In the past, South African law did not provide for a general minimum amount payable as a salary (remuneration/wage) to employees. This meant that any amount – no matter how small – could have been agreed upon between employers and employees. There were exceptions to this rule and certain minimum amounts were provided for in sectoral determinations or collective agreements, for example, in respect of domestic workers. This all changed when the National Minimum Wage Act 9 of 2018 (“Act”) came into force on 1 January 2019.
What does a national minimum wage actually mean?
- An employer and employee are still allowed to negotiate the employee’s salary, however, it is not allowed to be less than the minimum wage prescribed by law.
- The prescribed minimum wage is a payment for ordinary hours of work and excludes the following:
- payments to enable the employee to work, for example, transport, equipment, food, and so on;
- payments in kind, for example, accommodation;
- gratuities, for example, gifts, bonuses and so on.
What are the prescribed minimum wages?
- The general national minimum wage is set at R20 per hour.
- Other minimum wages prescribed by the Act are the following:
- R18 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).
- R15 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 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.
Does the national minimum wage apply to everyone?
- The Act applies to all employers and employees, but not to members of the National Defence Force, National Intelligence Agency or South African Secret Service.
- The Act also does not apply to a volunteer who performs work and does not receive or is not entitled to receive any remuneration for his/her services.
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.
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 aspects surrounding 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. A labour inspector will then investigate the matter and if s/he has reasonable grounds to believe that the employer did not comply with the Act, s/he can attempt to get a written confirmation by the employer to comply with the Act. If the employer fails to comply with the written confirmation, the labour inspector can refer the matter to the CCMA in order for the written confirmation to be made an arbitration award.
- 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?
- Another change in the BCEA is that 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 80
Do you have any more questions?
What is meant by ordinary hours of work?
- Ordinary hours of work refer to what is provided for as a basic condition of employment under the BCEA.
- The BCEA provides that an employee may not work more than 45 hours a week or more than 8 hours (if a week is 6 days long) or 9 hours a day (if a week is 5 days long).
What happens during conciliation at the CCMA?
- Conciliation is the process whereby a commissioner assists the employer and employee (“parties”) to a labour dispute to overcome their differences and reach a settlement agreement.
- The parties are not allowed to have legal representatives present in a conciliation.
- If the labour dispute remains unresolved (in other words the parties did not reach a settlement agreement), the commissioner issues a certificate of non-resolution. The labour dispute may then be referred for arbitration at the CCMA or alternatively, adjudication by the Labour Court.
What happens during arbitration at the CCMA?
- Arbitration is the process whereby a commissioner hears both parties; each party may state their case, call witnesses and lead evidence.
- The parties may have legal representatives present in an arbitration, provided that prior consent is obtained from the commissioner. A party may not be represented by a labour consultant. A party may, however, be represented by an official of a trade union (group of employees) or employers’ organisation (group of employers).
- At the conclusion of the hearing, the commissioner must issue an arbitration award. An arbitration award may be enforced as if it is an order/judgment of the Labour Court.
- An arbitration award may be reviewed by the Labour Court.