Riverside Hockey Club

Riverside Hockey Logo

Encouraging Employee Loyalty and Good Conduct

 Many Employers find that Employees will leave them if there is a misunderstanding, miscommunication and / or if an Employee is offered a marginally higher wage and / or salary elsewhere.  This comes, more often than not, at an inconvenient time for an Employer.

In order to incentivise Employee loyalty, Employers are often advised to enter into agreements with Provident Funds wherein which they will contribute an equal amount to that which the Employee contributes to the Provident Fund.  The belief is that because the Employer is contributing freely and voluntarily that the Employee will be incentivised to remain with that Employer.

In reality, however this this is not the position. A Provident Fund will pay out the Employers and Employee’s contribution to the Fund, regardless whether or not the Employee has left as a result of misconduct.  Therefore, it arises that an Employee could be dismissed for serious misconduct, such as threatening an Employer’s life and still have the Employer’s contribution paid to that Employee. The problem is therefore, that in ordinary provident Funds an Employer cannot control the terms and conditions under which the Employers contribution is to be paid out.

We therefore suggest a “Savings Agreement” be entered into between an Employer and Employee.  A Savings Agreement is a voluntary arrangement between an Employer and  Employee wherein which both contribute equally to an account, which account is controlled by the Employer.  A Savings Agreement will have the following benefits:

1.         It is an incentive for loyalty.  The Employee only receives the Employers contribution to the Savings fund based on the length of their service.

2.        It is an incentive for good conduct.  The Employee stands to lose the Employers contribution to the Savings fund if she / he is dismissed for misconduct.

3.      It is a deterrent against any Employees resigning without the proper notice period.  This is because the Employer will be holding the Employee’s contributions as well as the Employers.

4.   It is an incentive to the Employee to find their own accommodation after termination of employment because it provides you with a means of deducting rental from the ex-employee.  Further after a reasonable period of service, it can provide them with a lump sum to purchase their own accommodation.

A formal agreement is to be signed between the Employer and Employee in regard to the above. This agreement will give the Employer a much greater degree of  “control” in regard to the circumstances under which an Employee will be paid the Employer’s contribution.

If you have any questions in this regard, please do not hesitate to contact McCarthy & Associates on (033) 266 6170 or admin@mccarthylaw.co.za.