MTN won’t go under if it allows its employees to have company cars: CCMA
Twenty radio mast engineers employed by MTN in Durban have won an arbitration court battle that allows them to keep their personal company cars and petrol cards, after the cellphone giant argued these should be taken away.
Nationally, about 520 employees were affected by the decision.
According to a report by News24, MTN had removed the perks as they considered it an unnecessary expense and were looking at cutting down on costs.
In the arbitration, which took over two years, the employees argued that the perks formed part of their employment contracts which stated that they were entitled to take the vehicles home in the evenings and on weekends.
In December 2014, the company gave notice that from April 2015 this would change. The cars would be “pooled” and could only be used for work.
Company representatives testified that MTN could no longer afford to give unlimited use of the vehicles, and that the financial prejudice to the employees would be offset by them not having to pay “perks tax”.
Head of MTN financial management Divyesh Joshi, meanwhile, said shareholders “were not happy” with the profit of just under R6.5 billion the company was making and they were hoping to push it up by about R75 million.
However, Commissioner Lester Sullivan found that the cutting of the perks did not constitute an “economic necessity”.
“After they testified, the company conceded that the value to them of the use of the company vehicle would be between R6,000 and R8,000 a month. The tax savings, on the other hand, would be between R315 and R1,900 a month,” he said.
“The company contended that it was obliged to cancel all private use as a result of economic necessity. This boiled down to shareholders being unhappy with a profit of R6,469 million and would prefer R6,544 million.”
“Under no stretch of the imagination can this amount to economic necessity.”
Sullivan further said it was ridiculous that the employees’ tax saving would equal the loss of the use of the vehicles.
“In making this decision, I have taken into the particular submission that the company could ‘go under’, if the share price decreased and people sold their shares,” said Sullivan.
“While, in the very long run, this statement might be true, saving R78 million in the circumstances of this company, cannot affect the issue in any significant way and is simply not fair.”
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