Increase in Minimum Wages: the impact on the employer and implications if you do not pay

You will recall that last month we sent you details regarding the Minister of Employment and Labour (“the Minister”) announcing amendments to the National Minimum Wage Act, 9 of 2018 (“NMWA”), which saw increased adjustments to the national minimum wage, effective 1 March 2022.

Here is a recap and explanation of the implications of this, provided to FEDHASA members, by Nadia Froneman, Senior Associate in Employment Law at Eversheds Sutherland.

“What are the new national minimum wages?

The national minimum wage for each ordinary hour worked is now R23,19, an increase of 5.6% from R21,96 from 1st March 2022.

This year, from 1 March 2022, we also see that specific categories of workers shall benefit from the increase to the national minimum wage, being domestic workers and farmworkers who are now entitled to R23,19 per ordinary hour of work. The increase for domestic workers is notable, as it is an increase from R19,09 per ordinary hour of work, and for farmworkers it is an increase from R21,69 per ordinary hour of work. 

Workers employed on expanded public works programmes are entitled to a minimum wage of R12,75 per hour, which represents an increase of 6.9% from the previous R11,93.

Notably, however, the Bargaining Council for the Fast Food, Restaurant, Catering and Allied Trades Main Collective Agreement (“the Main Agreement”), which was extended by the Minister to be binding on all employers and employees in the industry from December 2020 until its expiry on 31 August 2026, prescribes its own hourly rates for specific categories of workers in the industry. If and to the extent that the prescribed hourly rate in the Main Agreement is less than that set out in the NMWA, the NMWA must be applied.

What happens if an employer does not implement these changes?

Should employers fail to comply with their obligations in terms of the NMWA, it could result in the employer concerned being: (i) issued a compliance order by a Department of Labour inspector; and (ii) fined as set out in the Basic Conditions of Employment Act (“the BCEA”).

The BCEA stipulates that employers who fail to pay their employees the increased hourly minimum wages may be ordered to pay the worker either twice: (i) the value of the underpayment; or (ii) the employee’s monthly wage, whichever amount is the greater. The BCEA does not stop there. Should there be further contraventions by an employer to pay the national minimum wage to their employees, the fine can be increased threefold in accordance with the aforementioned calculation of the penalty.

Earnings Threshold

The Minister of Employment and Labour (“the Minister”) also published a Government Notice in February stating that the earnings threshold under the BCEA will be increased from R211 596,30 per annum to R224 080,48 per annum. This provides for an increase in total earnings per month from R17,633 in 2021 to R18,673 with effect from 1 March 2022.  This is important for employers to note as it impacts upon which of its employees are entitled to all the minimum basic conditions of employment contained in the BCEA (and of course the Main Agreement). For example, employees who earn above the earnings threshold are not entitled, in law, to earn overtime.

The earnings threshold also impacts whether employees are afforded other statutory protections in the Labour Relations Act, 66 of 1995 (“LRA”), which provides protection to employees who earn below the earnings threshold and they i) work for a labour broker; ii) are employed on a fixed term contract; or iii) are employed on a part time basis.

It is important for employers to be aware of this change and to act accordingly to ensure compliance with the various statutory provisions which are linked to the earnings threshold.

Employers should seek and obtain legal advice should they have any queries in respect of the new national minimum wage and/or the new earnings threshold.”

You can reach Nadia at:

Nadia Froneman | Senior Associate | Employment Law

nadiafroneman@eversheds-sutherland.co.za  

M: +27 82 301 5079

www.linkedin.com/in/nadia-froneman

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