No work no pay – What do the courts say?

No work no pay – What do the courts say?
09 Jul 2020

The ‘no work no pay’ principle has been highly topical during this Covid-19 lockdown period with much confusion surrounding the legalities when it comes to employers having to continue to pay, or not pay, their employees. To add to this, two recent Labour Court judgments offer differing decisions that might not offer greater clarity but do set out the Court’s reasoning behind each which should be noted.

In the recent Labour Court judgment of Macsteel Service Centres SA (Pty) Ltd v National Union of Metal Workers of South Africa and others [2020] JOL 47372 (LC) (Macsteel), handed down on 3 June 2020, the Court was approached on an urgent basis to make an order regarding the unprotected status of strike action. However, in coming to their decision, the court dealt with the topical issue of the applicability of the ‘no work no pay’ principle to the Covid-19 lockdown period. The Court started off by commending the Applicant company for not implementing no work no pay over the lockdown period and for continuing to pay employees in full, despite the fact that they were not able to render their services.

While this implies that the Applicant company was not obligated to pay employees for the period for which they did not and could not work, the Court went further and made it abundantly clear that the legal principle of no work no pay is applicable to the Covid-19 lockdown period. In this regard, the Court held:

The reality in law is that the employees who rendered no service, albeit to no fault of their own or due to circumstances outside their employer’s control, like the global Covid-19 pandemic and national state of disaster, are not entitled to remuneration and the Applicant could have implemented the principle of ‘no work no pay’.

This judgment is welcomed as it provides in clear and unequivocal terms that companies are well within their rights to invoke the principle of no work no pay for the Covid-19 lockdown period, as they do not have a legal obligation to pay employees when employees are unable to render their services.

However, the same reasoning was surprisingly not applied in Mhlonipheni v Mezepoli Melrose Arch and Others [2020], handed down in the High Court on the same day as the Macsteel judgment.

The Court in this case had to decide whether the Respondent company ought to be placed under business rescue in terms of S131(4)(a) of the Companies Act 71 of 2008 (the Act). In coming to its decision, the Court had to determine whether the Respondent company had a legal obligation to pay its employees over the Covid-19 lockdown period. In this regard, the Court looked at the common law doctrine of supervening impossibility, whereby, performance in terms of a contract is excused when performance is rendered objectively impossible. The Court held that the obligation the Respondent company had to pay its employees was always capable of performance and was at no time rendered impossible. Furthermore, the Court reiterated that the duty to pay arises not from the actual performance of the work, but from the tendering of service. The Court went further and held that the lockdown level 5 Regulations made it clear that there was still a duty on employers to pay employees, as the implementation of payroll systems was listed as an essential service. The Court thereby concluded on the point and held that supervening impossibility was not applicable and the Respondent company had a legal obligation to pay its employees.

Evidently, there appears to be a stalemate regarding the duty to pay employees over the lockdown period. However, we are of the view that the court in Macsteel had it right, and as a court specifically designed to deal with labour issues, such as the principle of no work no pay, their approach is to be favoured.

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(This article is provided for informational purposes only and not for the purpose of providing legal advice. For more information on the topic, please contact the author/s or the relevant provider.)
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