New Minimum Wage And the Earnings Threshold

The Earnings Threshold 

Effective from 1 April 2024 the earnings threshold will increase from R241 110.59 per annum (R20 092.54 per month) to R254 371.67 (R21 197.63 per month).

The earnings threshold is defined as an employee’s regular annual remuneration before the deduction of income tax, pension, medical aid, and similar payments, but excluding similar payments/contributions made by the employer in respect of the employee.  Subsistence and transport allowances received, achievement awards and payment for overtime worked are not regarded as remuneration for the purpose of the notice.

Employees earning more than the earnings threshold are excluded from the provisions which regulate ordinary hours of work, overtime, compressed working weeks, averaging of hours of work, meal intervals, daily and weekly rest periods, Sunday pay, pay for night work, and pay for work on public holidays of the Basic Conditions of Employment Act, 1997 (“BCEA”).

Those employees currently earning between R 20 093 per month and R 21 198 per month will, from 1 April 2024, now join the category of “vulnerable” workers who are entitled to additional rights and protections, including the right to increased rates of pay, in terms of the BCEA.

All employees earning below the threshold are subject to the provisions of the BCEA dealing with hours of work, overtime, compressed working week, averaging of hours, meal intervals, daily and weekly rest periods, pay for work on Sundays, night work, and work on public holidays.

The increased earnings threshold also affects any temporary employment services (“TES”) employees, i.e., labour broking employees, who are earning between R 20 093 per month and R 21 198. They will, from 1 April 2024, be deemed the employees of the client of the TES, if they satisfy the requirements of section 198A of the LRA. If employees are not performing temporary work and are placed with the client of the temporary employment service for three months or more, they may be considered permanent employees of the client and not of the TES. If this is the case, employers will also be jointly and severally liable for any non-compliance by the TES with the provisions of the BCEA, and the deemed employees will be able to institute action against their deemed employer for any non-compliance by the TES.

Any fixed-term contract employees who are earning between R 20 093 per month and R 21 198 per month will from 1 April 2024 be deemed to be permanent employees of the employer if they satisfy the requirements of section 198B of the LRA. Employees who earn below the threshold may be deemed permanent employees if they are employed for 3 months or more without a justifiable reason for fixing the term of the contract. Again, there is a positive obligation on the employer to equalise the treatment of these employees with permanent comparators.

 

National Minimum Wage 

Effective from 1 March 2024 the Minister of Employment increased the national minimum wage by 8,5% from R25,42 to R27,58 for each ordinary hour worked.

The increase will apply to most workers, including farm workers and domestic workers whose minimum wage has been aligned with the national minimum wage rates since 2022.   

To illustrate, domestic and farm workers who work an 8-hour day, 5 days a week, must be paid a monthly wage of R 4 412.80. This amount would of course fluctuate based on the number of days and hours worked by such workers, as it is measured by the present minimum hourly rate

The general increase in the national minimum wage will not apply to employees employed on an expanded public works programme or workers engaged through learnerships. The minimum wage for workers employed on an expanded works programme will increase from R13.97 to R15.16 an hour and workers who have concluded learnership agreements in terms of section 17 of the Skills Development Act, 1998, will be entitled to the increased allowances announced by the Minister, which range from R415.07 to R2421.13 a week, depending on the learner’s NQF level and number of credits earned by the learner.  

The increased minimum wage will not apply to members of the South African Defence Force, the National Intelligent Agency, the South African Secret Service, and volunteers, all of whom are excluded for the ambit of the National Minimum Wage Act, 2018.  A volunteer is a person who performs work for another person and who does not receive or is not entitled to receive, any remuneration for their services.

Employers are encouraged to take note of and comply with the new minimum wages. Non-compliance may also attract fines in terms of section 76A (1) of the Basic Conditions of Employment Act, 1997.   

Employers must review and audit their contracts of employment and policies to ensure that these are aligned with the new amounts legislated. They should also conduct audits of their workforce and suppliers of labour to ensure compliance with the BCEA.

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