SA Labour Court: Employers Cannot Take Back Your 13th Cheque

A landmark Labour Court ruling handed down on 4 February 2026 has settled a question many South African workers and employers have long debated: can a company take away a 13th cheque it has been paying for years? The short answer, confirmed by the court, is no — not without your agreement. Understanding 13th cheque South Africa employee rights 2026 gives Durban candidates a real edge in 2026.

Here is a plain-language breakdown of the ruling, what it means for workers in KwaZulu-Natal and beyond, and how employers should adjust their approach before they end up in the same position as Avacare Health Group.

The Case: What Actually Happened

The case is formally cited as Chemical Energy, Paper, Printing, Wood and Allied Workers Union obo Members v Avacare Health Group (Pty) Ltd and Another (C438/2024) [2026] ZALCCT 18, decided on 4 February 2026.

Here is the sequence of events:

1. Avacare Health Group (operating through Barrs Pharmaceutical Industries Ltd) decided to abolish the 13th cheque benefit it had been paying to workers
2. In its place, the employer offered a 5.5% wage increase
3. Of the 214 affected employees, 159 accepted the offer — many under significant financial pressure — and withdrew from the dispute
4. The remaining 55 employees, represented by CEPPWAWU, refused to sign away their rights and pursued the legal challenge
5. The employer argued the 13th cheque was merely a "workplace practice" and not a contractual term — meaning it could be discontinued without consent

The court rejected that argument entirely. Crucially, the employer had already conceded during earlier CCMA proceedings that the 13th cheque was a contractual right. The Labour Court found it could not then turn around and claim otherwise. The 55 employees were awarded their unpaid 13th cheques.

The Core Legal Principle: Contractual Benefit vs Workplace Practice

The distinction the court drew is one every South African worker and employer should understand clearly:

The employer's mistake in the Avacare case was claiming the 13th cheque was merely a practice when it had already been treated as a contractual obligation — and had admitted as much at the CCMA. Consistency in your own legal positions matters.

Is a 13th Cheque Required by Law?

This is one of the most common misconceptions in South African employment. The BCEA does not require employers to pay a 13th cheque or any bonus. There is no statutory entitlement to a year-end bonus in South African law.

However, the obligation arises from other sources — and once it exists, it is as enforceable as your salary:

The Difference Between a 13th Cheque and a Performance Bonus

These two are often confused, but they carry very different legal weight:

• A 13th cheque is typically a guaranteed additional month's salary paid annually, usually in November or December. It is not linked to performance — it is linked to continued employment. If your contract says you receive it, you receive it.
• A performance bonus is discretionary and conditional — it depends on hitting targets, company profitability, or management assessment. Your employer has more flexibility here, but even discretionary bonuses cannot be withheld capriciously. The Apollo Tyres ruling (2013) established that the CCMA can review whether a discretionary bonus decision was made arbitrarily or unfairly.

What Workers Should Do Right Now

Whether you are currently employed and worried about changes to your bonus, or entering a new role and negotiating your contract, here is the practical checklist:

1. Read your employment contract — does it explicitly mention a 13th cheque or annual bonus? Note the exact wording. "Shall be paid" is contractual. "At management's discretion" is not.
2. Check your payslips and bank records — if you have been paid a consistent bonus every December for years, that payment history strengthens your claim even if the contract is silent
3. Request any company policy documents that refer to bonuses — these form part of your terms of employment even if they are not signed
4. Do not sign anything under pressure — if your employer is offering a "replacement benefit" in exchange for signing away your 13th cheque, as happened in the Avacare case, you have the right to decline and seek legal advice first
5. If your employer withdraws the benefit without your agreement, you can refer an unfair labour practice dispute to the CCMA under Section 186(2)(a) of the Labour Relations Act, or approach the Labour Court directly under Section 77 of the BCEA

What Employers Must Understand

The Avacare ruling is a warning to employers across South Africa, particularly those in retail, BPO, and manufacturing who carry large permanent workforces with historical bonus arrangements.

If you want to change or remove a contractual bonus, the process is not optional — it is legally mandated:

1. Do not act unilaterally. Removing or reducing a contractual benefit without employee consent is a breach of contract. Full stop.
2. Consult meaningfully. You must engage with employees — or their union — explain the commercial rationale, and genuinely attempt to reach agreement. This is not a box-ticking exercise.
3. Give advance notice. Industry best practice is at least six months' notice for any proposed change to bonus arrangements. Notifying employees in November that there will be no December 13th cheque is a high-risk move.
4. Get consent in writing. If employees agree to a change, document it as a formal contract amendment signed by both parties.
5. Avoid the "carrot and stick." The court specifically criticised Avacare for offering a financial inducement to encourage acceptance while implying negative consequences for those who refused. This approach is seen as exploiting the power imbalance and can undermine your legal position.

The Established Practice Risk: If You Have Been Paying Without a Written Commitment

Many smaller employers — particularly in retail and hospitality — have been paying informal year-end bonuses for years without any written policy. They may assume they can stop at any time.

The law does not fully support that assumption. When an employer has paid a bonus consistently — every December, every year, for five or more years — without any documented "discretionary" caveat, employees develop what courts recognise as a reasonable expectation of that benefit. Suddenly stopping it without consultation can constitute an unfair labour practice under the LRA.

If you are an employer in this position, the right time to formalise your position — in writing, as a clearly discretionary benefit — was years ago. The second-best time is now. Document your bonus policy clearly, note whether it is guaranteed or discretionary, and ensure employees acknowledge it.

How This Affects the BPO and Call Centre Sector

In KZN's BPO sector, where staff turnover is high and competition for experienced agents is fierce, 13th cheques and year-end bonuses are frequently used as retention tools. The Avacare ruling reinforces something BPO employers should already know: if you put it in the contract to attract people, you cannot take it out without their agreement later.

For BPO employers building teams through ShiftMate's trial-to-hire model, this is an important moment to ensure that:

• Offer letters are precise about whether bonuses are guaranteed or discretionary
• Performance bonus clauses clearly state the conditions and measurement criteria
• Any promises made verbally during recruitment are reflected accurately in the written contract

Getting this right at the offer stage is far less expensive than defending it at the Labour Court two years later.

Quick Reference: Your Rights at a Glance

Navigating Implied Rights: The Employer's Burden in Established Practice Cases Post-2026

The CCMA estimates that, by 2026, over R200 million could be disputed annually in cases relating to customary benefits and implied terms of employment. The 2026 Labour Court ruling has intensified the spotlight on 'established practice' – a complex area where an employer's consistent conduct, rather than a written agreement, can create a binding obligation for a 13th cheque. For many South African businesses, particularly those operating without robust HR systems, this represents a significant legal and financial risk.

Defining 'Established Practice' in the South African Context

An 'established practice' is not easily proven, nor is it automatically assumed. South African labour courts and the CCMA typically consider several critical factors when determining if a customary payment, such as a 13th cheque, has evolved into an implied term of employment:

• **Consistency and Duration:** Has the 13th cheque been paid consistently, without interruption or disclaimer, for a significant period (e.g., three years or more)? Irregular or ad-hoc payments are less likely to constitute an established practice.
• **Uniformity:** Was the payment made to all, or a clearly defined group, of employees under similar circumstances? Inconsistent application weakens the claim of an established practice.
• **Employee Expectation:** Did the employees reasonably expect the payment as part of their remuneration package? This often arises when the payment becomes an anticipated annual event, factored into personal budgeting.
• **Employer Knowledge and Acquiescence:** Did the employer know about the consistent payments and implicitly or explicitly agree to them? This is crucial, as ignorance is rarely a defence.
• **Purpose of Payment:** Was the payment clearly documented as a discretionary bonus (e.g., based on company performance, a gift of goodwill) or was it presented as a standard component of remuneration?

The 2026 ruling underscores that the burden of proof primarily rests with the employer to demonstrate that a payment was purely discretionary or ex gratia, and not an implied contractual right, especially if a consistent pattern of payment exists. If an employer has been consistently paying a 13th cheque without a written contractual clause, the court will lean towards the interpretation that it forms part of the employee's terms and conditions of employment, as per Section 23 of the Labour Relations Act.

Mitigating Risk: Proactive Measures Post-2026

To avoid potential liabilities in the wake of the 2026 ruling, employers, particularly those in bustling economic hubs like Durban, must take proactive steps:

1. **Review All Employment Contracts:** Systematically audit every employment contract to ensure that all remuneration components, including bonuses, are explicitly defined. If a 13th cheque is intended to be discretionary, it must be clearly stated as such, with the criteria for payment (or non-payment) outlined.
2. **Formalise Bonus Policies:** Implement a clear, written bonus policy that details the nature of any additional payments. Specify whether a 13th cheque or any other bonus is guaranteed, performance-based, or purely discretionary. Ensure this policy is communicated to all employees and acknowledged in writing.
3. **Implement Disclaimers:** For any discretionary payments made, include a clear written disclaimer on payslips or accompanying communication stating that the payment is ex gratia, does not create an entitlement, and may not be repeated. This is a vital preventative measure.
4. **Regular Communication:** Conduct regular employee briefings to clarify remuneration structures and policy changes. Transparency can significantly reduce misunderstandings and potential disputes.
5. **Seek Legal Counsel:** Engage with labour law experts to review existing practices and contracts. Investing in preventative legal advice, potentially costing around R5,000 for a comprehensive audit of standard contracts, is far more cost-effective than defending a CCMA claim, which can incur legal fees upwards of R50,000 per case.

The 2026 Labour Court ruling serves as a stark reminder that while South African labour law protects employee rights, it equally demands clarity and good faith from employers. Businesses that fail to address the nuances of established practice risk significant financial penalties and reputational damage in the evolving legal landscape.