RIGHT OF A DOMESTIC WORKER TO A CHRISTMAS BONUS

Doris, a domestic worker, demands a Christmas bonus from her employer in the amount of R1 000. She has not yet been employed for longer than a year and as a result no prior agreements or expectations have been created in this regard. When Christi, her employer, informs Doris that she will not pay her a Christmas bonus, Doris aggressively shouts that she will report Christi to the CCMA for unfair labour practices …

Doris is a domestic worker who has been working at a private residence in Durbanville for just under a year now. On 15 December 2015 Doris approaches her employer to demand a R1 000 Christmas bonus. Christi, Doris’s employer, is not in a financial position to offer Doris a Christmas bonus, let alone a bonus to the amount requested by Doris. Christi explains to Doris that she cannot pay her a bonus due to economic constraints but that next year they could revisit this conversation and see if things have improved. It would also be based on Doris’s performance during the year.

Doris gets very upset by this response and starts shouting at Christi, threatening to take her to the CCMA for unfair labour practices. Christi feels apprehensive and is uncertain as to her stance in law on this point, so she consults an attorney to advise her.

Upon obtaining legal advice Christi learns that labour law legislation provides no guidance on the question of bonuses. In the absence of a contractual term regulating bonuses, a previous arrangement or previous payments of a bonus Christi learns that it is up to her to decide whether she wants to pay Doris a bonus or not.

Due to a Christmas bonus being considered as gratuitous payment by an employer to an employee, it is a natural corollary that the employee is granted same in exchange for a job well done, or for exceptional service which reaches beyond the call of duty in the year that has passed. This warrants a reward or tip over and above the normal agreed upon wage for services rendered.

Things Christi was advised to consider when making such a decision were inter alia Doris’s performance in the past year and Christi’s own financial position. She should also keep in mind that, should she decide to pay what Doris has demanded, a reasonable expectation may be created in the years to come for Christi to continue to pay such a bonus.

Doris does not have an all-encompassing right to receive a Christmas bonus. Further, due to the fact that no reasonable expectation has yet been created, Christi’s reasons for and decision not to pay Doris a bonus cannot be seen as an unfair labour practice. Thus providing Doris, in this particular case, no grounds on which to approach the CCMA to claim performance from Christi.

Reference list:

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

WHO MAY BE APPOINTED AS DIRECTOR?

Certain people are not eligible to be appointed as directors of a company. In this article we look at who is disqualified from being a director as well as the effects of the actions of such persons while still acting as director.

A company must not knowingly permit an ineligible or disqualified person to serve or act as a director, according to section 69(3) of the Companies Act 71 of 2008. “Knowingly” includes the situation where the company should reasonably have known that the person is ineligible or disqualified.

Section 69(7) lists the persons on which there are an absolute prohibition, being juristic persons, minors or any persons disqualified in terms of the Memorandum of Incorporation. Section 69(8) lists the persons that are disqualified on a temporary basis, being someone who has been prohibited by the court or whom the court has declared a delinquent, unrehabilitated insolvents, persons who were removed from an office of trust on the grounds of misconduct involving dishonesty, and persons who were found guilty of a criminal offence and imprisoned without the option of a fine, or were ordered to pay a higher fine for being found guilty of any dishonesty crimes.[1]

A question that arises here is what the effect would be of appointing a prohibited director. Section 69(4) says that a person immediately ceases to be a director if they are prohibited from being a director, but section 71(3) states that if a shareholder alleges that a person is disqualified then the person must be removed by a board resolution before they cease to be a director. This means that any act done by such a person, despite his disqualification, will be valid and binding on the company unless the third party who was involved in the act was aware that the person they were dealing with was disqualified.[2]

Section 162(5) (a)-(f) sets out the grounds for an order of delinquency. A court must make an order declaring a person to be a delinquent director if the person:

  1. consented to serve as a director, or acted in the capacity of a director or prescribed officer, while ineligible or disqualified to be a director;
  2. acted as a director in a manner that contravened an order of probation;
  3. grossly abused the position of director while being a director;
  4. took personal advantage of information or an opportunity, or intentionally or by gross negligence inflicted harm upon the company or a subsidiary while being a director;
  5. acted in a manner that amounted to gross negligence, wilful misconduct or breach of trust while being a director; or as contemplated in section 77(3) (a), (b) or (c);
  6. has repeatedly been personally subject to a compliance notice or similar enforcement mechanism;
  7. has been convicted of an offence at least twice, or subjected to an administrative fine or similar penalty; or
  8. was a director of a company or a managing member of a close corporation, or controlled or participated in the control of a juristic person that was convicted of an offence, or subjected to a fine or similar penalty, within a period of five years. [3] & [4]

If a person is declared a delinquent in terms of section 162(5) (a) or (b) it is unconditional and for the lifetime of the person. If a person is declared a delinquent in terms of section 162(5) (c)-(f) this is temporary for a minimum of 7 years.[5]

It is therefore very important, when appointing a director, to make sure that he is qualified in terms of the new Companies Act. One must do proper research about a person accordingly before appointing him as a director of a company because it is possible that if you do not do so, the company in which you are a shareholder may have to bear the consequences of the actions of this disqualified person.

Reference list:

  • Companies Act 71 of 2008
  • FHI Cassim et al Contemporary Company Law (2012)
  • [1] Section 69(7) – (8) of the Companies Act 71 of 2008.
  • [2] Section 69(4) and 71(3) of the Companies Act 71 of 2008.
  • [3] Section 162(5) (a)-(f) of the Companies Act.
  • [4] FHI Cassim et al Contemporary Company Law (2012) 435 – 437.
  • [5] FHI Cassim et al Contemporary Company Law (2012) 438.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

YOUR WILL AND FOREIGN ASSETS

Each country has its own legislation regarding inheritance and signing of wills. It would therefore be possible that your South African will does not comply with all the requirements of the country where your foreign assets are located. This may result in the non-inheritance of your foreign assets in terms of your last will and testament. It is therefore imperative that you should have two wills if you have foreign assets; one for your South African assets and one regarding your foreign assets according to the regulations of the country where these assets are located. It is always important to plan your estate carefully; should you have foreign assets, however, you must take extra care to ensure that you meet all the requirements of the relevant country’s legislation.

The aim with planning an estate is ultimately to reach your goals in the distribution of your assets and liabilities. These goals should make provision for the management of your estate during your lifetime, but also after your passing.

A further consequence of the increasing exposure to international investments is that South Africans are also exposed to foreign fiduciary services, including wills for their foreign assets.

Whether it is truly necessary to draw up a separate foreign will or just one global will depends on the following:

  • where your foreign assets are located;
  • the nature of the assets and the type of products in which these assets have been invested; and
  • who takes care of the administration of your foreign assets/investments.

Should your South African will be drawn up in Afrikaans, it may be necessary to have it translated and sealed before sending it to the foreign executor/agent. This could be time-consuming and very costly.

A separate foreign will also has other advantages: your foreign will is administered in line and simultaneously with your South African assets; an executor/agent who is familiar with the required procedures in the relevant country where your assets are located will save you time and money; and someone who draws up wills professionally within the jurisdiction of the relevant country can provide you with advice regarding the possible dangers in relation to tax accountability and hereditary succession when it comes to assets outside the borders of South Africa.

Although we would recommend drawing up a second will with reference to foreign assets, we suggest that, should there be any mention of foreign assets, your South African will must be drawn up in English and it should not pertinently refer to the fact that the document is only applicable to your South African assets.

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)

SUSPENSIVE CONDITIONS IN A DEED OF SALE: KNOW YOUR OBLIGATIONS

Imagine signing a deed of sale for your dream house and later discovering that the contract lapsed because you obtained bond approval one day too late. The situation could be worsened if the Seller receives a better offer for the house and accepts that better offer.

If a deed of sale is made subject to a suspensive condition, it will lapse if such condition is not fulfilled in time. This was confirmed in the case of Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C) (hereinafter referred to as “the Marais case”). There is then no contract for the sale of the property between the two parties and the Seller can sell the property to another purchaser.

Examples of suspensive conditions are obtaining bond approval before a certain date, or the sale of the Purchaser’s current property before a certain date. It is very important for both the Seller and Purchaser to take note of the wording of these conditions and ensure that they understand them.

The following is an example of the wording of a suspensive condition relating to a bond, also sometimes referred to as a “bond condition”:

This Deed of Sale is subject to the Purchaser obtaining bond approval from a financial institution for the amount of R1 500 000 before 2 December 2013, failing which this agreement will lapse.

In the above example, if only R1 400 000 is approved before 2 December 2013, in other words R100 000 less than the required amount, then the condition is not met and the contract will lapse. Similarly, if a bond is approved for R1 500 000 but only on 5 December 2013, then the condition is not met in time and the contract will lapse, as was decided in the case of Meyer v Barnardo and another 1984 (2) SA 580 (N).

The parties can however agree to extend the time during which the suspensive condition must be fulfilled. Such extension must be in writing and signed by both the Seller and Purchaser as per the requirements of the Alienation of Land Act 68 of 1981. It must also be done before the time limit of the suspensive condition expires. In the above “bond condition” clause example, this would mean that the parties would have to sign the extension before 2 December 2013 to prevent the Deed of Sale from lapsing. In the Marais case the court held that even if the suspensive condition had been inserted in the contract for the exclusive benefit of the Purchaser, the Purchaser would have had to communicate his intention to waive the requirement before it lapsed.

In the Marais case the parties entered into a written agreement of sale with a suspensive condition that a bond in the amount of R10 149 072 needed to be obtained by 15 August 2005. The Purchaser, however, only obtained a mortgage bond in the amount of R9 650 000, which was granted on 2 August 2005. The respondent’s attorneys argued that the suspensive condition had been substantially fulfilled because the shortfall was, in their opinion, only a “minor shortfall” and therefore an insignificant amount compared to the purchase price. The court did not agree with this and found that it could not be said that the parties intended the suspensive condition to be fulfilled in any way other than what was expressly stipulated in the Deed of Sale. The court found that the contract had therefore lapsed.

If a suspensive condition will not be fulfilled in time, rather take the necessary precautions beforehand to avoid a lapsed Deed of Sale. We advise that you contact a professional for advice in this regard.

Reference list:

  • Kontraktereg, UNISA 2004
  • Self-Study Conveyancing Course for Attorneys, Gawie le Roux, 2013
  • Alienation of Land Act 68 of 1981
  • Marais v Kovacs Investments 724 (Pty) Ltd [2009] 1 All SA 174 (C)
  • Meyer v Barnardo and another 1984 (2) SA 580 (N)

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice. Errors and omissions excepted (E&OE)