The National Minimum Wage Act 9 of 2018 (“Act”) aims to advance economic development and social justice by protecting workers from being paid unreasonably low wages. The Act applies to all workers and their employers except members of National Defence Force, the National Intelligence Agency and the South African Secret Service. Every employer may not pay wages that are below the minimum wage and the national minimum wage cannot be reduced by contract, except if the contract provides for a more favourable wage.
The Act requires an annual review of the rates based on inflation, the cost of living, the need to retain the value of the minimum wage, wage levels and collective bargaining outcomes, productivity, and so on.
What are the current prescribed minimum wages?
- As of 1 March 2021, the previous national minimum wage of R20.76 per hour has increased to R21.69 per hour.
- Other minimum wages prescribed by the Act are the following:
- R21.69 per hour for farm workers (a person employed in connection with farming or forestry, which also includes a domestic worker employed in a home on a farm or forestry environment).
- R19.09 per hour for domestic workers (a person performing domestic work in a private household, which also includes a gardener, driver for a household, caretaker of children, disabled or elderly).
- R11.93 per hour for employees on an expanded public works programme (a programme providing public or community services through a labour intensive programme and which is funded from public resources).
- The Act also provides for minimum wages relating to employees who are part of a learnership programme. However, the minimum wage is determined per week and depends on the amount of credits already earned by the learner.
- The prescribed minimum wages do not include benefits, such as transport, meals, accommodation allowances and so on, unless the Minister makes a determination that such benefits may be included for a specific group of workers.
Can an employer reduce a salary to be in line with the new national minimum wage?
- If an employment agreement already exists between an employer and employee which provides for a salary higher than the prescribed minimum wage, the employer cannot unilaterally reduce this.
- On the other hand, if the employment contract provided for less than the prescribed minimum wage, the employer must increase the employee’s salary to be in line with the minimum wage.
- It is an unfair labour practice for an employer to unilaterally alter hours of work or other conditions of employment in implementing the national minimum wage.
Where can disputes about minimum wages be referred to?
- With the commencement of the Act, the Basic Conditions of Employment Act 75 of 1997 (“BCEA”) was also changed to accommodate certain aspects about minimum wages.
- One of these changes is to allow disputes regarding the non-compliance with the Act to be referred to the Commission for Conciliation, Mediation and Arbitration (“CCMA”). The dispute will firstly go through conciliation and if it could not be resolved, it will then be referred to arbitration.
- A dispute regarding minimum wages can also be referred to the Department of Labour. Department of Labour Inspectors may obtain a written undertaking from employers to pay the minimum wage or issue compliance orders for non-enforcement. Both the compliance orders and written undertakings may be made into arbitration awards by the CCMA. If the award is not complied with, on application, the CCMA may certify the award and it may be enforced as if it were an order of the Labour Court.
- Even though the CCMA and Department of Labour may attend to disputes regarding failure to comply with the prescribed minimum wage, an aggrieved employee can only refer it to one of these institutions and not to both.
What penalties will an employer incur for failure to comply with the Act?
- An employer may be issued with a fine if an employee is paid less than the prescribed minimum wage.
- This fine may be either one of the following (whichever is the higher amount):
- Twice the value of the amount the employee is paid below the prescribed minimum wage. For example, an employer paid the employee R5 less than the prescribed minimum wage. This means that the fine will be twice that amount, which is R10.
- Twice the employee’s monthly wage. For example, if an employee earns R900 per month, the fine can be R1 800.