Phil Skinner and 208 Others v Nampak Products Limited and Others

The applicants, former and current employees of Nampak Products Limited, were beneficiaries of a post-retirement medical aid (PRMA) policy that formed part of their terms and conditions of employment. Under the policy, qualifying employees were entitled to a 100% or 50% employer contribution towards medical aid premiums after retirement. In 2014, following legal advice and financial concerns, Nampak introduced a cap on its PRMA contributions, limiting future increases to CPI-based adjustments. The applicants were notified of this change by letter dated 25 September 2014. Subsequently, parts of Nampak’s business were sold to other entities, though Nampak largely retained PRMA liabilities. The applicants alleged that the capping constituted a breach of contract under section 77(3) of the BCEA and an unfair labour practice relating to benefits under the LRA.

The claims for breach of contract and for unfair labour practice were dismissed. No order as to costs was made.

This case is significant in South African labour law for clarifying how contractual discretion clauses in employment policies—particularly relating to post-retirement benefits—are to be interpreted. It affirms that clear contractual wording granting an employer sole discretion may lawfully limit otherwise generous employee benefits and that the exercise of such discretion does not automatically constitute an unfair labour practice.