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South Africa: New earnings threshold and minimum wage to come into effect on 1 March 2023

23 February 2023
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On 1 March 2023, we will see the implementation of an increased annual earnings threshold in the amount of ZAR 241 110.59 per annum and an increased national minimum wage in the amount of ZAR 25.42 per hour worked. 

Earnings threshold

The earnings threshold determined by the Minister of Employment and Labour (Minister) in accordance with the Basic Conditions of Employment Act (BCEA) will be increased to ZAR 241 110.59 per annum (ZAR 20 092.55 per month). This represents an increase of approximately 7.59% from the previous amount of ZAR 224 080.48, which has been in effect since 1 March 2022.

In terms of the BCEA, employees who earn below the earnings threshold are subject to protection under the provisions which regulate, amongst other things, working hours, overtime, averaging of hours and compressed working weeks, meal intervals and rest periods.

The Labour Relations Act also extends protection to employees engaged in atypical forms of employment (namely employees employed in terms of fixed term or part time contracts of employment and employees provided to clients by labour brokers) who earn below the earnings threshold.

For purposes of determining whether an employee earns below the earnings threshold, ‘earnings’ means an employee’s regular annual remuneration before the deduction of any income tax, benefit scheme contributions and similar payments, but excludes payments of allowances such as transportation, tools, food, and payments in kind.

Minimum wage

The national minimum wage determined by the Minister in accordance with the National Minimum Wage Act (NMWA) will be increased to ZAR 25.42 for each ordinary hour worked. This represents an increase of approximately 9.62% from the previous amount of ZAR 23.19, which has been in effect since 1 March 2022.

As in previous years, the NMWA provides for minimum wages to be applied in respect of several working groups. This notwithstanding, it appears that with effect from 1 March 2023, domestic workers and farmworkers will also be entitled to the national minimum wage of ZAR 25.42. However, exceptions are still made for the following working groups:

  • Workers employed on an expanded public works programme are entitled to a minimum wage of ZAR 13.97 per hour; and
  • Workers who have concluded learnership agreements contemplated in section 17 of the Skills Development Act, 1998 are entitled to allowances contained in a schedule to the NMWA.  

The national minimum wage forms 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 is the amount payable in money for ordinary hours worked by an employee and excludes payments of allowances such as transportation, tools, food, accommodation, payments in kind, bonuses, tips and gifts.