As South Africans head into the final stretch of the year, the same question often starts circulating in workplaces: “Are we getting a bonus?”
For some employees, a year-end payment is part of the rhythm of working life. For others, it’s an expectation rather than a guaranteed right.
But legally, how do year-end bonuses work?
According to Cliffe Dekker Hofmeyr (CDH), South African law does not provide any general statutory right to a year-end bonus. This means employees are not automatically entitled to a “13th cheque” unless something else creates that right, such as:
- a contract of employment;
- a collective agreement;
- a company policy; or
- a binding past practice (in some circumstances).
This principle was confirmed in UIS Analytical Services (Pty) Ltd v Independent Democratic Union of South Africa and Others (2025), where the Labour Court emphasised that employees had no contractual or policy-based right to a bonus, and therefore the trade union could lawfully strike to demand one.
Two types of bonus schemes
Although companies use a variety of bonus schemes, CDH says they fall broadly into two categories: a guaranteed bonus or a discretionary bonus.
A guaranteed bonus is typically a contractual term – sometimes called a thirteenth cheque – and arises where the right is clearly included in the contract of employment, a collective agreement, or a formal, binding policy.
If the contract says an employee will receive a bonus, the employer must pay it, subject only to the conditions set out in that document (for example, that the employee must still be employed on the payment date).
These payments are not at the employer’s discretion; they are enforceable rights.
A discretionary bonus is just that – discretionary. The employer may consider the business’s performance and financial viability, the performance of individual employees, team results, and commercial circumstances.
Although the employer has discretion, it must still be exercised fairly. The Labour Relations Act protects employees from arbitrary or capricious decisions relating to benefits.
But crucially, a bonus that is discretionary does not create a right to be paid one. In the UIS Analytical case, the employees’ contracts explicitly stated that there was “no legal obligation” on the employer to pay bonuses and that bonuses were subject to “exclusive discretion”. As a result, the court held that the employees had only a bargaining demand, not an enforceable benefit.
Bonus disputes are usually bargaining issues, not legal rights
The UIS Analytical judgment illustrates how courts distinguish between a rights dispute and an interest dispute.
The employees had individual contracts stating the employer “has no legal obligation” to pay bonuses, and any bonus would depend on the employer’s exclusive discretion. The Court confirmed this meant employees had no right to bonuses in 2024.
Because there was no contractual or policy right, the employees’ demand for a bonus was an issue of mutual interest – something addressed through negotiation and, if necessary, protected strike action.
The Court held that a demand for a bonus without a contractual entitlement is an interest dispute, not arbitrable as an unfair labour practice. Therefore, the union was entitled to strike lawfully.
The judgment directly tackled the common misconception that because a bonus qualifies as a “benefit”, it must be enforceable. The Court rejected this, noting that a benefit becomes enforceable only when the right to it exists in contract, law, or policy; otherwise, it remains a negotiable issue.
In many workplaces, employees argue that because bonuses were paid in previous years, a right has been established.
The Labour Court was cautious on this point. In UIS Analytical, bonuses had been paid the previous year under a specific wage agreement, but that agreement had expired. The past payment did not create a standing entitlement for future years.
The key question is: Was the bonus intended to become an ongoing term and condition of employment? Unless there is clear evidence of that, past payments alone are not enough.
In UIS Analytical, the wage agreement for 2024 expressly stated that bonuses would not form part of the initial agreement and that the parties would meet again once draft financials were available.
When the employer later declared bonuses “not negotiable”, the Court held that:
- there was no agreement on bonuses;
- the employer could not rely on an “unspoken” understanding about affordability; and
- the union was entitled to take industrial action to pursue its demand.
This illustrates an important principle: Where a matter is expressly left for negotiation, an employer cannot unilaterally close the door on that negotiation.
Disclaimer: The information in this article is a general guide and should not be used as a substitute for obtaining professional legal advice.
Well court ruled must be obeyed so bonus issue remain unsteady only contractual between employer and employees