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National minimum wage

27 November 2017
– 5 Minute Read


Last week, the recently approved National Minimum Wage Bill, 2017 (NMW Bill) was published for public comment. Those who wish to do so will have until 30 November 2017. (In this regard, please see the link at the end of this Newsflash.)

Recognising that there are huge income disparities in the South African labour market, the NMW Bill makes provision for the introduction and implementation of a minimum wage of ZAR 20 per ordinary hour of work. This is due to come into effect on 1 May 2018. There are a number of exceptions to the minimum wage, which include the following:

  • farm workers will be entitled to a minimum wage of ZAR 18 per hour;
  • domestic workers will be entitled to a minimum wage of ZAR 15 per hour;
  • workers employed on an expanded public works programme will be entitled to a minimum wage of ZAR 11 per hour; and
  • workers engaged under learnership agreements under the Skills Development Act, 1998, will be entitled to a minimum allowance as set out in schedule 2 of the NMW Bill.

The NMW Bill will apply to all workers and their employers, subject to limited exceptions such as the South African National Defence Force, the National Intelligence Agency and the Secret Service. Employees will be entitled to receive the minimum wage and an arrangement purporting to contract out of this entitlement will not be enforceable.

The calculation of the wage will be the amount payable in money for ordinary hours of work. The following will be excluded:

  • a payment made to enable a worker to work, including any transport, equipment, tool, food or accommodation allowance;
  • any payment in kind, including boarding or accommodation; and
  • gratuities, such as bonuses, tips or gifts.

The national minimum wage will form the minimum floor for wages. This means that every worker will be entitled to at least the minimum wage and no employer may pay less than the minimum wage. The minimum wage cannot be varied by contract, collective agreement or law. Except to the extent that an employee’s contract of employment, a collective agreement or law provides for a more favourable wage, the national minimum wage will constitute a term and condition of the employee’s employment.

The NMW Bill further provides that it will be an unfair labour practice for an employer to unilaterally alter an employee’s wages, working hours or other conditions of employment in connection with the implementation of the minimum wage. Once the NMW Bill comes into effect, it is intended that this provision relating to unfair labour practices will have retrospective effect from
1 May 2017.

The NMW Bill provides for the establishment of a National Minimum Wage Commission whose primary function will be to review the national minimum wage annually and to make recommendations for its adjustment. The Commission also has additional functions such as investigating the impact of the national minimum wage on the economy, income differentials and collective bargaining; setting targets for the national minimum wage within three years, and advising the Minister of Labour on measures to reduce income differentials.

The NMW Bill makes provision for the Minister of Labour to grant exemptions to an employer or employer’s organisation from paying the national minimum wage. The exemption process is intended to be dealt with by way of regulations. The Minister has not yet published draft regulations in this regard.

To view a copy of the NMW Bill, please click here.

A related amendment bill is the Basic Conditions of Employment Act (BCEA) Amendment Bill. This Bill contains certain amendments that are consequential to the NMW Act including the power of labour inspectors to monitor and enforce the provisions of the NMW Act.

Importantly, the BCEA Amendment Bill contemplates the repeal of chapters 8 (i.e. sectoral determinations) and 9 (i.e. the Employment Conditions Commission) of the BCEA. No new sectoral determinations will therefore be capable of being issued after the NMW Act comes into force. Existing sectoral determinations will however remain in force until suspended or cancelled by the Minister. Insofar as such sectoral determinations prescribe wages lower than the national minimum wage, the national minimum wage will apply. Insofar as existing sectoral determinations prescribe wages in excess of the national minimum wage, those higher wages remain in effect (i.e. may not be reduced) and those wages (as well as remuneration and associated benefits based on those wages) must be increased proportionally to any national minimum wage increases for three years following the commencement of the NMW Act.

A new section 9A of the BCEA will have the effect that employees who work for less than four hours a day must nevertheless be paid for four hours. This will only apply to employees earning below the prescribed earnings threshold, currently
ZAR 205 433.30 per annum/ ZAR 17 119.44 per month.

To view a copy of the BCEA Amendment Bill, please click here.

The following three Bills are open for public comment until 30 November 2017:

  • The Labour Relations Amendment (LRA) Bill. Click here to view.

To view a copy of the LRA Amendment Bill, please click here.

  • The Basic Conditions of Employment Amendment Bill. Click here to view.
  • The National Minimum Wage Bill. Click here to view.

Please contact Shelley Wilson, Talita Laubscher or any other member of the Employment and Benefits Practice at Bowmans if you require further information or advice.