With effect from 1 July 2011, the earnings threshold for employees provided for in section 6 of the Basic Conditions of Employment Act (“the BCEA”), was raised to R172,000.00 per annum. It was last raised in 2008, when it was set at R149,736.00.
The earnings threshold excludes employees earning more than the threshold from certain basic conditions of employment which would otherwise apply to them in terms of the BCEA. For example, the BCEA limits on maximum ordinary working hours (45 hours per week, with a maximum of 9 hours per day if an employee works five days a week or less, etc.), overtime hours (10 hours a week and 3 hours a day), overtime rates of pay (one and a half times their ordinary wage), etc. do not apply to employees earning above the earnings threshold, unless the employer agrees with them otherwise.
Therefore, employees who, as a result of the increase in the earnings threshold, now fall above the threshold, would no longer be entitled, for example, to statutory overtime pay. Before simply stopping overtime payments to such employees, however, employers would do well to check the terms of the employment contracts or collective agreements applicable to these employees to see if the terms thereof do not give a contractual entitlement amount to overtime. This will depend on an interpretation of the agreement in question.
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