Player Information Pack COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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Industry Salary Plan Wh at you n eed to k now
OUTLINE
• I n tro d u c ti o n p 3 • Te r m s of a g re e m e n t p 4 • S a l a r y re d u c ti o n s c a l e s ( I S P)
p9
• G l o b a l c o m p a r i s o n p1 2 • P l aye r s u p p o r t s e r v i c e s p1 5 • C o n t a c t I n f o r m a ti o n p1 7
COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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T h e e co n o m i c a n d h u m a n i m p a c t of th e COV I D -1 9 p a n d e m i c h a s b e e n s eve re , a n d fo r th e fo re s e e a b l e f u tu re , th i s wi l l co nti n u e to b e th e c a s e a c ro s s b o rd e r s a n d i n d u s tr i e s . S o u th Af r i c a n r u g by i s n o d if f e re nt . T h e i n d u s tr y a s a wh o l e a nti c i p ate s s i g n if i c a nt reve n u e re d u c ti o n s of b et we e n R70 0 m i l l i o n a n d R 1 . 2 b i l l i o n , p r i m a r i ly f ro m b ro a d c a s ti n g a n d s p o n s o r s h i p d e a l s . T h e s e co ntr i b u te b et we e n 8 0 % a n d 9 0 % of th e i n d u s tr y ’s i n co m e . T h e i n d u s tr y s t a ke h o l d e r s – SA R u g by, th e p l aye r s , e m p l oye r s a n d a d m i n i s tr ative s t af f – h ave d e c i d e d to j o i n h a n d s a n d co l l e c tive ly a b s o r b th e s e f i n a n c i a l s etb a c k s .
HOW WILL THIS BE ACHIEVED?
1 2 3 4 5
Direct savings Cuts in Reduction in Introduction due to reduction operational distributions of financial in operational expenses across to Provinces arrangements activities the industry and Players like staging Trust for use competitions, of collective travel and commercial accommodation rights
Salary reductions
T h e P l aye r s ’ O rg a n i s ati o n h a s co nti n u o u s ly co n s u lte d p l aye r s d u r i n g th e fo r m u l ati o n a n d th e n fo r m a l i s ati o n p h a s e of th e i n d u s tr y ’s j o i nt re s c u e p l a n . T h e fo l l owi n g d e c i s i o n - m a k i n g m e eti n g s we re h e l d :
3 APRIL » Player representatives
10-20 APRIL
7 APRIL » SARPA Exco (including player reps) » Players’ Fund Trustees » MyPlayers Board
21 APRIL
» Various negotiation » SARPA Exco (including sessions with SA Rugby, player reps) SAREO and SEU
8 APRIL
9 APRIL
» All professional teams » Player agents (attended by 268 players)
22 APRIL » Players’ Fund Trustees
23 APRIL » All professional teams (attended by 286 players) » Player agents
W ith th e s u p p o r t of th e va s t m a j o r it y of p l aye r s , a n d b a c ke d by i n d e p e n d e nt l e g a l exp e r t s , M y P l aye r s a n d th e oth e r i n d u s tr y s t a ke h o l d e r s co l l e c tive ly a g re e d to p ro p o r ti o n a l ly e q u a l s a l a r y re d u c ti o n s f o r a l l e m p l oye e s – p l aye r s , a d m i n i s tr ative s t af f, a n d oth e r s . COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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TERMS OF AGREEMENT COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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The industry c ollective agreement on s alary reductions includes the following terms:
1. 2.
95% PARTICIPATION by all employees in the industry.
W hy n o t 10 0 % p a r t i c i p a t i o n? I t wo u l d h ave b e e n i m p r a c ti c a l a n d u n re a l i s ti c to a s s u m e 1 0 0 % s u p p o r t fo r a co l l e c tive a p p ro a c h . H a d 1 0 o r 1 5 p l aye r s f ro m a g ro u p of 70 0 d e c i d e d n ot to b e p a r t of th e co l l e c tive , it wo u l d h ave j e o p a rd i s e d th e e nti re d e a l fo r th e l a rg e m a j o r it y of p l aye r s if 1 0 0 % p a r ti c i p ati o n we re a co n d iti o n .
SALARY REDUCTIONS IN PROPORTIONALLY EQUAL MEASURES
same salary reduction scales for all employees. This means that all employees – from the CEO of SA Rugby to the most junior player – will be treated equally. The salary reductions will take effect on 1 May 2020. The first reductions will be reflected in salaries paid at the end of May 2020. H ow d o e s t h i s i n f l u e n c e my a g e n t c o m m i s s i o n s? M o s t p l aye r-a g e nt d e a l s i n cl u d e a g e nt f e e s a s a s et p e rce nt a g e of th e p l aye r ’s i n co m e . I f a p l aye r ’s i n co m e i s re d u ce d , a g e nt s ’ co m m i s s i o n s wi l l b e re d u ce d a cco rd i n g ly. Fo r exa m p l e , if a p l aye r e a r n s R 1 0 0 a n d h i s a g e nt i s e ntitl e d to 7. 5% co m m i s s i o n , th e p l aye r p ays h i s a g e nt R7. 5 0 . I f th e p l aye r ’s s a l a r y i s re d u ce d by 1 5% to R 8 5 , th e a g e nt ’s co m m i s s i o n d ro p s to 7. 5% of R 8 5 , th u s R 6 . 4 0 . N OT E : Ag e nt f e e s a re n ot p a r t of th e co l l e c tive a g re e m e nt , a n d p l aye r s a n d a g e nt s h ave to e n g a g e i n th e s e co nve r s ati o n s o n th e i r own te r m s .
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3.
SALARY REDUCTIONS UNTIL 31 DECEMBER 2020 S h o u l d S o u th Af r i c a retu r n to p l ay e a r l i e r, th i s d ate m ay b e revi s e d . T h e I n d u s tr y C ovi d -1 9 C o m m it te e (C ovco m) wi l l re a s s e s s th e i n d u s tr y ’s a p p ro a c h eve r y t wo m o nth s .
A FULL PENSION FUND HOLIDAY
option for all players during the salary reduction period.
4.
M ay I c o n t r i b u t e a s m a l l e r p e r c e n t a g e o f my s a l a r y d u r i n g t h e r e d u c t i o n p e r i o d ? N o . T h e i n d u s tr y d o e s n ot h ave th e a d m i n i s tr ative c a p a c it y to a d m i n i s tr ate d if f e re nt p e n s i o n f u n d co ntr i b u ti o n s fo r i n d ivi d u a l p l aye r s . To avo i d exce s s ive p re s s u re o n th e e m p l oye r s ’ p ay p o i nt s , a p e n s i o n f u n d h o l i d ay m u s t b e fo r th e f u l l m i n i m u m co ntri b u ti o n of 1 5% . P l aye r s m u s t i nfo r m M y P l aye r s if th ey wa nt to u s e th e p e n s i o n f u n d h o l i d ay o pti o n . H ow d o e s t h i s e f f e c t my o t h e r g r o u p b e n e f i t s? D u r i n g th e p e n s i o n f u n d h o l i d ay, yo u wi l l s ti l l co ntri b u te a m o nth ly a m o u nt of R 2 8 . T h i s i s to s e r vi ce yo u r oth e r b e n ef it s , l i ke yo u r l if e i n s u r a n ce , f u n e r a l p l a n , f a m i ly p rote c to r b e n ef it , etc . H ow d o I m a ke u s e o f t h e p e n s i o n f u n d h o l i d ay ? S e n d a n e m a i l to D avi d d e V i l l i e r s (d avi d @ my- p l aye r s . co m) o r I s m a - Ee l D o l l i e (i s m a e e l @ my- p l aye r s . co m), a n d th ey wi l l ti c k th i s b ox fo r yo u .
this is a
5.
FULL SALARY REDUCTION and not a deferment.
H oweve r, i n th e u n l i ke ly eve nt th at a n e m p l oye r m a ke s a p rof it i n th e c u r re nt f i n a n c i a l ye a r, th o s e p rof it s wi l l b e u s e d to ref u n d e m p l oye e s i n p ro p o r ti o n a l ly e q u a l m e a s u re s f o r re d u c ti o n s e n d u re d .
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After salary reductions come into effect, employees have a
21-DAY PERIOD TO CANCEL THEIR CONTRACTS WITH IMMEDIATE EFFECT. Em p l oye e s m ay e n g a g e th e i r e m p l oye r s i n d ivi d u a l ly to n e g oti ate a l o n g e r re l e a s e p e r i o d . Af te r th e 2 1 - d ay p e r i o d , e m p l oye e s m ay a l s o s ti l l e n g a g e th e i r e m p l oye r s i n d ivi d u a l ly to d i s c u s s s eve r a n ce p a c ka g e s . W hy o n l y 2 1 d ay s?
6.
N o r m a l ly, n e g oti ati o n s fo r a n e a r ly re l e a s e f ro m co ntr a c t t a ke p l a ce i n a n i n d ivi d u a l c a p a c it y b et we e n a n e m p l oye r a n d p l aye r. T h e i n d u s tr y ’s d e c i s i o n to i n cl u d e th i s te r m i n a co l l e c tive a g re e m e nt wa s u n u s u a l a n d a n i n d i c ati o n of th e wi l l i n g n e s s to a c t f a i r a n d re a s o n a b l e g ive n th e c i rc u m s t a n ce s . T h i s , a m o n g m a ny d if f e re nt i nte re s t s , h a d to b e we i g h e d a g a i n s t e a c h oth e r, b u t it wa s f e lt th at th e we l l b e i n g of th e i n d u s tr y p o s t- C ovi d -1 9 s h o u l d b e th e p r i m a r y co n s i d e r ati o n , i n wh i c h c a s e a l l s t a ke h o l d e r s h a d to h ave s tro n g re p re s e nt ati o n . H oweve r, a co l l e c tive a g re e m e nt wa s n eve r g u a r a nte e d . D u r i n g th e n e g oti ati o n s , a co l l e c tive a g re e m e nt b et we e n th e e m p l oye r s a n d p l aye r s wo u l d n ot h ave m ate r i a l i s e d h a d th e p l aye r s i n s i s te d o n a l o n g e r co ntr a c t te r m i n ati o n p e r i o d . W ith o u t a co l l e c tive a g re e m e nt , p l aye r s wo u l d h ave b e e n l ef t to f e n d fo r th e m s e lve s i n d ivi d u a l ly, wh i c h co u l d h ave p u t th e m i n a wo r s e l a b o u r p o s iti o n . B y o pti n g fo r a s h o r te r re l e a s e p e r i o d , th e i n d u s tr y re a c h e d a b a l a n ce d co l l e c tive a g re e m e nt th at t a ke s i nto a cco u nt th e i nte re s t s of th e va r i o u s s t a ke h o l d e r s . T h e 2 1 - d ay te r m i n ati o n wi n d ow (2 4 A p ri l 2 02 0 t o 14 M ay 2 02 0) s h o u l d n ot b e i nte r p rete d a s th e i n d u s tr y fo rc i n g p l aye r s to a cce pt a s a l a r y re d u c ti o n , “o r e l s e ”. T h i s co n d iti o n h a d to b e m et i n o rd e r to re a c h th e a g re e m e nt th at wo u l d p rovi d e e m p l oye e s with th e g re ate s t l eve l of j o b s e c u r it y d u r i n g th e p a n d e m i c . A r e c o n t r a c t t e r m i n a t i o n c l a u s e s c o m m o n p r a c t i c e? N o . Fro m ava i l a b l e i nfo r m ati o n , th e S o u th Af r i c a n r u g by i n d u s tr y i s th e o n ly o n e to i n cl u d e a n i m m e d i ate e s c a p e cl a u s e i n it s co l l e c tive re s p o n s e to th e C ovi d -1 9 p a n d e m i c .
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7. 8.
NO DISCRETIONARY SALARY INCREASES OR BONUSES
during the salary reduction period. Contractual increases and bonuses must be adhrered to.
NO CONTRACTING OF NEW EMPLOYEES
(except for players; squad-size limit of 45) may occur during the salary reduction period unless it is to replace a current contract and is approved by the industry’s Covid-19 Committee (Covcom). and not the reduced salary.
in case of
9.
LIQUIDATION A FULL CLAIM AGAINST YOUR ORIGINAL SALARY
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INDUSTRY SALARY PLAN (ISP) S alar y re duc tion sc ales
COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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T he ta b l e a nd e x a mp l e b el o w s ho w t he s a l a r y r educ t ion p e rcen ta ge s a nd imp l ic at ion s f or t he dif f e r en t inc ome s e gmen t s . T he immedi at e ef f e c t of a P en s ion F und hol iday on p l ay e r s ’ c a s h f l o w s i s a l s o il l u s t r at ed. S ALARY ADJUSTMENT S CALES Adjustment %
Income segments (per year)
OPTION 1: Effective average adjustment % (excl.
OPTION 2: Effective average adjustment % (incl. pension fund relief
Current number of players
pension fund relief)
of 15%)
(717)
Segment 1: R0 - R240 000
0%
0%
0%
273
Segment 2: R240 001 - R500 000
36%
13%
2%
198
Segment 3: R500 001 - R750 000
36%
22%
9%
81
Segment 4: R750 001 - R1 m
39%
27%
14%
45
Segment 5: R1 000 001 - R1.5 m
39%
31%
18%
53
Segment 6: R1 500 001 - R2 m
43%
33%
20%
22
Segment 7: > R2 million
43%
38%
25%
45
Example: R1-MILLION MAN A p l aye r e a r n i n g R 5 0 0 0 0 0 p e r ye a r (S e g m e nt 2 ; R 24 0 0 01 to R 5 0 0 0 0 0) f a l l s i n th e 3 6% re d u c ti o n b r a c ket . H oweve r, th at d o e s n ot i m p ly a 3 6% re d u c ti o n o n h i s tot a l g ro s s s a l a r y of R 5 0 0 0 0 0 . T h e 3 6% re d u c ti o n i s o n ly a p p l i e d to eve r y r a n d e a r n e d a b ove R 24 0 0 0 0 . T h e f i r s t R 24 0 0 0 0 i n s a l a r y re m a i n s u nto u c h e d . S i m i l a r ly, a p l aye r e a r n i n g R 1 m i l l i o n p e r ye a r wi l l s e e n o s a l a r y a d j u s tm e nt s a p p l i e d to h i s f i r s t R 24 0 0 0 0 . A 3 6% re d u c ti o n wi l l b e a p p l i e d fo r eve r y r a n d e a r n e d f ro m R 24 0 0 01 to R75 0 0 0 0 , a n d th e n a 3 9 % re d u c ti o n fo r eve r y r a n d e a r n e d f ro m R75 0 0 01 to R 1 m i l l i o n . W hy i s t h i s c a l c u l a t i o n i m p o r t a n t? I f R 1 - m i l l i o n M a n d o e s n ’ t t a ke th e P e n s i o n Fu n d re l i ef o pti o n , th e ef f e c tive a d j u s tm e nt p e rce nt a g e o n h i s tot a l g ro s s s a l a r y of R 1 m i l l i o n wi l l b e 2 8 % a n d n ot 3 9 % . W hy ? B e c a u s e th e 3 9 % i s n ot a p p l i e d to h i s tot a l g ro s s s a l a r y. I f h e d e c i d e s to t a ke th e P e n s i o n Fu n d h o l i d ay ( 1 5% of h i s g ro s s s a l a r y), th e ef f e c tive a d j u s tm e nt p e rce nt a g e to h i s tot a l g ro s s s a l a r y i s j u s t 1 6% . Li kewi s e , th e ef f e c tive ave r a g e a d j u s tm e nt p e rce nt a g e fo r A L L p l aye r s i n R 1 - M i l l i o n M a n ’s i n co m e s e g m e nt i s 27 % (I S P) a n d 1 4% (I S P + P e n s i o n Fu n d H o l i d ay) re s p e c tive ly (a n d n ot 3 9 %). W hy i s th e ef f e c tive ave r a g e a d j u s tm e nt p e rce nt a g e fo r a l l p l aye r s i n th i s s e g m e nt l owe r th a n R 1 - M i l l i o n M a n ’s ef f e c tive a d j u s tm e nt p e rce nt a g e? Fo r a p l aye r e a r n i n g R75 0 5 0 0 p e r ye a r, o n ly R 5 0 0 of h i s i n co m e wi l l b e re d u ce d by 3 9 % , wh i l e R 2 5 0 0 0 0 of R 1 M i l l i o n M a n ’s i n co m e wi l l b e s u b j e c t to a re d u c ti o n of 3 9 % . T h e re d u c ti o n i m p a c t o n R 1 - M i l l i o n M a n ’s tot a l s a l a r y wi l l b e l a rg e r th a n th at of th e p l aye r e a r n i n g n e a r ly a q u a r te r of a m i l l i o n r a n d l e s s th a n h i m , b u t wh o f a l l s with i n th e s a m e i n co m e s e g m e nt o n th e s a l a r y a d j u s tm e nt s c a l e .
See the illustration on the next page COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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R1MILLIONMAN LAST
R750 001 - R1 MILLION
39%
28% Effective
ADJUSTMENT
adjustment %
NEXT
R240 001 - R750 000
(excluding Pension Fund Relief)
16%
36%
ADJUSTMENT FIRST
Effective
R240 000
adjustment %
0%
(including Pension Fund Relief
ADJUSTMENT
of 15%)
R1MILLIONMAN
monthly ca shflow
Key words: ISP: Industry Salary Plan | PFH: Pension Fund Holiday
EXAMPLE OF ISP ON A PLAYER EARNING R1 MILLION PER YEAR Monthly salary (Total Cost to Company)
R83 333
Minus Pension Fund contribution
R11 628
Gross salary (before tax and other deductions)
R71 705
IMPACT OF ISP AND PFH
OPTION 1
OPTION 2
ISP (excl. PFH)
ISP + PFH
Monthly salary (Total Cost to Company)
R83 333
R83 333
Minus ISP adjustment
R23 425
R23 425
Adjusted salary (Total Cost to Company)
R59 908
R59 908
Minus Pension Fund contribution
R8 359
R28
Gross salary (before tax and other deductions)
R51 549
R59 881
% Effective on gross salary (before tax and other deductions)
-28%
-16%
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GLOBAL COMPARISONS COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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C OVID-19 IMPACT ON S ALARIES (GLOBAL ) COUNTRY South Africa New Zealand Australia Ireland
England
ADJUSTMENT % Average 25% (all employees)
50% (players)
Average 62% (players and some staff)
10% to 50% (staff and players)
25% (employee distribution
IMMEDIATE ESCAPE CLAUSE
DEFERMENT OR REDUCTION
Yes. 21 days
Reduction
No
Deferment
No
Unknown
No
Deferment
No
Unknown
No
Unknown
No
Unknown
unknown)
Wales Scotland
25% (players)
10% to 25% (players and some staff)
Notes • To d a te , S o u t h Af r i c a i s t h e o n l y r u g by i n d u s tr y to i n c l u d e a n i m m e d i a te e s c a p e c l a u s e i n a c o l l e c ti ve a g re e m e n t . • W h i l e s o m e exe c u ti ve s a n d s t a f f h ave a c c e pte d s a l a r y c u t s o r d e f e r m e n t s i n o th e r c o u n tr i e s , S o u t h Af r i c a ’s d e c i s i o n to a p p l y a n e q u a l l y p ro p o r ti o n e d s a l a r y re d u c ti o n s c a l e f o r a l l i n d u s t r y e m p l oye e s i s n o t t h e n o r m . • S o u t h Af r i c a ’s s a l a r y re d u c ti o n s w i l l c o n tr i b u te 2 5 % of th e to t a l i n d u s tr y s av i n g s . T h e s p l i t b e t we e n p l aye r s a n d a d m i n i s t r a ti ve s t a f f i s e q u a l , w i th th e re d u c ti o n i n p l aye r s ’ s a l a r i e s c o n t r i b u ti n g ro u g h l y 1 2 . 5 % o f th e to t a l i n d u s tr y s av i n g s . T h u s , w h i l e s ti l l to u g h a n d u n p l e a s a n t , o n l y a re l a ti ve l y s m a l l p o r ti o n of th e i n d u s tr y ’s s av i n g t a r g e t w i l l b e a c h i eve d th ro u g h s a l a r y re d u c ti o n s . T h e s av i n g s b u rd e n o n e m p l oye e s h a s b e e n ke pt a s l ow a s possible. • T h e I n d u s t r y S a l a r y P l a n w i l l h ave a m a te r i a l i m p a c t o n l e s s th a n a th i rd of S o u th Af r i c a ’s 70 0 p ro f e s s i o n a l r u g by p l aye r s . T h e s a l a r y s c a l e s h ave b e e n d ev i s e d to p ro te c t p l aye r s e a r n i n g l e s s t h a n R 24 0 0 0 0 p e r ye a r. T h e i n t ro d u c ti o n of a P e n s i o n Fu n d h o l i d ay wa s d o n e to re d u c e th e i m p a c t o f s a l a r y re d u c ti o n s o n p l aye r s i n s e g m e n t s 2 to 7 ( R 24 0 0 0 1 to m o re th a n R 2 m i l l i o n p e r ye a r) .
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A LT E R N AT I V E S CEN A R IO W H AT C OUL D H AV E H A P P ENED H A D T HE INDU S T R Y NO T A GR EED T O A C OL L E C T I V E A P P ROA CH ? Fi r s tly, th e 2 1 - d ay e s c a p e cl a u s e wo u l d h ave f a l l e n away, a n d p l aye r s wo u l d n ot h ave b e e n a b l e to i n s i s t o n a re l e a s e f ro m th e i r co ntra c t s . U n d e r ce r t a i n co n d iti o n s , e m p l oye r s wo u l d th e n h ave b e e n with i n th e i r r i g ht s to i ntro d u ce va r i o u s co s t- s avi n g m e a s u re s , l i ke d e m a n d i n g e m p l oye e s t a ke th e i r a n n u a l p a i d l e ave , s p e c i a l u n p a i d l e ave , retre n c h m e nt s , etc .
W h at w oul d t he ef f e c t of t hi s h av e b een on t he indu s t r y ?
1
Players would have reacted by taking legal action against their employers.
2
In these uncertain times, and with no precedent to reflect on, it is impossible to say exactly what the outcome of these labour disputes between employers and players would have been. But, • I t wo u l d h ave t a ke n u p ti m e th a t th e i n d u s tr y c o u l d o th e r w i s e h ave u s e d to s t a r t s av i n g . • T h e re wo u l d h ave b e e n a n i n c re a s e i n ex p e n s e s d u e to l e g a l f e e s . • T h e o p p o r t u n i t y f o r d i f f e re n t s t a ke h o l d e r s to c o o p e r a te wo u l d h ave b e e n w i p e d of f th e t a b l e .
U lti m ate ly, th e co l l e c tive a p p ro a c h wa s n ot o n ly th e b e s t way fo r th e i n d u s tr y to s af e g u a rd th e r i g ht s of it s e m p l oye e s , b u t a l s o fo r th e i n d u s tr y to g ive it s e l f th e b e s t c h a n ce of s u r vivi n g th e C ovi d -1 9 o n s l a u g ht .
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PLAYER RELIEF COV I D-19 | I nd ust ry S a l a ry P l a n: W hat yo u need to k n ow
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I n th e 2 5 ye a r s of p rof e s s i o n a l i s m i n r u g by, th e g l o b a l i n d u s tr y h a s n eve r b e e n d i s r u pte d to th e ex te nt th at C ovi d -1 9 h a s tu r n e d th e g a m e o n it s h e a d . T h e s u r viva l of th e p rof e s s i o n a l g a m e at th e i nte r n ati o n a l a n d d o m e s ti c l eve l h a s fo rce d s t a ke h o l d e r s to t a ke d e s p e r ate m e a s u re s , wh i c h i n cl u d e s a l a r y c u t s .
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