Debate Over
The lengthy debate regarding whether or not the national minimum wage should be adopted in South Africa has finally reached its end. President Cyril Ramaphosa has crossed the Rubicon by signing the National Minimum Wage Act 9 of 2018 into law last month. The purpose of this Act is to advance economic development and social justice by improving the wages of the lowest paid workers, protecting workers from unreasonably low wages, preserving the value of the national minimum wage, promoting collective bargaining and supporting economic policy. As the commencement date of this Act is the 1st of January 2019, it is imperative for employees and employers alike to take note of how this Act may affect them.
The Parameters
The minimum wage will apply to all employers and workers. The Act defines an “employer” as “any person who is obliged to pay a worker for that work that worker performs for that person”. On the other hand, a ‘’worker” is defined as “any person who works for another and who receives, or is entitled to receive, any payment for that work, whether in money or in kind. The only workers who will be excluded from this Act will be members of the South African National Defence Force, the South African Secret Service, the National Intelligence Agency and volunteers who perform work for another person without remuneration.
The minimum wage is R20 for each ordinary hour worked. “Ordinary hour” is defined the hours of work permitted in terms of section 9 of the Basic Conditions of Employment Act (currently 45 hours per week) or in terms of any agreement in terms of section 11 and 12 of the BCEA. If the worker is paid on a basis other than the number of hours worked, the Act states that the worker may not be paid less than the national minimum wage for the ordinary hours of work. The BCEA’s provisions regarding the payment of remuneration of the worker, information about remuneration as well as deductions and other acts concerning remuneration remain applicable to the payment of the national minimum wage. In addition, the Act prohibits any deduction from a worker’s wages which exceeds one quarter of the worker’s remuneration.
Certain payments payable in money for ordinary hours worked are excluded. Unless specified otherwise in a sectorial determination, a payment which has been made to enable a worker to work cannot be deducted from a worker’s wages. These payments typically include payments made by the employer for transport, equipment, tools, food or accommodation allowance. Payments made for board or accommodation, gratuities (bonuses, tips or gifts) and any other prescribed category of payment can also not be deducted from a worker’s minimum wage.
It is important to note that the National Minimum Wage Act distinguishes between categories of workers and which minimum wage which will be applicable to these workers. Farmworkers, domestic workers, workers employed on an expanded public works programme and workers who have concluded learnership agreements in terms of the Skills Development Act will therefore also be entitled to a national minimum wage, albeit at a different rate. Farmworkers are entitled to a wage of R18 per hour. On the other hand, domestic workers will be entitled to a minimum wage of R15 per hour. Workers employed on an expanded public works programme will be entitled to R11 per hour. Lastly, workers who have concluded learnership agreements are entitled to allowances based on their NQF level of skills.
Does this apply to everybody?
The minimum wage will be adjusted annually in terms of section 6 of the Act. The Act also indicates that the separate provisions for farmworkers and domestic workers will be reviewed by the Commission eighteen months after the commencement of the Act to ensure that it achieves the goals contemplated by the Act. Workers in the public works programmes’ wages will also be increased proportionately to any adjustment of the national minimum wage.
Can we contract out of the minimum wage?
Although the task might seem daunting, compliance with this Act by Employers is essential. The Act clearly states that unless an employee’s contract or collective agreement applicable to them determines a more favourable wage, the national minimum wage must now constitute a term in the employees contract. The payment of the national minimum wage can also not be waived and overrides all contrary provisions in law, sectorial determinations, collective agreements and contracts (unless the terms of the aforementioned are more favourable). Employers should lastly note that if they attempt to unilaterally change the wages, hours of work or other employment conditions which relate to the national minimum wage, they could now also be guilty of an unfair labour practice.
The question on the minds of several employers might now be: what must be done if I am unable to immediately afford compliance with this Act. An important feature of this Act is that an employer or employer’s organisation registered in terms of section 96 of the Labour Relations Act may apply for exemption from the minimum wage. If you are interested in finding out more about the possibility of exemption and whether or not you qualify, you are welcome to contact us.