not stipulated in the contracts of employment, no contractual obligation exists.

The last possible cause of action out of which an obligation can arise is where an employer has a discretion to pay LEP. This situation can arise in two instances:

• where the contract of employment indicates that the payment of LEP, in the absence of a MEIBC main agreement, is in the discretion of the employer; or
• where the employer has paid LEP previously, despite no main agreement being operative and no contractual obligation existed.

In both these instances the employee party will have to prove that the manner in which the discretion was exercised was unfair.

As this is a highly technical matter, members are advised to contact their relevant NEASA regional office should they be confronted with such a dispute.

Kind Regards,
Jaco Swart
National Collective Bargaining Coordinator

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