In February 2026, the Labour Court ruled that an employer’s decision to unilaterally abolish the contractual payment of a 13th cheque to its employee amounted to a breach of contract. The court emphasised the trite position that contractual obligations are not optional and cannot be mischaracterised as a workplace practice to avoid obligatory fulfilment.
This dispute arose after an employer elected to unilaterally abolish the payment of a 13th cheque to its employees and replaced it with a performance-based bonus scheme. Notably the employer offered a salary increase to employees who accepted the unilateral amendment without challenge and advised that any strike action opposing the proposed change would be ineffective and futile.
214 employees argued that the payment of the 13th cheque was a contractual benefit whilst the employer maintained that the payment was merely a workplace practice that had developed and been implemented over time. A contractual benefit arises from an agreed term or condition within a contract of employment (such as the number of hours you work or your position) whilst a workplace practice is not contractually agreed to but is instead a common practice which has arisen within a workplace (such as the shift you work on or the duties you perform). Whilst an employer is entitled to amend a workplace practice without specific agreement from the affected employee, an employer may not amend a contractual term or condition without agreement from the employee, and any such unilateral amendment will invite legal consequences.
The employer conceded during the dispute resolution process that the payment of the 13th cheque was a contractual right and the court easily concluded that that failure to pay it amounted to a breach of contract and ordered the payment of the unpaid 13th cheques to the employees. The court looked unfavourably on the employer’s attempt to mischaracterise the benefit as a workplace practice and skirt their contractual obligations.
The court expressed displeasure with the employer’s “stick and carrot” approach of offering a financial incentive in exchange for compliance and a threat of losing out on that financial incentive in the event of non-compliance whilst simultaneously discouraging collective bargaining due to its resulting, what the court deemed “unfortunate”, effect. In this regard, whilst the dispute resolution process ran, 55 of the original 214 affected employees did not accede to the employer’s proposal to forfeit their contractual right to a 13th cheque in exchange for withdrawing from the dispute and taking the salary increase.
Employers should remember that the payment of a 13th cheque is not a statutory obligation and should they willingly include such a benefit in a contract of employment they are contractually bound to comply with it.
This case serves as a reminder to employers to follow the correct procedures when a need to amend a contractual obligation arises as any failure to obtain the requisite agreement to amend will result in the court enforcing that contractual obligation. Employers are discouraged from mischaracterising obligations in an effort to avoid them and are reminded to be cautious when implementing approaches to obtain agreement which the court may see as coercive. Before amending or discontinuing any benefits, employers must verify whether they are contractual and, if so, must obtain agreement to avoid defending unnecessary court action.
This blog is co-authored by Olebogeng Motlhaping, a candidate attorney