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South Africa: New BCEA threshold and increase in national minimum wage

9 February 2021
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Two recent developments in employment law are important for employers to bear in mind.

BCEA earnings threshold

The Minister of Employment and Labour has published the new earnings threshold in terms of the Basic Conditions of Employment Act, 1997 (BCEA).

With effect from 1 March 2021, the BCEA earnings threshold increases to ZAR 211 596.30 (from ZAR 205 433.30) per annum. The earnings threshold was last revised almost seven years ago.

‘Earnings’ means the regular annual remuneration of an employee before deductions in respect of tax, medical aid, retirement fund and similar payments, but excludes similar benefit contributions made by the employer. Subsistence allowances, transport allowances, achievement awards, and overtime payments are also not included.

Employees who earn below the earnings threshold are entitled to the working hour protections contained in the BCEA. This means, for example, that such employees are entitled to overtime pay or time off in respect of overtime worked.

The earnings threshold is also relevant for purposes of sections 198A, 198B, 198C and 198D of the Labour Relations Act, 1995 (LRA). These sections regulate a-typical forms of employment, such as labour broking, limited duration contracts of employment and part-time employees.

Employees in these a-typical forms of employment who earn below the earnings threshold are also entitled to certain protections. For example:

  • a labour broker employee earning below the threshold who performs work for a client where such work is not a ‘temporary service’, is deemed to be the employee of the client for purposes of the LRA; and
  • an employee earning below the threshold who is employed for a limited time period of longer than three months, is deemed to be employed indefinitely if there is no justifiable reason for fixing the term of the contract.

National minimum wage

With effect from 1 March 2021, the national minimum wage is increased to
ZAR 21.69 per ordinary hour worked. This also applies to farm workers. For domestic workers, the minimum wage is ZAR 19.09 per hour, and for employees employed in an expanded public works programme, the minimum wage is ZAR 11.93 per hour.

In addition, the Minister published revised rates of pay for employees in the contract cleaning sector, employees employed in terms of learnership agreements, and employees in the wholesale and retail sector.