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Article 32/2025

What are the principles of set-off applied by the labour appeal court in North West Provincial Legislature and Another v National Education, Health and Allied Workers Union obo Members (2023) 34 SALLR 351 (LAC), with reference to Schierhout v Union Government (Minister of Justice) 1926 AD 286 and Public Servants Association obo Ubogu v Head of Department of Health, Gauteng and Others 2018 (2) SA 365 (CC) and why can such principles not be applied when an employer wishes to deduct from an employee’s remuneration monies erroneously paid to such employee in circumstances where there is a dispute about the amount of money to be deducted and the entitlement to so deduct?

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  1. Set-off operates only where two persons reciprocally owe each other something in their own right (Du Bois, F (ed), ‘Wille’s Principles of South African Law’,9 ed (2007) at p 1834).
  2. It applies, as was stated in Schierhout v Union Government (Minister of Justice) 1926 AD 286, at 289 (see, also, Capricorn Beach Home Owners Association v Potgieter t/a Nilands and Another [2013] ZASCA 116; 2014 (1) SA 46 (SCA)):
    ‘When two parties are mutually indebted to each other, both debts being liquidated and fully due, then the doctrine of set-off comes into operation.
    The one debt extinguishes the other pro tanto [only to the extent of the debt] as effectually as if payment had been made.’
  3. In Public Servants Association obo Ubogu v Head of the Department of Health, Gauteng 2018 (2) SA 365 (CC) (Ubogu), at paragraph [70], the constitutional court made it clear that the doctrine of set-off does not operate ex lege (as a matter of law) and that, where there are no mutual debts but rather an unresolved dispute about deductions made from an employee’s salary, it cannot be applied.
  4. With reference to the aforesaid scenario, the view is held that set-off is not permissible in such scenario because, firstly, there is non-compliance with the requirement that the parties must be mutually indebted to each other and, secondly, set-off is not permissible if there is a dispute.
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